Euro crisis: “it is time to send for the Borg…”

You can follow the latest developments in the eurozone crisis at the Guardian’s live-Business blog as pressure mounts on Italian Prime Minister designate, Mario Monti – who was nominated to replace Silvio Berlusconi three days after the Italian President, Giorgio Napolitano, appointed Monti a Lifetime Senator.  From his Wikipedia entry

In 2007, Monti was one of the first supporters of the first European civic forum, Etats Généraux de l’Europe, initiated by European think tank EuropaNova and European Movement.

In December 2009, he became a member of the reflection group for the future of Europe, chaired by former Spanish Premier Felipe Gonzalez. In this forum, he advocated an economic government for Europe and a European Monetary fund. He also supported a New European Deal with a better coordination between social and economic issues in Europe.

In 2010, Monti was asked by Commission President Manuel Barroso to produce a Report on the Future of the Single Market proposing further measures towards the completion of the EU Single Market.[11]

Monti is a founding member of the Spinelli Group,[12] an organization launched in September 2010 to facilitate integration within the European Union (other members of the steering group include Jacques Delors, Daniel Cohn-Bendit, Guy Verhofstadt, Andrew Duff and Elmar Brok).

And it’s worth noting Frau Bundeskanzlerin nailing her colours firmly to the mast

Addressing the annual conference of her Christian Democratic Union (CDU) in Leipzig yesterday, the German leader described the challenge facing the Continent as “the task for our generation”.

Standing before a backdrop with the slogan “For Europe. For Germany” – a reversal of the normal order of things in Germany politics – Dr Merkel reminded delegates that these are far but normal times in Europe.

The task of our generation now is to complete the economic and currency union in Europe and, step by step, create a political union,” she said. “It’s time for a breakthrough to a new Europe and it’s time to think beyond day to day, towards a permanent solution.”  [added emphasis]

The new Greek Prime Minister technocrat-in-chief, Lucas Papademos, has made his position clear

“The new coalition government, and myself personally, have assumed our responsibilities at this critical moment because Greece’s participation within the euro zone is at risk,” said Lucas Papademos, presenting his interim government’s programme to parliament.

In reiterating the positions that he has expressed since his appointment on Friday, the technocrat revealed nothing new in the slow-paced speech that was largely devoid of complex terminology. He said the main task of his government was to carry out the decisions of the October 27th summit “and to apply economic policies linked to these decisions”.

“I cannot complete this mission on my own,” the former Greek and European central banker added, in an appeal for unity. “The country can be saved; it depends on us.”

You don’t need to share the political views of Daniel Hannan, MEP, to recognise the fundamental truth of his opening statement here

What we have witnessed is a coup d’état: bloodless and genteel, but a coup d’état none the less. In Athens and in Rome, elected prime ministers have been toppled in favour of Eurocrats – respectively a former Vice-President of the European Central Bank and a former European Commissioner. Both countries now have what are called ‘national governments’, though they have been put together for the sole purpose of implementing policies that would be rejected in a general election.

Even if you believe, as the BBC’s Chris Morris appears to suggest, the intervention of “a kind of politburo” could be justified by the “extraordinary times”.

Chancellor Angela Merkel and President Nicolas Sarkozy have been joined by one other democratically elected leader – Jean-Claude Juncker, the Prime Minister of Luxembourg, who also happens to chair meetings of eurozone finance ministers.

Also at the table are five others chosen by their peers: Jose Manuel Barroso and Ollie Rehn from the European Commission; Herman Van Rompuy from the European Council; Mario Draghi, the new president of the European Central Bank; and all the way from Washington (but really from France) Christine Lagarde, the head of the IMF.

It has been christened the Frankfurt Group, after the venue of their first meeting where Mr Sarkozy and Mrs Merkel rather spoilt the moment by having a stand-up row.

But what is interesting about this inner core within the inner core is that it has begun to flex its muscles. Leadership – that is what we have all been crying out for, isn’t it?

It has been pressure from members of the Frankfurt Group which has helped unseat recalcitrant prime ministers in Italy and Greece. That may raise questions about democratic legitimacy, but these are extraordinary times.

Questions, indeed.  In the Irish Times, Fintan O’Toole plays down the dangers of “two completely unrealistic “futures” for the euro and the EU”, but he doesn’t address the questions posed by “the coup that has already happened in Europe, with an unelected directory in Frankfurt assuming control of national budgets. The Frankfurt Group (Angela Merkel, Nicolas Sarkozy, Mario Draghi, José Manuel Barroso, Jean-Claude Juncker, Herman van Rompuy, Christine Lagarde and Olli Rehn) which has assumed command with no democratic or legal mandate”.

He argues that “retrospective legitimacy [to that “coup”] by changes to the EU treaties” “is not going to happen”.

Perhaps…

Final word, for now, from Henry Farrell at Crooked Timber who quotes the FT leader on 9th November as “not very far from what [he] would be writing if [he] had the time

Apparently, the answer to the huge problems of the eurozone is the replacement of elected premiers with economic experts – approved officials dropped from European institutions. In Greece, Lucas Papademos, a former vice-president of the European Central Bank, has been pushed hard for the job; in Italy, Mario Monti, another economist and a former EU Commissioner, is much mentioned. They may lack a democratic mandate but they’re fantastically well regarded in Frankfurt. It remains to be seen if either will clinch the role. But what exactly is the great attraction of technocrats?

If ever modern Europe needed brave, charismatic leaders to carry their nation through turbulent times, it would seem to be now. Instead, it is as if the crew of the Starship Enterprise had concluded that Captain Jean-Luc Picard is no longer the man for the job and that it is time to send for the Borg. Efficient, calculating machines driving through unpopular measures across the eurozone with the battle cry “resistance is futile” are apparently the order of the day. Faced with a deep crisis, once-proud European nations are essentially preparing to hand over power to Ernst & Young.  [added emphasis]

Indeed.  In the meantime, as I may have mentioned

It’s still “the political trilemma.” 

[Europe is still sexy! – Ed]  Of course it is.

And, as I’ve been saying, for supporters of the “European Project”, the options are stark.

And when it’s that serious, you have to lie…

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  • What do you make of FOT’s preferred alternative to the twin spectres of Eurobonds and fiscal union? It would require a huge about-face from the ECB, but how likely is that, even under new management?

  • Drumlins Rock

    I went through a stage of being fasinated with conspiracy theories in my late teens (mainly from the End Times stable) buying lots of books and scouring the papers for clues. I eventually grew out of it but am sorely tempted to hoke out some of those old books.
    I wonder would the UK or Ireland allow the same to happen? I would hope not.

  • John Ó Néill

    Looks like the the contagion is taking hold as well as Spanish bond yields hit 6.2% today and Italy crashed back over 7%.

  • Mick Fealty

    There’s a noteable backwash effect too, with the Germans and the French getting firmly separated…

    http://ftalphaville.ft.com/blog/2011/11/15/747541/french-bonds-some-parabolic-perspective/

    What was that about a fiscal union?

  • Jud

    Pete – I have to say I enjoy your economic blogs.
    DR – it is said the best conspiracies happen in plain sight. In this case our elites have become so empowered I don’t think they are making any attempt to hide it.

    It’s hard to shake the impression these are people deeply out of their depth and out of tune with reality.

    I’m not sure there are any good (or less bad) options left.

  • Pete Baker

    Cheers Jud.

    But I’d suggest the post is more about the politics involved than the economics…

  • Jud

    Fair enough Pete – but a (if not the) major issue is that this is a financial crisis that has so far been treated as a political one.

    As all the political cards have been played the financial crisis has become bigger – and is now big enough to risk some serious political crises down the road.

    I’m not sure we can separate the two at this point.

  • It’s worth keeping an eye on the worsening situation in Hungary: http://tinyurl.com/dyawbdg

    Although the figures are obviously second division compared to Italy and Spain, it still has the potential to pull not only the likes of Romania and Slovakia into the mire but also Austria whose banks are seriously over-committed there.

  • Pete Baker

    Jud

    “but a (if not the) major issue is that this is a financial crisis that has so far been treated as a political one”

    It’s both. Always has been.

    “As all the political cards have been played the financial crisis has become bigger”

    Erm, no. The political cards played have been dealt from the bottom of the pack.

    The political game in play has always been “Protect the euro!”. And the European project…

    But they’ve been stymied by the [unfortunate] need to keep an eye on domestic political concerns and their own national constitutional niceties.

    Hence the politburo’s coup intervention.

  • Drumlins Rock

    meanwhile after 520 days Belgium still hasn’t even got a government, but is high on the list after Italy…

  • Alias

    Olli Rehn, the EU Commissioner in control of bailing out the eurosystem, said last week that all eurozone countries subjected to the EU/ECB/IMF agenda had “governments of national unity” and so too should Italy.

    Just as the EU propaganda machine spins bailing-out the eurosystem as bailing-out wayward member states, it also spins single-party rule as the benign-sounding “governments of national unity”. This propaganda term implies that all parties are abandoning democratic structures because that best serves the common “national” good, and all are united on that. In reality, it is designed to serve the EU’s interests ahead of the redundant national interest so it is treason and no less.

    Why then did Olli Rehn include Ireland in the list of countries that have been subjected to “governments of national unity” when there is still a de facto opposition in this state?

    Because, in reality, we always had a “government of national unity” on relation to EU rule. All three of the mainstream political parties implement what is called a bi-partisan policy on the EU. That means that the issue of EU rule is never subjected to democratic scrutiny by the state. The three parties sell this treason as “placing the EU above politics” but it simply means that they all agree never to be critical of EU rule or to oppose its expansion, and agree to place the EU’s interests ahead of the redundant national interest.

    We are left with the illusion of democracy due to this long-standing bipartisan policy, whereas the other victim-states have lost all plausible pretence at democracy and self-determination.

  • Here’s how it is, guys and gals. What do you think of the deception ….. http://youtu.be/oTnWfZ4izEU

    And CHAOS is real good for you when it is IT which knows what IT needs to do with Clouds Hosting Advanced Operating Systems, and although such as IT may be able to easily deliver may be quite alien to some folk, in troubles and chaotic times, is it perfectly natural in others of a higher order and lower bars to get rid of the arrogance and ignorance which breeds bigoted sophistry ….. and of which you would probably all know only too well, is still alive and kicking in many a fool tool with not much upstairs in the thinking department.

  • Drumlins Rock

    Think about it, Italy has a completely un-elected government, appointed by outside powers who threaten to country with an economic war.

  • Drumlins Rock

    scarey bickies

  • As shrewd an analysis as any I’ve read yet.

  • FuturePhysicist

    Send in the Borg? Do we really need a more vocal Swedish voice on things?

    (Don’t explain it, my moniker should let you know everything)

  • IrelandNorth

    With the ongoing Eurocrisis, maybe there’s something in Fine Gael’s suggestion that we should consider rejoining the [British] Commonwealth, “… if that were the price of a [re]united Ireland”. Whilst independence is a nobel concept, in an era of global convergence, first banana to leave the group gets peeled. But what would we call a common currency between Ireland & the United Kingdom of Great Britain (UKGB). The ‘hiberno’ or the ‘anglo’? Perhaps exchangeable in all Commonwealth jurisdictions with Can/Aus/NZ$

  • Rejoining the Commonwealth has nothing to do with national independence or monetary union. The Commonwealth is little more than an old boys’ club. The Can/Aus/NZ$ have no relationship with the pound sterling – in fact, as the names suggest they are historically more closely associated with the US dollar.

  • Greenflag

    ‘Send in the Borg? Do we really need a more vocal Swedish voice on things?’

    Actually Sweden provides a good example of how a country should regulate it’s banks so that they dont’ become havens for gambling addicts hooked to paper money mega millions concocted out of fiat money printed by irresponsible politicians .

    IIRC Sweden went through a huge economic and monetary meltdown in the early 1990’s form which they have obviously recovered enough to help ‘bail ‘out Ireland somewhat. Not sure if they’ve ‘bailed ‘ out Greece .

  • Slugger normally covers most of the important Euro news, as it relates to Irish politics. It seems to have missed this story

    http://www.telegraph.co.uk/finance/financialcrisis/8911146/Ireland-demands-debt-relief-warns-on-EU-treaties.html

    So consider this a surrogate post.

    Merkel & Co. certainly need another treaty to pursue their agenda of closer fiscal union so should Ireland blackmail the EU by seeking debt forgiveness in return?

    And if that type of leverage does not work (as happened when Greece ‘u’ turned on its decision to hold a referendum), does Ireland have a ‘Plan B’?

  • wee buns

    Seymour

    very important news indeed.
    To hell with the debt, would it not be more vital to ‘blackmail’ them for the return of our sovereignty? Meaning fiscal union in exchange for proper political representation within Europe?
    That’s if we are for staying.

    As it stands FG is committing an Offence against the State insofar as it has allowed an unauthorized body to take part in decisions of government. http://www.irishtimes.com/newspaper/opinion/2011/1122/1224307948012.html

    On the question of ‘Plan B’: Shane Ross asked Enda only a fortnight ago, and the response was coy in the extreme; read as, there ain’t no Plan B.

    Monti’s presence on the stage beside Sarkosy & Merkel – that’s supposed to show strength & unity of leadership? Sorry but the horse has officialy bolted.
    Europe remains stuck in a common currency whose structural flaws it cannot resolve.

  • Alias

    “Europe remains stuck in a common currency whose structural flaws it cannot resolve.”

    The commonly argued “structural flaw” is that there is a monetary union without a fiscal union. The assumption is that once there is a fiscal union then the structural flaw is corrected and all becomes well in Euroland. That is certainly the assumption that the eurogombeens are busy proffering: give up your fiscal sovereignty in return for monetary stability.

    That, however, is a structural flaw in both logic and economics. There is already a semi-union of fiscal policies for eurozone members: it’s called the Growth and Stability Pact. Essentially, eurozone members maintain economic indexes – fiscal budget deficit, debt to GDP ratio, interest and echange ratesm etc – within specified parameters. That fiscal control hasn’t stopped those eurozone economies from diverging dramatically rather than converging as intended.

    More fiscal control going to the EU will more likely cause still grater divergence rather than greater convergence. Why? Because the real economies of the eurozone members will never converge without utter deconstruction and reconstruction in the image of the eurozone member for whom those fiscal policies will be designed. Ireland’s economy, for example, is a much more open economy than Italy’s economy and has much less indigenous manufacturing industry that Germany’s export economy (in fact, less that 5% of Ireland’s exports are indigenous – and most of that pitiful 5% is meat). A decontruction – particularly loss of fiscal taxation policy – in this area could see 95% of Ireland’s exports at risk.

    Other assumptions about how to correct fundamental structural problems, such as wealth transfer from the more productive countries to the less productive countries, are the stuff of dreams. If folks decide to sell out what little remains of their sovereignty for the promise of being kept women then perhaps the Irish really have lost their right to be an independent nation and deserve their new live of servitide to their new masters. Remember, it only ever takes one generation for a nation to cease to exist as a sovereign nation…

    “To hell with the debt, would it not be more vital to ‘blackmail’ them for the return of our sovereignty? Meaning fiscal union in exchange for proper political representation within Europe?”

    You don’t become more sovereign by becoming less sovereign. The lack of understanding there is just scarey…

  • wee buns

    ‘You don’t become more sovereign by becoming less sovereign.’

    Tell that to Ganley and the other tall poppy federalists. http://www.independent.ie/business/irish/we-need-to-come-up-with-a-plan-b-for-the-euro-crisis-2811936.html
    As Mr Buns can attest there are no kept women around here and when they ask us to endorse Lisbon 3 the response will (still) be a resounding NO.

  • Alias

    Ganley’s longstanding support for euro-federalism is predicated on the bogus assumption that a European demos exists when, in reality, only an engineered class of European citizenship exists. There can never be a European democracy because there will never be a European nation. It remains as a post-war invention designed to create a ‘United States of Europe.’

    Democracy gains its legitimacy from the people, being the will of the people – not the shared will of peoples. Ganley, being a euro-federalist, believes that the will of the bogus European nation rightfully takes precedence over the will of the Irish nation. His only quibble with his fellow euro-federalists is that the European ‘nation’ cannot elect all of its rulers within the existing structures.

    But what difference would it make to the Irish nation if the European ‘nation’ could elect its rulers? You would not have more than 1.7% of the vote and therefore would not be in a position to elect rulers who promote your interests, policies and agenda. The purpose of a democracy is for the nation to self-determine its own affairs in its collective interest. That nation has a duty of fidelity to protect itself and to promote its own interest, not to seek to destroy itself. Euro-federalism will always defeat that purpose for the nations on the continent of Europe and can, therefore, never offer democracy to those nations.

    It is a anti-democratic agenda by default – that is, of course, unless you are a brainwashed eurogombeen who thinks a European nation does exist or can be successfully engineered.