Thursday, October 27, 2011

Euro crisis: and yet more talk of fairies at the bottom of the garden

I can’t think of anyone who likes being treated as a moron, yet apparently several of the most important bods in the European Commission seem to believe we’re not that fussed. European Commission President Jose Manuel Barroso has declared that Europe is ‘closer to resolving the eurozone crisis’. Oh no it’s not. The shit is deep and getting deeper by the day.

Last night various heads of government and finance minister got together and cobbled up some deal or other - suitably obscure on the principle that if the public don’t understand it, they won’t worry so much - then gathered, all smiles, for a photo opportunity and buggered off home. I would like to give you the details, but they are meaningless. The eurozone crisis - or rather the underlying shambles which is the eurozone - has not been resolved. All that has happened is that another layer of sticking plaster has been imposed on a festering wound in the hope that ‘the markets’ can be ‘calmed’. Yes, that’s the name of the game. Bugger that Greece still owes more money than it can make in one year, that Italy and Spain are also in the shit; that everyone assumes Greece’s creditors will be quite happy to settle for getting back less than half of what they lent; that both Ireland and Portugal are getting very fucking annoyed indeed that Greece should be let off half of its debts while they diligently and honestly imposed horrible austerity on their folk to pay off their debts; that when all is said and done the Greeks are still retiring far earlier and getting larger pensions than the folk who are paying of their bills; that the whole sunshine scenario of ‘resolving the crisis’ depends on steady economic growth in Europe, which absolutely no one believes will happen; and that the utterly stupid arrangements which lead to this shambles are still in place.

Bugger all that: at least ‘the markets are being calmed’.
Ten years ago when every bloody left-of-centre trendy in Europe was toasting the EU’s new currency as though it were the Second Coming, others were warning that unless there were fiscal union - taxes imposed from the centre - it would all end in tears. And that is exactly what happened. So now our esteemed leaders - well, as a Brit, not mine - are urging just that: a fiscal union. And given the mutual suspicion in the eurozone, cobbling that together has as much chance as making a snowman in hell. But that doesn't dampen all the brave talk of the 17 eurozone members about forming a fiscal union and imposing the necessary uniform taxes throughout the eurozone area. This is certainly what eurosceptics pointed out ten years ago - and were proved right - that unless the eurozone area was a fiscal union, the whole bunfeast would end in disaster.

Given that among the 17 at present tax raters vary widely, that Ireland has always done well and attracted investment because of its low corporation tax and would do badly if this were raised to the level prevalent in other countries, and that in Italy and Greece tax evasion is the order of the day, successfully establishing such a fiscal union is the pipedream to end all pipedreams. Here's just one brief scenario: uniform taxes are imposed, the traditional tax evasion in Italy and Greece (and elsewhere for all I know) carries on, the protestant, fair-haired, hardworking Northern Europe members of that fiscal union, who are diligently paying their taxes as the Bible demands, get terminally fed up and their voters tell their leaders that unless the fiscal union is ended, they will vote in folk who will end it. Result: end of fiscal union, end of the eurozone and, most probably, end of the EU as we know it at present. So why wait? Why not bite the bullet?
Then there is the ‘one trillion’ euros which will boost the stability fund. Where exactly is that coming from? Because it is most certainly not coming from the banks, who will soon be out of pocket to the tune of half of everything they lent Greece.

There is brave talk of getting the Chinese to cough up on the grounds that if the eurozone goes phut, the world’s economy will go phut and the Chinese will be just as badly hit as the rest of us. True enough, but I can’t see the Chinese putting any faith in a gang of eurozone finance minsters who have so far shown themselves to be economically illiterate. So that leaves you and me - well only up to a point me as Britain stayed well clear of the eurozone despite Tony Blair’s best efforts to involve us (I believe he described it as ‘our destiny’). Welcome to higher and heavier taxes over these next few years.

. . .

What is left entirely out of the equation, of course, is that an electorate utterly fed up with the halfwits that got them into the mess in the first place might well - with apparently nothing to lose - put their faith in the kind of political gangsters who operate on the fringes. Let me see: Hungary, Belgium, Finland, Germany, Austria, France, Italy, the Baltic states and The Netherland all have parties which tend to the far right waiting in the wings. Given an economic depression and attendant widespread unemployment, they might feel Lady Luck is finally shining the light their way.

There is this touchingly naive belief that just because a touchy-feely hug-your-neighbour liberalism has been the order of the day for the past 30 years, that it is well ensconced in our psyche, and that anyone predicting that several nasty would-be hard men might step into the limelight over the coming decades is a Mauser short of a right-wing coup. I wonder. Angela Merkel, the Chancellor of Germany no less rather than some hack blogger with time on his hands - that’s me - has warned as much. The reasoning might go thus, to be soaked up eagerly by das Lumpenfolk who always makes such adventures possible: you jobless, homeless, you have no future and a great many darker-skinned foreigners are taking the bread out of our mouth: look where our precious democracy has got you. The trouble is that after a few beers and a row with the wife, quite a few too many might be tempted to agree, especially in those ‘former Soviet bloc’ states where democratic instincts are what you read about in textbooks. Mahlzeit.

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