A Tittering Europe Asks Bond Of Submission From Greece And Italy
By Farooque Chowdhury
08 October, 2011
Countercurrents.org
A crisis charged Europe is tittering with bankers’ political intrigues for regime change in Greece and Italy, mounting pressure on Germans, and austerity measures announced in France. George Soros warns: “Europe is in a very serious crisis”, and Europe faces a lost decade or more. Stock markets across the continent behaved uncertainly. They jumped up and down as they were unsure of their speculative future. And, the powerful IMF is running from capital to capital, from Moscow to Beijing to Tokyo, in search of money for Europe.
Europe’s creditors have asked bonds of submission from Greece and Italy as the ruling elites of the two countries are jockeying to have a government credible to bankers. And, the centre of problem is unknown, neither in Athens nor Rome. Is it in the German capital or in Paris?
In European stock markets, at one stage shares slipped down. The FTSE 100 in London, the German Dax, France’s Cac, the Italian FTSE MIB, Spain’s IBEX joined together to move down. Rumors made them jump up for a while. And, rumors made them dip again.
Series of news from European capitals are interesting, intriguing, and annoying. It is difficult to perceive which one is more significant.
German position under fire
Germany came under heavy fire from its EU partners, especially the UK to allow the European Central Bank to play a bigger role, to abandon its veto on a rescue operation by the ECB so that the euro zone and the world can be saved. David Cameron, now trying to move from sideline to the center, told the House of Commons that he had put pressure on Germany over the crisis in the euro zone. The British leader “found it very difficult to understand why” Germany “would not lift its opposition to” the ECB “doing more to bail out the euro.” He warned that the euro zone will collapse unless the ECB takes more powers to buy the bonds of countries like Italy.
Germany’s Bundesbank with a reserve of €180bn stubbornly resists ECB proposals to use euro zone countries’ reserves to boost the European Financial Stability Facility. So far Angela Merkel, and her finance minister have only heeded warnings from the Bundesbank president that a prolonged bond-buying spree by the ECB would jeopardize its independence and stoke up inflation. The German leaders thwarted off attempts at the G20 Cannes Summit to maraud the Bundesbank and other central bank gold reserves to boost the IMF’s finance-power so it could effectively boost the EFSF. It is expected that dictation by market will soften Berlin and the Bundesbank to change its stubborn position.
France again tightens belt
As sign of tougher days ahead, France, Europe’s second largest economy, has announced more austerity measures. These include raising retirement ages to 62 in 2017, a temporary 5% increase in company tax while increase the lower VAT rate to 7%. The measures plan an extra 7bn euro of savings and tax rises for 2012, rising to 11.3bn euro in 2013. The total package will reach to 65bn euro by 2016. Shall not these steps impact election-war coming within six months?
Under threat of down graded credit rating Francois Fillon, the French prime minister, admitted that France must take serious steps to remain ahead of Europe’s debt crisis. The French ruling elites wish, as he told, “to protect the French people from the serious difficulties that many European countries are now facing. […] Bankruptcy is no longer an abstract term. Our financial, economic and social sovereignty require prolonged collective efforts and even some sacrifices.”
It is now difficult for the French ruling elites to escape hard decisions. The “better” way they find, as all ruling classes have invented, to press the people to pay with hardship.
Submission in democracy: Greece
Bankers are driving the Greek ruling elites’ journey in search of a puppet prime minister. Athens will be ruled by elites united in crisis to implement austerity measures imposed by creditors.
Whoever takes the role of puppet has to commit in writing the terms of the bailout and austerity measures to get money from bankers. The euro ministers have asked for a letter co-signed by two main party leaders. The letter, the EU Monetary Affairs Commissioner Olli Rehn indicated, would have to spell out that the government pledged to implement in full the stiffer austerity program associated with the bailout. Once that was received, he added, Greece would probably get the bailout installment. A submission in absolute terms!
But public opposition to the austerity plan is growing. A labor organization has already called a mass rally for November 10. In a statement it said:
“The new government that they have assembled has nothing to do with the people or their problems. It is a government that is deeply hostile and has as its mission the defense, by every means, of saving monopolies and destroying the peoples’ movement. They want to vote through the new agreement, with its new austerity measures, with the least possible social reaction. They have no right to vote this new agreement with new barbaric measures that will be enforced until 2030 and then take us to elections. We demand elections now!"
Submission in democracy: Italy
Panic has overwhelmed the euro zone with the “prospect” of Italy turning the next victim of debt crisis now unfolding in the continent. Borrowing costs for Italy’s government have skyrocketed as fears have gripped that Italy may be unable to repay its debt. The situation has pushed Silvio Berlusconi, survivor of about half-century confidence motions, to face his Mubarak Moment in the Chamber of Deputies as clock for a crucial vote on the Italian state financing bill is ticking. There is rebellion in Berlusconi base, and the Italian centre-left opposition is preparing a vote of no confidence.
Now, it is not Italy-politics. Rather, Italy- politics is now part of international finance capital-politics. Rehn demands answers from Italy by the end of the week. A letter has been sent to Italy asking questions about the implementation of the austerity, etc. programs and a written reply is expected by the end of this week. A technical mission will also visit Rome within days to intensify surveillance of the country's fiscal policies. The Italian finance minister has already assured euro zone finance sherpas that Italy would implement the financial reforms promised last month. The correspondence reveals intervention and submission.
To stop the rot
The euro zone’s 17 finance ministers began crisis talks in Brussels on November 7 “to stop the rot”. But they failed to show any salvation path on plans for the EFSF. Now, they need, as the fund’s chief executive said, “market participants”, market’s help.
In a statement on the failed G20 summit Cameron said: “The world sent a clear message to the euro zone […:] sort yourselves out and then we will help, not the other way round.” Cameron came under pressure for his willingness to increase the UK funding to the IMF. Cameron said he already had parliamentary sanction.
There are “ideas” being floated to widen space for private banks to salvage states.
One leading European daily cited a sarcastic comment: It is now being told that “the levers of power are really in the hands of a third, more secretive group […] Now it stands for Groupe de Francfort or Frankfurt Group, an ad hoc, entirely unaccountable cabal of Sarkozy, Merkel, Juncker, Draghi, Barroso, Van Rompuy, Rehn and, the real powerhouse, Lagarde. It was formed at the October 19 Mozartfest in Frankfurt’s Alte Oper to say goodbye to Trichet as president of the ECB. This octet controls, or think it does, the euro zone and - memo to Dave and George - the EU. To whom do they report on their talks, say, with Obama or Wen Jibao?....
This looks like being a day of wildly contradictory rumours and denials.”
Advice from a wise man
George Soros, one of the few wisest financiers in this world, has opined: A combination of a bank crisis and a sovereign debt crisis means that the EU itself is now suffering. Above all, it’s a political crisis. The euro is in the process of undermining the political cohesion of the European Union, he said.
Soros was addressing a Brussels conference on the growth of hard-right populist parties in Europe. He said: The entire euro experiment is “a bubble”, which allows some countries to enjoy debt-fuelled booms while others - mainly Germany - become more efficient. Funds to address the crisis were now being deployed “in the wrong way. This will lead to a long-term depression. When you look at similar situations you had a lost decade.[...] I am afraid that this is the outlook for Europe this is the unfortunate reality.
Surfacing questions
The events and incidents, dramatic in appearance, carry deeper meanings. These are bringing up to surface a number of fundamental questions related to the regime of ruling ideas and arrangements. Credibility of the mainstream media in the US is already under question as a latest poll shows. The mainstream media in Europe is neither now telling people’s reactions to all the “honorable” awards being handed over to Greece and Italy. Can it retain its credibility and honesty? The mainstream academia is not uttering words with the level of democracy and sovereignty being practiced and imposed on Greece and Italy. Shall not this political practice create repercussions?
Dhaka based freelancer Farooque Chowdhury contributes on socioeconomic issues.
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