The electorates are on the march, in New York with the ’Occupy Wall Street’ demonstration, London, Frankfurt…
The week-end’s G20 showed that Europe’s leaders still cannot see the size and cause of the current crisis: the combination and inter-linkage of the state and banking debt crises are causing the funding required for a total solution to rise ever upwards, to €3.0 or 4.0 or 5.0 trillion, or more, but no-one has this amount in free cash.
Their only solution is to pile up more fiat currency debt on today’s already over-bloated debts to save the euro, and that’s the real problem that they cannot see or come to terms with: saving the euro is like trying to cause a cancer by hanging on to the cause. The solution for the euro is to get rid of it, or at best to retreat to the original six.
The south of the EU cannot live with the north, not now or ever, and trying to keep it together will just mean a bigger bust sooner rather than later, while the south is forced into a deflationary job-destroying vortex and inflation spirals up in Germany and the north.
Even to attempt to save the euro is most unlikely, because when the seventeen parliaments just recently approved the EFSF €440 billion fund, none of them voted on gearing it up further to the mooted (but still inadequate) €2.0 trillion, and the Karlsruhe Constitutional Court positively forbade it, and the Bundestag will vote against it anyway, as that route will lead inevitably lead to a transfer-union that is unacceptable to the German and French electorates. There is no way out of the impasse other than to break up the eurozone, now, at enormous cost, but at least for a viable economic future.
Two other developments over the week-end are significant: many Tory MPs are planning to cause a vote in the House on a resolution for a referendum to leave the EU (and possibly bust the Coalition) while maintaining a free trade arrangement; and secondly, the electorates are on the march, in New York with the ‘Occupy Wall Street’ demonstration, London, Frankfurt, Paris, Athens, Rome and Madrid.
Their call has not gone beyond articulating an end to capitalism and a fairer system where the super-rich and super-poor are brought economically closer together, but events are also moving faster than their ability to define their demands. There is crisis in the air all right and the stuff of revolutionary demand is blowing in the wind. And the politicians haven’t got a clue as to what to do, in a crisis created by their own arrogance, which ignored any necessity of achieving any democratic endorsement for their totalitarian dreams, or even applying their own rules for EMU.
Get ready for a cold winter of mass-discontent. I suspect the crisis will have burst by Easter, if not before. And there is precious little comfort to be taken from America or China, where much the same debt problems are beginning to drive events there too. It would only need the crisis in Europe to erupt to bring their economies down too, and then we will all be looking at Great Depression II.
The stakes are high, very high, and saving the euro should not be driving the agenda any more than the Chinese giving up their dollar peg, as it is blocking the real agenda for international co-operation and economic viability.