22 July, 2015

SECS5: The Counterfeit Euro is a Democracy-Destroyer

The euro is pulverising European democracy. It is destroying democracy not only in Greece but in all other members of the euro zone. It is also destroying people’s hopes for a real democracy at the European level. It has caused a huge rift from north to south and between the crisis-ridden Euro Zone and EU Member States outside the system. It has replaced trust by hyprocrisy. It has stirred up nationalism across the Continent from Scotland to Catalonia to Greece. In Greece, it has stoked hatred and memories of WW2 instead of understanding.
In the 1950s Robert Schuman and the Founding Fathers laid out the road to a democratic, solid Community currency. Its supranational principles are different from either intergovernmentalism or federalism.
Ask a politician today to define ‘supranational’ — and you will see why ignorance or arrogance has got Europe’s money in such a mess. In the 1990s politicians of a later generation chose the pseudo-federalist Delors Plan. It is destroying not only the consensus for a common currency but tearing apart European society.
The European currency was supposed to unite. It was supposed to bring harmony amongst the peoples. It was supposed to bring an era of prosperity and investment in a common future.
It has failed.
Why? It is what Robert Schuman called a ‘counterfeit’ currency! Schuman provided plans and institutions to create a real Community currency but politicians started dismantling them in the 1950s. Ever since they vie in further destructive acts against honest, democratic money.
It is a pathway to pecuniary perdition.
That is why the only alternative to the morass that European leaders have embarked on is to look again at the principles that gave originally Europe its longest period of peace and brought about its greatest prosperity.

The supranational currency system belongs to the people. It would provide full and open democratic input from
  • businesses,
  • workers and
  • consumers.
It would safeguard the democratic rights of various regions so that the rich would not dictate to the poor. It would be based on open government, not closed door meetings of financial ministers.
It would allow governments to adjust their currency to the needs of their individual Member States.
The pseudo-federalist Delors Plan euro does none of these. It is controlled by the secretive, closed door EuroGroup. Who are they? They are national, not European representatives! They are not practically involved in the needs, fears and plans of industry, workers or consumers. They are party political. They come with a party ideology. And as history has shown, they have loose moral and ethics when it comes to doing what ordinary people have to do — balancing the household budget.
They are the people should be kept at more than an arm’s length from any currency — finance ministers!
The recent events on Greece has cut a swathe of earthquake-like devastation in European democracy.
Firstly, the ‘democratic leaders’ showed themselves completely inadequate to call out corruption in Greece for what it was. Initially they did not insist on anti-corruption measure before serious consideration was given to EU membership. Instead the EU leaders in the Council and also in the Commission dolled out masses of money that only added to the corruption such as in the Bank of Crete scandal.
Neither sides learned lessons. Major Mistakes:
  • politicians should not be in charge of money regulation.
  • Politicians should not be able in any way to influence a currency, as inflation is hidden taxation;
  • politicians should not choose their central bank governor and certainly not in secret;
  • Money is public property not the politicians’ plaything. It requires democratic supervision.
Let’s go back no further than the beginning of the month of July 2015. On the first day of the month, five European institutions published a report called: ‘Completing Europe’s Economic and Monetary Union.
Called the Five Presidents’ report, it was meant to have all the authority of those who consider themselves Europe’s leading politicians. It was prepared by Commission President Jean-Claude Juncker, President of the so-called Euro Summit, Donald Tusk (also president of the European Council), President Jeroen Dijsselbloem, president of the secretive EuroGroup, Mario Draghi, president of the European Central Bank, and Martin Schulz, president of the European Parliament.
It says:
A complete EMU is not an end in itself. It is a means to create a better and fairer life for all citizens, to prepare the Union for future global challenges and to enable each of its members to prosper.
The report is the fruit of ten months’ work of eurocrats of these five institutions. It was launched at the October 2014 EuroSummit.  1 July marks the start of Stage One.  What is that about?
Stage 1 (1 July 2015 – 30 June 2017): In this first  stage (‘deepening by doing’), the EU institutions and euro area Member States would build on existing instruments…. this entails boosting competitiveness and … and enhancing democratic accountability.
The Commission in reply to my question firstly said that they could not give any details about ‘enhancing democratic accountability‘ as it was a technical matter! When questioned further about a referendum, the Commission said that it did not think referendums would be involved.
Days later, the Greek government announced that it would have a referendum. They urged the Greek populace to vote No. The peculiar motion included out-of-date and unfinished, technical, negotiating positions on euro zone and IMF loans as an annex in English.
Clearly the referendum did not meet Swiss standards of democratic accountability. It was a political operation equivalent to those used in left-wing dictatorships like the DDR or the Soviet Union. In this case it was cleverly crafted to get extreme right wing and centre parties to join in the parody of democracy.
Did the Commission denounce this referendum, because referendums were not part of their yet undisclosed ‘democratic enhancement‘? Did they say that such a farce could not lead to real ‘democratic accountability‘?
Not at all!
The Commission President urged the Greek people to vote Yes! But he spoke ominously about Grexit, the exit of Greece. But from what? the euro? But the politicians’ own treaty, the Treaty of Lisbon, makes it abundantly clear that there is no exit possible from the euro. The Commission as ‘guardian of the treaties‘ repeated that many times recently. It was written in the earlier Maastricht Treaty, specifically to discipline governments to more-or-less balance their budgets and reduce debts. (Several States refused to join the euro as they considered it unworkable.)
Any student of human nature and of history would know that asking politicians not to devalue the currency (through inflation) as a hidden tax is asking the impossible of them. (Soon after the euro was launched, Germany and France were hauled up before the European Court for breaking the ‘Stability and Growth Pact‘.)
What happened in the referendum?
The Greek people voted massively No.
Thus Greek people lost any ability to gain from the extraordinary efforts the IMF, the EU and the European Central Bank had made in bending the rules.
What happened next?
The new Greek government finance minister came to Brussels and accepted all the onerous conditions (and much more besides) that had been rejected by the Greek people in their referendum.
The government then put all these difficult measures of extra taxation and austerity to the Parliament.
What did the Parliament do, seeing that the Greek people had spoken clearly against all of them?
It passed all the onerous measures! In the 300 seat chamber, 229 voted for them and only 64 were against. The puzzled observer might ask: What sort of democracy is that? The same people who had enthusiastically voted for a dubious referendum with the great hope of everyone voting No, were now turncoats against the democratic vote of the people.
What can be more pernicious than the secretive EuroGroup and its secretive political acolytes grinding down any sort of parliamentary and popular democracy into fine dust of public hypocrisy and Brussels-based serfdom?
But that was not the end of it. Far from it. The new vastly increased loans have to be paid for by other European taxpayers. The loans have to be passed in all parliaments of euro Member States. An emergency loan was needed to pay off the IMF. The euro Member States agreed to €7.16bn in short term financial assistance to Greece under the European Financial Stabilisation Mechanism (EFSM).
Was the IMF happy? A few days later, an IMF press release expressed their view: Greek debt was ‘highly unsustainable‘.
The financing need through end-2018 is now estimated at Euro 85 billion and debt is expected to peak at close to 200 percent of GDP in the next two years, provided that there is an early agreement on a program. Greece’s debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far.
So what do we have of ‘enhanced democratic accountability‘ even before the first month of Stage One ends?
We have the European Commission, which is supposed to be an impartial, guardian of the treaties, saying:
  • enhanced democratic accountability’ is a technical matter,
  • a referendum is ruled out,
  • a referendum is ruled in,
  • the Commission President can urge Member States which side to vote on,
  • it can impose conditions on the people and government against the clear result of the referendum,
  • it can insist that the Greek Parliament vote in favour of these conditions that the referendum has rejected.
The Greek government can
  • call for a referendum at short notice, which legally means nothing,
  • take the result of the referendum seriously,
  • re-negotiate the EU/IMF loan deal to the detriment of the Greek people,
  • force the parliament to accept this democratically dubious deal,
  • thumb their noses at Greek democracy and the European institutions.
Instead of doing down the IMF, the Greek government was forced to repay the IMF loan. The IMF in return announced that Greece is heading for economic meltdown and the European institutions are going to have to pay through their noses for the foreseeable future.
We have the other Member States of the euro zone, who vote in their parliaments who are ignorant
  • whether referendums on the euro are permitted,
  • whether the Commission is supposed to speak out urging Europeans vote Yes or No in referendums in general,
  • whether euro-loans and imposed conditions of taxation and structural changes under such conditions are legal in EU law,
  • and despite this ignorance, their own parliaments are being forced by Brussels to vote according to its timetable,
  • and in practice these other ‘democrats’ show they are willing to vote in their parliaments in this state of financial, democratic and legal confusion on the future of the whole EU.
The reality of the counterfeit euro is much worse. There are several other Member States who could end up in a similar dilemma to Greece. Prepare yourselves!

02 July, 2015

SECS4: Greek Crisis shows the need for a New EU Currency system

In world monetary history, some currencies have lasted more than a thousand years. That won’t happen with the present euro. Its self-destruction is as certain as anything in politics.
What is now urgent is to reform the currency on a solid basis. It will be a world-beater. A sound currency must retain a long-term store of value. Like tax it must have means for taxpayers to have proper representation in its destiny.
This eurDemocracy commentary predicted more than three years ago that the present euro will collapse. It is not due to Greece alone or other failing economies. The conclusion is based on Robert Schuman‘s own analysis of monetary systems. It was also clear from debates in the 1990s. Then the currency’s essential democratic foundation envisaged by Schuman and others was eliminated from the new euro design by politicians who willfully ignored warnings of a future calamity.
The present euro system is fatally flawed democratically. It is not only the extreme left-wing Greek Syriza party (which is nominally pro-euro) but the growing, powerful movements against Brussels-based party political cartels that will dictate its fate. They are vehemently anti-euro and in the foreseeable future will, in governments, kill the project from within.
Only a higher degree of democracy can save a European currency. It must show itself to the benefit of all. It must demonstrably improve the common good. The European currency must be
'in the service of the people and must act in accord with the will of the people.'          (c.f. Pour l'Europe, p55)
Secondly the present euro also has an economic illogicality in its foundation, making it unworkable. How did it arise? Today’s failure culminates from politicians arrogantly deciding that they could design a better European monetary system than Europe’s Founding Fathers. They at least were aware of the lessons of monetary history. The contradictions are now bringing turmoil on the money markets and threatening the political cohesion of the European Union.
Does that presage the end of the European Union? Not at all! The supranational Community system is stronger than its currency — even a flawed and suicidal one.
A new euro system will have to be built up based on sound economics. In effect Europe’s leaders have another chance to change their present failures into success and make the European currency the envy of the world. The Founding Fathers wanted to see their currency not last just for five or ten years but be stable for centuries. As designed, it would outclass any currency in history– even ones that lasted a thousand years!
What currency applies in a Community system? A Community currency. A supranational Community needs a Supranational Economic and Currency System. A real Community currency would bring wealth and investment unseen since the early Communities. Schuman, working as France’s Finance Minister, Prime Minister and architect of the European Community, helped initiate the ‘Thirty glorious years’ after WW2.
  • A system based on intergovernmentalism won’t work. (Europe is more than intergovernmentalism!)
  • A system based on federal principles won’t work. (The EU is not a federation!)
  • A system based on Optimal Currency Area theory won’t work. (Europe is based on freedom of choice!)
  • A currency that requires a fiscal, that is tax, union, without proper democratic representation won’t work. (The euroGroup is not even classified as a European institution in Treaties and yet has become the governing body of the EU!)
  • A European currency whose value and Central Bank policy are dictated by politicians and not by the market will always fail.
  • A system without a proper supranational democratic control of its economy and currency won’t work.
The euro has had only five or six years of stable interest rates across its Member States. It has been in crisis ever since.  The following graph from UCL gives the interest rates in excess of that offered by German bonds in euro.
Euro spread 1990 to 2011
The Greek crisis is only one of many challenges attacking the economic foundation to this euro system. It will certainly not be the last. Other Member States are likely to present Brussels with similar or worse problems in the near future.
A currency has to be based on public confidence. The flight of confidence and trust is as fatal as the flight of capital from banks.
The present crisis, and those with Ireland, Spain, Portugal and Italy have already exposed the fragile foundations. The process is under way and the outcome is inevitable.
The European public is now divided into those who see the euro continuing and those who see it failing. Those critics losing confidence in the euro are gaining in numbers. Hence the numbers of those who see it lasting longer are on a downward slope. The movement is in the direction of continual loss of confidence. Consider the consequences.
Those who in countries like Greece fear for their future have already involved in the multi-billion euro capital flight. They borrowed as much as possible, then stored notes or transferred them, buying where possible material assets abroad. They feared both that the Greeks might bring in a new Drachma or that their euro deposits in banks might be riffled as the euroGroup threatened to do during the Cyprus crisis.
European institutions sometimes made the matter worse. When European Central Bank tried to support Greek banks, directly or indirectly, it only accelerated the flight capital. Greek debts rose to some 325 billion euros, a third of this is flight capital.
What’s behind the Greek crisis? Three possible causes stand out among others:
  • corruption,
  • political immaturity or
  • political sabotage.
The first factor is political corruption. That is far bigger than most people think. By corruption I don’t mean just the Greek system. It was obvious from before Greek entry into the three Communities in 1981 that Greece remained highly corrupt after the dictatorship of the Colonels.
Parties of the Left and the Right tried too often considered electoral victory as a means to load the bureaucracy and the governmental system with their own supporters. Giving Greek bureaucratic posts to party loyalists is as corrupt as turning the Commission into a party political secretariat. An effective civil service must be above politics and political ideologies.
Greeks have a long history of what is called in Brussels ‘party political parachuting‘ their buddies into the civil service. It also leads to internal rivalries, turf wars and bribing. Externally it leads to paralysis.
Robert Schuman warned:
Amassing more officials is no guarantee against abuse … but is often just the result of favouritism‘ He said: ‘Administrative rigidities are the prime danger that threaten supranational services.’ (Pour l’Europe, p146.)
Greece also remained undeveloped as an economy, without proper attributes of a modern economy. For example Greece lacked a proper land registry system. Brussels paid some 100 millions euros so that they could have one. The money disappeared without a registry appearing. Brussels gave more money! Who owns land in Greece? No one knows! Nor does it have a fully working tax system. Yet these and many other failures were known to all the politicians of the time, including the Commission.
In 1978 the then European Commission President, Roy Jenkins, said that of the three Member State candidates, Greece was the least prepared and the least qualified. Which then entered the Community system first? Greece! Was it reformed? Judge for yourself! Joining the Community, Greece availed itself of handouts supposedly to reform its economy. The Brussels largesse led to the Karamanlis and Papandreou scandals involving dirty dealings in the Bank of Crete.
Thus corruption englobes the Greek governments of all stripes. But corruption also engulfs the European Commission. During the Gaullist years, France lied about the Community’s origin, and denied Schuman’s key achievements. The Commission played Gaullist tunes. France milked the rising German industrial power and the European Communities for all they were worth.
Under Roy Jenkins, a British Liberal politician, no real reform took place. Governments decided that the Commission should be populated only by party politicians, excluding all other citizens. This undermines public trust.
It is fundamentally dishonest. How? because none of the Commissions — who are supposed to be the ‘honest-brokers’ of Europe — were honest with Europe’s taxpayers.  Commissioner-politicians dished out European taxpayers’ money without proper controls. Commissions watched with open eyes and closed lips while fellow politicians in other countries committed fraud to buy votes. (They wanted to do the same.) They did not insist on reform over Meat Mountains, Wine Lakes, phantom autobahns going nowhere, fraudulent national statistics, and the fraudulent misuse of taxpayers’ money for political purposes. Meanwhile they embraced corrupt politicians of left and right as comrades and colleagues.
Under Jenkins the Commission decided to consider itself overtly party political. The Commission was always a political body but the Treaties forbade Commissioners to retain any interests,
  • whether commercial or not,
  • especially lobbying or other interests,
  • party political membership,
  • jobs, whether paid or not,
  • and for three years after retirement not take up any employment in sectors of their Commission expertise.
In short they were forbidden from involvement in anything that might undermine public confidence. They have to show they are totally independent as honest brokers. Clearly politicians who insist on retaining membership of a group (like a political party) that lobbies and is ideologically driven will lose public confidence and trust. Their political enemies and non-party opponents of the general public consider them ‘partisan‘.
Honesty is paramount. The Commission as Europe’s honest broker has to be honest. During the 2011 Greek crisis on the euro, the then head of the euroGroup said: ‘When  it becomes serious, you have to lie.‘ Other politicians besides Mr Juncker colluded in this nefarious mission that undermined all public trust in the Community institutions. It only made the Greek crisis worse and worse. Mr Juncker was not alone either when he said of the referendums on the Lisbon Treaty/ Constitutional Treaty : ‘If it’s a Yes, we will say ‘on we go’, and if it’s a No we will say ‘we continue’, we go forward.’
A travesty of Magna Carta and Community Charter rights! The treaty drafts were soundly defeated in referendums in France and the Netherlands and were set for catastrophically higher rejections in other States before they were denied the public.
And now Europe is faced with its most serious Greek crisis and another on/off referendum. In November 2011 Greek Prime Minister Papandreou proposed a referendum on the euro crisis but was dissuaded from carrying it out. A referendum is supposed to be democratic but the Syriza coalition government called a no-time-for-real-debate Blitz Referendum. It seemed quite content to modify, postpone or abandon it and maybe their people and pensioners too in their polemic against Brussels ‘blackmail‘. So much for Greek democracy.
What of the second factor. Is the Greek government composed of immature politicians?
The IMF chief Christine Lagarde famously commented that negotiations is only possible ‘when there are adults in the room.‘ Does this indicate unwillingness to negotiate or perhaps an alternative strategy refusing to come to an agreement? The Greek government had to pay 1.3 billion by the end of June to cover the IMF loan and avoid a default. By not agreeing to anything the Greek government lost billions of euros due to be returned to it on condition some sort of agreement was made. These funds would have paid off a great deal of the Greek debts, far more than the sums due before 1 July. This money is now lost for ever.
What of their skittish behaviour? For the IMF’s negotiator Christine Lagarde:
“We have received so many ‘latest’ offers, which themselves have been validated, invalidated, changed, amended, over the course of the last few days, that it’s quite uncertain exactly where the latest proposal stands,” she told Reuters.
Is this apparent confusion and incoherence due to the fact that the Greek government is a coalition and the Syriza party itself is a coalition. It is a grouping of
social democrats, democratic socialists, left-wing nationalists, feminists, anti-capitalists, centrist-environmentalists, as well as
Maoists,  Trotskyists,
Rosa Luxemburgists and
Some of these radical neo-Marxist/ Communist groups have not raised their heads in public in the West since 1968, others since WW1! Others form part of the alter-globalist movement aimed to fight the ‘neo-liberal’ IMF, International Monetary Fund.
We now come to the third possibility. Is there a neo-Marxist strategy in the Greek action? The Marxist system has internal contradictions that led to analysts like Robert Schuman predicting in the 1950s that the Soviet Union would collapse before the end of the century. Classical economists and historians also predicted that the Soviet system would tear itself apart as it had no means to value objects, products and services on the market. Hitler’s economy made similar errors and ended in absolute failure.
The Soviet system had a ‘Gosplan’ setting production targets by quantity (and often neglecting quality and demand). It also set their prices (without market information!) It had no consumer feed-back! (Complainers were class traitors!). As there were no free consumers, the Gosplan had to copy prices on the free western markets. The private enterprise system of the free market not only reduced prices but incorporated technological improvements that left Soviets in a cloud of dust. Maoists took an opposition stance against progress and Mao’s ‘Great Leap Forward‘ ended in de-industrializing China and killing upwards of 40 millions.
Is the new Syriza working according to a common anti-banker plan? The apparent changes of drafting documents, late arrivals and changes of negotiators may be explained by coalition disagreements. They might equally be consistent with a strategy to unnerve the Brussels negotiators to gain time and ensure maximum capital flight and nuisance power. This is also apparent in the violence of denunciations of Brussels: ‘blackmail‘ and fiscal ‘water-boarding‘.
When one party accuses the other of blackmail, it often means they are really the blackmailer. In this case three financial institutions and 17 euro Member States independently believe that they are negotiating in good faith. Some like Ireland, Portugal, Latvia and Spain have had similar conditions imposed on many of them. Now they are being as flexible as possible to Greece. They are not blackmailing. So who is blackmailing whom?
Why nuisance power? According to Marxist dialectic the new agreements with Brussels on the euro involve a new synthesis that resolves the old problem (for example, debts, government overspending, unworkable pension schemes, overpopulated civil service, untaxed industries and corruption). The opposition force, (Brussels and the bankers' 'neo-liberal' creditor Troika) is called the anti-thesis. The Marxist dialectic resolves the thesis and anti-thesis into a new synthesis.
What then is the anti-thesis of the Marxist radicals? One new synthesis would be the reinforcement of the link to the people against the fiscal ‘water-boarders‘. In other words, a referendum. Sufficient extra complications, extra documents, new proposals and fresh negotiation calls were submitted so that the Syriza government might even withdraw from the referendum if they felt public opinion was turning against them with the wrong answer. The referendum could be cancelled if the Brussels Troika betrayed trust!
Was the referendum an act of desperation or part of a strategy? The clues indicate that it was part of a strategy. First clue was their reaction to the unexpected euroGroup meeting that Europe’s heads of government declared AFTER the European Council of 25-26 June. It is clear the Greeks were taken by surprise. In the middle of negotiations on Saturday, the Greek negotiators were called out of the meeting. Their Prime Minister was about to announce the referendum.
They were stopped mid-negotiation. What sort of ultimatum/ blackmail is that?
The second indication is that the referendum document where the people are urged to vote NO, has, as its annex, documents which were being discussed on Saturday and are incomplete. Furthermore they are now useless. The basis for the documents was an agreement to be made on 30 June at the latest. Thus the Annex on which the Greek voters are to vote is legally useless!
The conclusion can only be that either the Greek government did not read the text itself and they are incompetent, or that the Greek government planned the referendum well in advance and were taken by surprise. They assumed that they would have a legally valid, final document published after the European Council that they could claim was Blackmail.
What is the end game for neo-Marxists? The final synthesis for Marxist theory is the collapse of capitalism due to its internal contradictions and the rise of the Workers’ State. In this, everyone would get a minimum wage from some sort of fiat currency with no material backing. The Soviet ruble was such a Workers’ currency. It was neither stable (it was devalued several times) nor did it reflect real values. It did not stimulate innovation by being a store of value. It was also not the currency of the workers, as workers who had saved their earnings immediately lost them in devaluations when the decimal place was moved in their bank accounts. Nor was it controlled by the workers. The Soviet Politburo decided when and how such decisions were made.
Many members of Syriza have long-standing relations with Russia, many in families back to Soviet times. Curiously when Prime Minister Tsipras visited Mr Putin the question of a Russian loan was not discussed. A Russo-Greek gas pipeline was. The Russian monopoly gas supplier, Gazprom, is now coming under scrutiny by the Commission for abuse of dominant power in the gas market, where in some EU Member States it supplies the totality of the gas.
One thing that Russia and many in the Greek government have in  common is the destruction of the European supranational law and Single Market system. Russia could then play of one Member State against another and gain the highest price in its bilateral contracts. Through its energy geopolitics it could dominate all Europe.
Russia and Greek debt are a major threat to the EU’s euro system. But if you think the present crisis is bad, be warned! Worse is yet to come before politicians see sense and it will get better.