SECS1: The 'New Hedonist' school throws Europe's currency rules out the window

The present euro system is on its last legs. A new European Currency will have to be built. How should Europeans create a Supranational Economic and Currency System? It should be fairly obvious that countries and nations that have fought each other for more than two thousand years need a system tailor-made for them. It is no use going to theorists living on other continents who are ignorant of Robert Schuman, one of France's most successful Finance Ministers initiating thirty glorious years of postwar growth, and how he brought about a system that ended war -- including Europe's expected Third World War.

The euro's fatal flaws arose because the politicians decided in the 1960s, 1970s and 1980s to abandon supranational democracy and the supranational philosophy that built the Community. Under the arrogant impulse of Charles de Gaulle who wanted to destroy the Community, the other European politicians succumbed to his closed door Council. They acquiesced to the non-democratic easy route of 'package deals'. Vote-getting Wine Lakes and Meat Mountains for farmers were paid for by European taxes and tariffs. This has led to our present Politburo Council system, where a cartel of political parties has replaced de Gaulle and his spineless European cronies. They FEAR openness in the Council as it will unfreeze moves to further democratic progress.

The European Community system must have a currency based on supranational currency principles. North American federal ideas won't cut the mustard. For decades economists have said that a European Currency must be based on a Optimal Currency Area. This idea is based on two fallacies:

• (a) it assumes that the European Community will act like a federal system such as either economic theorist Robert Mundell's native Canadian federation or the USA.
• (b) it relies on the Neo-Hedonist presumptions about the economy and currency.

For example, the US currency is minted by the Fed (the privately owned US Federal Reserve -- which is neither federal nor a reserve). Their mission is to print money only on the basis of encouraging growth and employment for Americans. Further dollars are created by the banking and speculative institutions which try to multiply loans for all. The massive avalanche of dollars that is being churned out by the Fed has had in practice little effect on either growth or employment. It has seen a massive flight of jobs abroad to places like China and other parts of Asia. Its own growth has only been kept above zero by massive borrowing. This is hardly healthy and will lead to 'an adjustment'.

The USA, now shackled by huge debts and overdraft from the other world economies, has become a dangerous and explosive debt overhang for the rest of the world. China, Japan, Russia and other major economies are avoiding US Treasury Bonds and divesting. Why? because of the coming massive inflation. The USA is likely to go through even worse crises than it has so far. This was clear several years ago. The world will also suffer. About 70 per cent of dollars circulate OUTSIDE the USA.

The European Community system is different from the North American experience. It is based on remedying the flaws that Robert Schuman and others saw in those systems and creating a better one. The Canadian and US federations are distinguished in the sense that because of their respective constitutions the first tends to stimulate the growth of governance powers to the provinces away from the centre, while the second has a tendency to centralize and grab powers from the constituent States, both where the constitution allows it and too often where it would seems to forbid it. The European Community system is designed -- when it works democratically -- to reinforce the nation State and build a higher supranational level, based on law and economics, above it.

America is suffering from toxic assets from the sub-prime property bubble scam, junk bonds and complicit credit rating agencies and a central banker with little democratic control. Europeans have most of the same plus a wide variety of political and statistical corruption in a 'European Union' -- not a democratic Community. It is led by the nose by the secretive EuroGroup (that meets in the dead of night) and the closed door European Council which decides policy in a democratic vacuum for the public.

Both sides of the Atlantic are now crying: 'Growth, Growth, Growth. That will change all our fortunes and the people will forget our mischief.'

The Neo Hedonists make no distinction between toxic (or crooked) deals and a healthy economy based on what should be obvious to all: The economy is not a separate or independent creature but it is connected to the real world, real people and goods and has to obey universal and supranational values. Any operation that is based on Ponzi schemes, pyramid selling and ignores morality will end in collapse, trauma and catastrophe.

The European Community is not based on Neo Hedonism as far as its founding philosophy is concerned, nor is it a model that can be shaped by either American, Canadian, Mexican or other federal systems. Whatever politicians try to do against those founding principles and philosophy will end unhappily. At the moment they are trying out all the wrong alternatives (mostly against supranational democracy and in line with a Politburo or political cartel approach).

Their failures are apparent to all but themselves. Thirty years of political corruption, behind closed doors, is now being exposed. Unfortunately all Europeans will have to pay for this mess.

The Community is not designed to be a centralizing governance system, but a purifying system for national democracies that willingly participate in it. Schuman said it was designed to de-toxify European relations.

That must include money, detoxifying it from private and governmental fraud and corruption. But in the 1990s the politicians threw the supranational rule book for a successful currency out of the window. They decided to base the euro on other fanciful ideas. They belittled and sidelined the Werner Report that in 1970 traced the steps needed for Monetary Union. This was written by a Luxembourg Prime Minister who knew Schuman, and among others, the governor of the Bank of France, Bernard Clappier, Schuman's former directeur de Cabinet. He acted as Chairman of the key Monetary Committee.

The politicians based the euro on the Delors Report of 1989. That did not even recognize the five key institutions of the European Community and understand how they should develop to take on the responsibility of a European Currency. It spent a good deal of ink explaining why the supranational criteria and conditions should not be applied, and ignoring others.

The Community made its first major contribution in a way that no federal system has succeeded in doing: it made war impossible between its Member States. But this is only the first step in the process of a supranational Community.

The politicians of the Delors era looked into the Treaty of Rome with its Economic Community Treaty to find out how to create a European Currency. In vain. It is not there. The principles are set out well before the Treaty of Rome in the founding documents and treaties. They set out the principles of the Single Market of 1953 and the way to currency union. They apparently did not even seem to analyse the first Community -- which defined both the Economic Community and Euratom.

The founding principles are well outlined in the Schuman Declaration, its democracy in the great Charter declaration, that the politicians still refuse to publish. It provides a clear outline of future developments including a Single Market, single economy and Single Currency based on enhanced democracy and justice.

The aims spelt out in the Schuman Declaration are to serve all Europeans and the world. They include raising employment, increasing innovation and building a stable European currency. Check it out!

• National decisions made together with supranational independent arbitration would become enforceable international law
• Equality, open information systems, better treatment of workers
• Raising living standards, promoting peace, aiding developing countries
• Was an aim of the Coal and Steel Community to create a single market?
• Goods would circulate within the Community free of customs duties
• The new Community was neutral about nationalizations or private ownership
• The new Community drew on the experience of the International Ruhr Authority
• Do a Common Market and a common currency figure in the proposal?
• Is a European economic community part of the proposal?
• Is monetary union implied in the original proposal?

The 2030 Gonzalez Reflection Group report: the Council's poisoned chalice

When The Council of Ministers asked Felipe Gonzalez to lead a Reflection Group on Europe 2030, it offered the participants a poisoned chalice. It told them that under no circumstances were they to discuss, debate or expose INSTITUTIONAL questions.

They took it and drank. And from the report itself, they did not realise how poisoned it was. How can anyone discuss the dangers, challenges and responses of Europe while drugged and with their arms tied behind their back? It is more. It is blindfolding the Reflection Group. The drugged chalice has befuddled their minds with intergovernmentalism. The Council party Cartel, having fraudulently imposed the Lisbon Treaty, do not want anyone to discuss anti-democratic practice and the Council’s GUILT!!

No wonder that the Group is confused as to whether 'EU’s common agenda and purpose' comes from the citizens or whether it is handed down after discussions by party politicians in its secretive Council of Ministers and then delivered on a plate to the citizens by the Council from behind its closed doors. At one stage the report says citizens must develop a sense of ownership and elsewhere that the European Council should be given leadership (nothing about earning leadership!). The Group was not allowed to pose the question why, if the citizens had already said NO to the Lisbon /Constitutional Treaty system, then why the citizens should accept another Diktat from the coup leaders, a party cartel, posing as democratic representatives.

So what did the twelve eminent wise persons come up with? They identified many problems but they failed in the first task of such a reflection group. That is to make a balance sheet on what the Founding Fathers and later politicians had done to SERVE Europeans and for the future of Europe. They failed to distinguish between service to Europe and the self-serving demands of egotistical leaders and cartels. The Group avoided anything controversial that would offend their political paymasters (one million euros) at the European Council of Ministers.

The Group say that ‘the historical origins of the EU are well known ' but they show no real grasp of them. In other words they failed to understand what were the principles and actions that allowed them to be there, meet, discuss and not be involved in some further European war or crushed by some dictatorship of the left or the right.

Let us take just four examples.

1. Security and defence policy. Robert Schuman created a Community in which ‘war was not only unthinkable but materially impossible.’ If for two thousands years Europeans had been continually killing each other and teaching their children to hate, it seems important to any wise person to find out why and how they stopped. How did this happen? It is important not only for the past understanding but for setting the basis for a future security policy. Can people in today’s killing zones around the world benefit? Do we want our neighbours to be peaceful?

Should not Europe be involved in works of peace, as Schuman said? That should be the mission statement for external policy. Instead the Reflection Group says that Europe should be more assertive. It says it has 1.8 million soldiers under arms. That is half a million more than the USA. But the EU is incapable of deploying a 60,000-strong rapid intervention force. That indicates something is seriously wrong with both the concentration on force and the internal decision-making structure of the EU. The Group does not ask the question: How do we make sure that peace is spread across the world. What are the principles Schuman and his colleagues discovered without armies and how should they be applied between now and 2030. The world's greatest security system -- stopping war between Europeans -- did not require a single gun.
In other words, in terms of Community policy, the Council’s prohibitory mandate not to discuss institutions and supranational democracy befuddled and distorted their minds. It did it so much as to render it practically useless. They did not reached the starting line of utility.

Even worse. If the Council had not forbidden the Group to analyse this essential question of war and peace, then the report would have provided real policy options. By drinking from the Council’s poisoned chalice, the Group comes up with the opposite, illogical conclusion to Community reasoning. It says: ‘A Union of 27 Member States pooling their sovereignty in order to reach common decisions is not an obvious global power house.’

In fact, to anyone who thinks, it is obvious. If Europe showed that the entire population WHO WERE FREE TO CHOOSE had reached a democratic consensus (rather than dictated policy from the self-proclaimed leaders in Council), then Europe would be without doubt the greatest leader of the planet. If all the population was convinced personally that the planet was in danger of Climate Change destroying the environment, causing diseases, migrations and wars, it would be a marvelous example to any dictatorship or religio-political fanaticism and authoritarianism. It requires that all Europeans should become highly reasonable, well-educated and knowledgeable. Only wise people with wise leadership, dedicated to peace can lead the world wisely. That's what Schuman meant by real democracy as distinct from counterfeit democracy of the communist 'people's republics'.

The Group fails to analyse why the EU’s successful foreign policy always comes from its supranational Community structures and never from its intergovernmentalism.

2. Energy. The Group rightly points out that Europe is getting deeper and deeper into trouble with its imported energy dependency. That should be fairly obvious to all. For oil, Europe is 90 percent dependent on suppliers who have  in the past tried to place a blackmail embargo on Western Europe. Countries like the Netherlands and Denmark were placed under total embargo while the rest were told that oil supplies would be cut by ten per cent each month unless European States changed their foreign policy. Some 80 per cent of its gas comes from suppliers who have recently subjected vast stretches of Europe to cold, cold winters by stopping the supply. And the EU which is basically built on a foundation of coal strata now imports from abroad about 50 per cent of its coal. Yet the Group do not signal this Energy Deficit and Blackmail as a MAJOR DANGER to the economic existence and viability of the European economy.

They say the opposite. And they are quite wrong in their conclusion. They say ‘There is no chance of becoming energy independent’. That is simply not true. It is possible that if Europeans set their collective minds to the main problem for its continued economic existence, Europe could be ENERGY INDEPENDENT BY 2020. That is what a top European industrialist said a few days ago. Obviously the Group did not ask anyone who knew  — which is why they are repeating the soothing, lying propaganda of the oil and gas importers, who want European acquiescence to blackmail prices and extortion.

Europeans are currently paying about eight hundred percent of the free market price of oil. Oil was less than 10 dollars in 1999 and major oil companies said this was about what they expected the long-term price to be. They assumed the cartel and financial leverage powers of the oil cartel had been broken. Then oil shot to 147 dollars a barrel. How did this happen?  By a combination of energy cartels squeezing supply, falsifying demand, financial leverage and greed. The western economy could not take this blood-sucking amounting to around 10 percent of GDP.  The cartel action partially collapsed. It is not dead. Like a leech, it is just sleeping it off.

Now energy prices are on the way to upwards again. If Europe wants to have TRILLIONS MORE bled from its economy in the years till 2030, it should do exactly what the Group thinks is best — nothing. If Europe wants to take seriously the Warnings made from the 1950s on that oil dependency will mean economic and political servitude, then they should re-read the Community’s Louis Armand report Un Objectif pour EURATOM. This too was commissioned by the Community's six governments but it had some hard-headed analysis. It stated starkly: 'Shortage of Energy (that is NATIVE European energy) is likely to become the strongest force arresting economic growth.' They warned against foreign dependency. And they said all this in 1957 when oil was under two dollars a barrel. There was then a free market and no oil cartel.

The Group should have reviewed what many reports said subsequently. Instead the Group made no balance sheet of past failures. That is just the attitude that will cause us to repeat them with ever more disastrous consequences. The most obvious feature is oil and gas dependency with the same sort of political paralysis as drug addiction.

The solution then, a half century ago, as now, is the same — a European Energy Community based on democratic principles with clear objectives to be so energy independent that Europe will be able to act independently in the world about Energy and Climate Change. As for the urgency of this problem, it has been well known for decades. It is no revelation when the Group says 'Europe needs a common strategy,' but they don't say how to kick the addiction! Europe needs to face up to the truth that this drug will not last forever. Drugs supplies are running out fast!

The only way to stand up to global CARTELS is by united action of the victims and all sympathisers in an open, democratic anti-cartel. Otherwise economic bullies will only grow stronger. Urgent action is needed not only for Europe but for the planet. The world is facing climate disasters on a massive scale. We are already seeing increasing migrations, wars and epidemics. We can expect far more of the same.

THE WISEST WAY TO REVIVE THE EUROPEAN ECONOMY IS BY CONTROLLING THE MAXIMUM BUYING PRICE OF IMPORTED ENERGY THAT EUROPE IS PREPARED TO PAY. IT COULD THEN USE THE HUGE SAVINGS, AMOUNTING TO TRILLIONS. THE SAVINGS SHOULD CREATE A FUND TO BE DEVOTED TO PROVIDING FINANCIAL SUPPORT FOR INFANT ALTERNATIVE ENERGY INDUSTRIES AND ENERGY-SAVING TECHNIQUES IN EUROPE. THE FUNDS SHOULD BE UNDER NON-PARTY POLITICAL, DEMOCRATIC CONTROL OF INDUSTRY, WORKERS AND CONSUMERS. EVERY CITY AND EVERY HOME SHOULD BECOME ENERGY NEUTRAL. NO NEW VEHICLE SHOULD USE PETROLEUM. OIL SHOULD BE USED FOR PLASTICS AND OTHER INDISPENSABLE PRODUCTS.

3. Democracy The Reflection Group showed some sense in raising the question of democracy for organised civil society. Yet it gave no school report or balance sheet on democracy. What it does not say is the organised civil society, supposedly represented in the Economic and Social Committee has NEVER had an election as required by the treaties of Paris and Rome -- fifty years ago! Nor has the European Parliament EVER had a single European election under a single statute (rather the present 27 national ones) as required by the same treaties.

4 Finance and the crisis By failing to make a balance sheet, the Group has not analysed how in the 50 years of the founding Community, Europe had its own European financial resources. It had a European tax. It was able to have European loans and in fact built up a banking operation that was bigger than the European investment Bank. Why did the Council insist that it should be disbanded?

Today the major monetary contention lies between Europe which still assumes that money should represent real assets (and political parties should not fiddle the proper State accounting, causing other member states to foot the bill) and the USA which has abandoned the concept of solid money by opening the Fed to big collapsing debtors of any stripe. The banking and funding operations of the European Coal and Steel Community were based on real assets not electronic fiat money. They gained and retained the highest international ratings. The loans were granted by international bankers because the Community used the money to invest in renewal of coal and steel operations based on the democratic decisions of the entrepreneurs, workers and consumers. And they were always pleased to see there was no default because of corruption or fraud because these three democratic groupings kept a watching eye on how the money was spent.

It was the party-political ministers in the Council of Ministers who in 2000 refused to renew the Treaty establishing the Coal and Steel Community for a further fifty years. Instead they said citizens should have intergovernmental  funding controlled by political parties in governments. Party politicians thus removed real democratic control from European money. They had no democratic mandate to make this change. The present crisis shows how corrupt and crisis-ridden such a political cartel system can be.