The word holds its breath while the future of the global
economy is decided by what agreement, if any, can be reached between Angela Merkel and Francois Hollande and how this interplays with the results of Greece's election on June 17th. Barack Obama and David Cameron are playing
supporting roles and repeating the mantra that the choice between austerity and
growth is a false one. True that may be, but the real choice - and it
could still go either way - is between economic meltdown or the decades delayed theft
of the democratic rights of eurozone citizens, orchestrated by the European political elite
of times past.
The previous era's elite, headed by Chancellor Kohl, Jaques Chirac and before him Francois Mitterrand, bequeathed the Euro to their citizens in the full knowledge that to avoid or survive a crisis like the one that has been unfolding for the past two years, the prize of fiscal and therefore political union would have to be realised. Though these particular heads of state were not known to be scholars of economics, they were surely aware that a currency union, in which mobility of labour is hamstrung by linguistic and cultural barriers, could not ultimately work without fiscal harmonisation. The payment of taxes by every eurozone citizen to a supranational agency, allowing automatic fiscal transfers between the more and less prosperous states, was always the endgame. The cynicism of the previous elite allowed the construction of a currency union ultimately doomed to self destruct without the eventual quantum leap to fiscal union - which in ordinary circumstances would never command the support of the citizens it affects.
Monetary union was foisted upon the
collectively skeptical European peoples who were made to believe that they
could share one currency, a common interest rate for an entire continent, with
each nation state continuing to maintain sovereignty over taxation and
spending. That lie - one of the greatest in political history - is now
being exposed.
The choice now is between a so called
'Grexit', following which the risk of a total eurozone banking meltdown is too
high to countenance, or the mutualisation of debt - Eurobonds - as a holding
step before fiscal harmonisation, and ultimately a European superstate, can be
achieved. This current era of European political leaders find themselves
well and truly hijacked by their forebears. The idea of an exit followed by devaluation for
Greece or any of the peripheral EZ countries leading to tolerably short term
chaos followed by a rapid return to growth as exports from those markets become
40% – 70% more competitive is a false one, given that the component economies
and markets are too entwined to be unravelled without the near certainty of
mutually assured destruction. Merkel & Hollande are faced with a
perfect Hobson's choice. Let Greece go, and likely Portugal, Spain and
possibly Italy as well, and risk total Eurogeddon or ignore the wishes of the
German people by issuing Eurobonds and then go against the wishes of all EZ
electorates by creating the superstate they never wanted but which will, one
hopes, safeguard their prosperity.
Maintain relative
prosperity and accept a fast track to a United States of Europe, or otherwise
maintain democratic free will - possibly - if democracy is able to withstand
the ensuing economic chaos. That is the choice bequeathed to the European
peoples & their leaders today by Kohl, Chirac and Mitterrand.
