Wednesday, 12 October 2011

et tu, Slovakia?

True Finns logo.svgThe world has come to a fine mess when a vote in the obscure Slovakian parliament can threaten to de-rail the Euro bailout.

Of course, in many ways this present an interesting dialectic; the European Union has no direct democratic mandate which is one of the main reasons it is so unpopular yet at the same time is unable to control member parliaments.

In times of crisis, the power of the periphery increases with the current model. Everyone focus's on the German Constitutional Court - yet it is the Greeks, Finns and Slovakians - collectively barley even decent German state in terms of population, let alone economic power, who have the whip hand.

Worse though is that the logical resolution is to make EU policies directly enforceable on majority voting - but there is no real institution to make this happen. The whole structure is not able to cope in times of crisis and the impetus to reform is gone (not that it was ever there, Euro elites not being obvious fans of democracy).

But now, in 2011, with the potential of a new 1930's style depression upon on us, it is a rather awkward time to discover the flaws in the process. In the next few weeks, I think we will be hearing a lot more of the True Finns (party membership 5000 in 2011) and other groups who, bizarrely, will help to decide the future of the Euro and the World Economy.

11 comments:

Anonymous said...

Some of these smaller economies were encouraged to join up by the thought of European handouts. Now they are asked to put their hands in their own pockets, their attitude to philanthropy appears to have changed.

MoreLiver said...

The "small countries" like Slovakia and Finland are the only ones that have actually adhered to the Maastricht criteria - they've avoided rampant inflation, fiscal deficits and public debt. They've done what France and Germany have preached preaching but have failed to do themselves.

I see no particular reason why Finns or Slovaks should bail out German and especially French banks. Because that's what this is about. I blog on euro crisis at MoreLiver's Daily: http://morelivers.blogspot.com

Anonymous said...

The Solvaks are right. If the Euro is knackered what is a stability fund going to do other than buying (literally) more time from the bankers who are the issue in the first place.

Or are we likely to see a stability fund "stability fund" next.

Alice Cooper has an article on this that's well worth reading.

Blue Eyes said...

But this isn't a "flaw" the Euro was designed this way.

Nick Drew said...

and the motion is: Germany pays for everything. Those in favour ...

Anonymous said...

One way the Euro could be saved for the strongest why not say say Greek Euro, Italian Euro, Irish Euro, Portugese Euro & Spanish Euro obviously reduced in vale to reflect the amount of borrowing different values for each currency but related to the Main Euro. All the Euro based countries printed their own notes so no need print more notes. Is that too simplistic or could something be done with it.

Sean said...

I think the missing word is "unreformable"

I promise you one day you will wake up and the eurocraps will be on the TV pretending all is well when all their aims and dreams have gone. Just like the collapse of the USSR, into thin air.

The Champs is on ice, these people are ideological fools.

James Higham said...

All eyes on Greece.

Budgie said...

CU said: "the European Union .... is unable to control member parliaments."

Come on, CU, since when has a euro country voting "No" been allowed to get away with it by the EU?

Ryan said...

Given that Slovakia won't be paying much into this fund I imagine the EU will simply find a way around the problem by setting some limit at which a nations GDP must exceed before it has to pay. Slovakia made except and a yes vote made easy.

Doesn't really change anything. The whole process is about swapping one debt for another at ever increasing interest rates. Crazy. Meanwhile the Greek economy is on a death spiral which can only end if Greece pulls out of the Eurozone - or the entire Greek population moves to Germany.

Fact is that the markets are proving that you cannot unite the disparate economies of Europe, after just 10 years. Furthermore the debt problems of Europe can probably only be solved by dramatic levels of monetization, which will render the currency weak and in no position to challenge the dollar as international reserve currency. The EU dream is over. Reality bites and bites hard.

The big danger is that the EU refuses to admit the dream is over and goes on fighting its corner with its supporters in France and Germany. If that happens all hell could break lose. War could easily break out in Europe. Greek nationalists could break into the European Commission buildings and put Barosso's head on a spike.

WWII broke out just 10 years after the Wall Street Crash. The rise of extreme nationalist elements and extreme left-wing parties in Europe that led to the war arose in much the same conditions as currently exist in Greece.

hovis said...

Ryan: Agree with much of what you say.

The "extremists" as you label them have long been around, (remember the only remaining Stalinist communist party is Greek as well as long standing anarchist groupings), add to that echo's from from the civil war and the Junta as the backdrop to politics and you have a volatile mix amongst a people less placid than us Brits.


"Greek nationalists could break into the European Commission buildings and put Barosso's head on a spike."

We can but daydream ...