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Will French Minister's Announcement That Bailout Is Prohibited By Bailout Clause Lead To New EUR Weakness
The power games among the ranks of Europe's puppet elite continue (the real elite as is well known consists of a few CEOs of insolvent banks). Earlier today, Pierre Lellouche, France's Europe minister, came out with another statement our of left field, that could set off the next round of European destabilization. In an interview with the FT, Lellouche said that the €440 billion European bailout "is an enormous change. It explains some of the reticence. It is expressly forbidden in the treaties by the famous no bail-out clause. De facto, we have changed the treaty.” As the bailout is already being pursued by various German scholars on grounds it is forbidden by the EU constitution, this statement will not be taken lightly by Germany which has had to lose major internal political credibility to enforce a bail out that it itself is not enamored with. Sure enough, the FT notes: "Mr Lellouche’s comments are likely to go down badly in Germany, where the government has insisted the debt guarantee scheme to help beleaguered eurozone members is a temporary mechanism, set up on an intergovernmental basis where Berlin retains a veto, and in no way implies a breach of the EU’s treaties." Furthermore, as was noted previously, a finding that the bailout is not constitutional would render the entire support mechanism moot, resulting in the imminent bankruptcy of Greece. Is this yet another concerted subversive effort on behalf of the European labor interests to expel the underperforming PIIGS and sink the euro?
From the FT:
The eurozone’s €440bn debt guarantee scheme is tantamount to the adoption of a Nato-style mutual defence clause and marks an “unprecedented” change to the bloc’s treaties, according to France’s Europe minister.
In an interview with the Financial Times, Pierre Lellouche laid bare the French government’s conviction that the emergency stabilisation scheme agreed earlier this month amounted to a fundamental revision of the European Union’s rules and a leap towards an economic government for the bloc.
Mr Lellouche said Angela Merkel, the German chancellor, was “right” to say the EU could not be a “transfer zone” where rich members directly subsidised poorer ones.
But he said the scheme institutionalised solidarity between states. “The €440bn mechanism is nothing less than the importation of Nato’s Article 5 mutual defence clause applied to the eurozone. When one member is under attack the others are obliged to come to its defence.”
Mr Lellouche rejected suggestions that the Franco-German relationship had broken down because of tensions over the Greek and eurozone bail-out plans.
But he conceded that it required a lot of effort to make the relationship work, likening the challenge to postwar reconciliation between the two countries.
“The Franco-German relationship doesn’t work all by itself. Going back to the Schuman declaration, that was an extremely ambitious initiative. That was only five years after the war, after the occupation, after Oradour-sur-Glane [site of a Nazi atrocity in France], after Auschwitz. To hold out our hands and offer a partnership of equals with Germany required a lot of vision. That’s a bit what it is like today.”
On the other hand, this is most likely just France attempting to regain some shred of Eurozone influence after Germany has taken a material lead in leadership following its unilateral announcement of the naked-short ban.
The eurozone rescue plan has proved divisive in Germany but enjoys broad support in France. On the other hand, there was a consensus in Germany behind the sacrifices necessary to make German industry more competitive. When it comes to showing solidarity with Greece, France is
miraculously united. But when it comes to drawing the consequences for
us here in France, on reform of pensions, on reducing costs, on
competitiveness, on working time, there is unfortunately less of a
consensus. I regret that.
Alternatively, as a ZH reader suggests, "politicians know that austerity plans will be their death. They need the eurozone to blow apart, so they can all join the race to the currency bottom which for politicians is preferential to austerity." As we pointed out two days ago, the Eurozone, and especially its sicker members, likely will push the limits of seeing how far they can push their "bailouters", now that such a thing as "consequences to wrong actions" no longer exists. Either way, whether due to natural causes or sabotage, Europe will likely not survive in its current format for more than a year or two. And as Albert Edwards pointed out earlier, due to the resulting global imbalances, the US will be on that particular titanic, enjoying each and every blow as the Keynesian system sinks.
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"is an enormous change. It explains some of the reticence. It is expressly forbidden in the treaties by the famous no bail-out clause. De facto, we have changed the treaty.”
For crying out loud, will someone stuff a sock in this loose cannon? What the hell is wrong with this idiot? Just when we get the international community to bail our banking asses out of this jam, this fool throws a monkey wrench in it?
Where are those Gladio terrorist hit squads when you need them?
http://en.wikipedia.org/wiki/Operation_Gladio
And on cue, the EUR is doing that sell off thing that it does so incredibly well these days.
WTF happened to you?
I'm just curious as to what NATO does if/when everything goes apeshit in the Eurozone.
If, say, Greece gets conquered by a radical faction and they start running rape-rooms everywhere, will CNN start agitating for a bombing campaign?
Personally, I doubt it. NATO will break up. Just like it's unlikely for war to happen in Korea.
Now, what will all those soldiers, spies, and assassins do next?
Umm. That's like saying what if the union of trash collectors were to take over the yakusa and start doing really nasty antisocial things.
NATO might as well break up, for all the capability it is able to deploy, and under the rules of engagement and politics it hampers itself with. It's a bad joke at best, as is for the most part its mission in Afghanistan.
kill us.
Head for Ibiza.
Euro died on April 16, all this noise is just politicians trying to save face wasting our resources on propping up its corpse.
I wish I knew how to post a pic here.
I would photoshop a "Weekend at Trichet's" poster.
http://www.chicagonow.com/blogs/redeye/images/weekend-at-bernies.jpg
I was reaching for that pic when you posted it! ;-))
Weekend at Trichet's!
Decade at Bernie's
Now, what will all those soldiers, spies, and assassins do next?
As long as I continue to get my monthly check I will do nothing.
When my check stops the new targets will be obvious.
BREAKING - wait, this just in, Euro is actually not quite dead yet (market up infinity)! Oh wait, what's this, yes, it is actually dead (market down infinity +1). Wait, still kicking, it's once again all well (market lifts off and does lap around moon).
I feel like I'm reliving the 2000 election night results...Gore, no, Bush, no Gore...we've no idea.
Maybe we're looking for "Mostly Dead"? ;-)
Plus, "no bailout clauses" and treaties are stupid. That's so yesterday. Everybody cheats now and in a race where you are rewarded to be the worst, you gotta break every rule to win.
A problem is Never a Problem until it Becomes a Problem and People Recognize it as a Problem and then it's Way Too Late to Deal with the Problem because it's become an Intractable Problem.
So TTTGeithner is going to explain to them how to sustain the unsustainable.
Get your conspiracy theories right. Lellouche is not exactly leftist: he's one of the few outspoken atlantists (US, free markets, NATO) among french politicians.
TD its the "New Maginot Line" being erected for exactly the same reasons as the French constructed proir to WWII. Except it is designed to hold out Financial attacks rather than Tanks and troops.
I dare say will be just as effective in keeping the Goths and Vandals out (hint you just walk around it)
http://en.wikipedia.org/wiki/Maginot_Line
Yes it required a lot of vision. Suckers!!
Solution:
Eliminate all borders between European Countries. Just make Europe, well, Europe. No more Spain, Italy, France, Switzerland can ship its famous chocolates, watches, and yodelers in complete freedom, and france its stinky cheeses, make it all one country, not even any state borders. Finally, Europe will be Europe. Kinda like the whole family moving in together, sink or swim.
There.
Next.
Without the welfare and pensions. Poof! That could actually work out well.
Yeah that's not going to happen.
I mean, it could happen, but that big entity would be called "Greater Deutscheland" after about two hours.
OK. I have come to a conclusion here [whether relevant or not that is another question], that you either posses an IQ of a 2 year old llama [0], or you have no access to book[s] which discuss post-1960 geopolitical environment. Also, while I'm here; try, for god sake just try, and read a bit about European history and the reasons which are behind the "quasi-federalization" of European center [and soon the former periphery].
I mean having an opinion is fantastic; but facts do matter; quite a lot. It just makes you look cocky and Anglo-centric, to a point of orthodoxy, when you throw shit hoping it would stick [it doesn't]. Germany has no will, need or power to put forth another Lebensraum conquest [be that monetary wise, geographically wise; whatever].
Also, your comment about NATO [in which you perfectly demonstrate how little you know of that what you speak about] borders with a 3rd grade essay on how you spent your summer. NATO is a military alliance in which Charter is clearly stated that The Alliance will not favor any country which signed the Charter, and will not intervene if a conflict between two participating members arises or escalates [only if external enemy takes military action against one or more members countries].
There is 10 different diplomatic venues that need [as defined by international law and demonstrated during the run up towards the Iraqi war] to be explored in resolvability of conflict before military force is even considered as an answer. Also the things you propose as possible would be, if they by some shear luck do happen, resolved by internal mechanisms [sovereign army, police, judicial system, due electoral process etc etc]. Also which radical fraction do you see as a threat to Greece, or Europe for that matter. You know political movements are not sub-atomic particles and do not spring into existence in 30 seconds. They are a process; a long term, painful, coordinated process. They have a theoretic base which serves as their paradigm and which unites those who believe or are willing to believe in that paradigm. Then comes 1st stage of action which is subversion and infiltration. I dont see 100k Greek students as anything close to that.
Now, ZHers, you can also junk this comment into oblivion as you did the previous one; i really do not give a shit.
I've never attacked you personally, Cheeky, that's unwarranted.
I'm unsure as to why you're taking an obvious tongue-in-cheek comment as something to refute. Knowing the current dovish culture of Europe, I doubt that we're going to see any WWI-type madness.
I understand that you must feel angry with me. That's OK.
Many of these "sacred" treaties are being over-ridden at the moment. I'm vaguely aware of the many diplomatic venues through which these elites are supposed to be capable of working things out amongst themselves.
The legal foundations for the EU have, as far as I understand it, never really got off the ground when the constitution failed to be ratified by all the member states. It's a lot of smoke, mirrors, and windbaggery.
I tend to focus more on how Europe was for the majority of the 20th century. These protests smell like 1968 to me. France and West Germany barely held on against the revolts in that year, and repressed them through massive police actions. That repression was followed by sporadic terrorism and economic malaise throughout the 1970s.
The US experienced something similar.
I really don't mean to offend you, but the only people that I've ever encountered who really believe in the "paradigm" of the European Union and the Euro were some of my professors and their adjunct TAs. I should also mention that I tend to avoid "true believer" types whenever I can, so that may color my perceptions.
Politics is violence. The best recent book that I've read on how violent movements grow is David Grossman's "On Killing." (http://www.amazon.com/Killing-Psychological-Cost-Learning-Society/dp/0316330116) His research jives with my reading of history.
I have a lot of trouble believing that there's much "theory" behind a rabble enthused with BBQing bank tellers and riot cops. Sure, there might be a lot of hot air behind it called "theory," but at the root, these are just tribal killings that will almost certainly escalate to mass strife.
Greece is not far removed from the strife that scarred it throughout the 20th century. People and cultures don't just suddenly change overnight.
As for NATO... the government of Greece is clearly threatened by what certain bureaucrats could easily define as a "terrorist movement." The US never stopped intervening in Greece covertly and overtly throughout the 20th century.
That's why I take this as a referendum on NATO's existence as a functioning military alliance. There's certainly room for disagreement!
"I have a lot of trouble believing that there's much "theory" behind a rabble enthused with BBQing bank tellers and riot cops. Sure, there might be a lot of hot air behind it called "theory," but at the root, these are just tribal killings that will almost certainly escalate to mass strife."
You know I got very interested in cultures and have sudied cultures on every scale from corporate culture to childhood rearing in japan to you name it. At one point I came to the realization that the black race has never evolved past a tribal form of government. When I was studying apartheid I became shocked and dismayed at tribes fighting it out in the streets after the whites gave up power. Same is true of the native american and many asian and even a few white subcultures. I kind of kept thinking of it as a socialization connection problem inherent in cultural forces. But then I slowly began to realize that it simply is NOT natural for humanity to operate outside of tribal mindset. You can see it soccer hooligans, mac fantatics, intel fanboys, cubs fans, etc etc. Any sort of group identification competitive group dynamics. Our connection beyond our tribal nature is more of a failing of the white race in that perhaps our specific cultural evolutionary track and religious identification makes us more prone to accept an "illusion" of democracy or an illusion of wholeness that simply won't allow mass grouping of consiousness without it being done by tight knit purely sympathetic and cooperative forces using this illusion to spread it's confusion and control and then pushing the inadequicies of these dynamics onto the individual. These forces and their true face of wholeness are being witnessed right now. They are not interested in all wholeness and all righteousness. Only thier own wholeness and thier own righteousness and banding together to overcome any competing forces from threatening them.
The problem with europe is it's particular seperate identity and whole identity matrix is so ingrained to rulership and dominance as the only means of obtaining security that it won't allow a security for all member nations. There will be arms races there will be aggression there will be fighting for markets or dominance in one field or another, or all fields that don't offer such natural advantages to one part or another. The european union was nothing more than a mind fuck banding together that was constantly undermined by goldman and the bankers any way. Britian is always yearning to return to imperialist ways a diminutive island ruling an large world. It's counterpart in the east Japan following the same pathway. First milatrily when pluto was first discovered and our collective conciousness started integrating the ideologies of repeating paterns to achieve power and dominance. It set off on building a repetive self feeding war machine to gain what it "lacked" from the larger outside world. Then later approaching it from a monopolization strategy in the computer and tech industry by achieving dominance in the marketplace until the west pulled the rug out from under them and moved onto other parts of asia. Engineered during the regan days when they cut and punked the japanese for malaysia and tawain. Then later somewhat cutting from them and moving onto korea and china.
But yes you are right on one thing. There's always problem with germany and theres always a fear from the smaller nations in europe to try to keep them down and control them before they get too far out of hand and threaten everbody's security around them too much. Germany is too serious. Too driven and too focused. Their neighbors that would like to relax more and enjoy life more keep feeling forced to behave like germany to keep up and it just causes too much stress.
Cheeky, people generally think along two lines... "grab the brass ring" or " look for the lowest common denominator". Go for the brass ring means you have individualistic values. Looking for the lowest common denominator means you measure yourself against others (in a relative manner) and want to be slightly better than the masses.
Germany is the only serious country in Europe that is approaching this financial crisis by trying to grab the brass ring. They have a plan. They will listen to other plans but will go with theirs if they feel their plan is better. France understands this and simply wants to play to the crowd. France et al want to look for the lowest common denominator and spread the misery around. Naturally they want the Germans to step in and correct the deficiencies but they want oversight over German actions.
That diplomatic approach will not work.
You are left with "Greater Deutchsland".
jeez, man, who peed in your cheerios?
Please take three minutes to watch this.
http://www.youtube.com:80/watch?v=H0a_FA_J6Sw
Hilarious!
Given today as a guide, this ought to be good for another +20 handles on the SPX tomorrow, no?
Will French Minister's Announcement That Bailout Is Prohibited By Bailout Clause Lead To New EUR Weakness?
Will the sun rise in the east? WIll Larry SUmmers fall asleep in the meeting in which this is discussed?
Yes. Yes they will.
Will Geithner continue to caddy for Blankfein?
Will Bernanke continue to dive into the lake and fish out Blankfein's lost balls?
Who would have thought having a strong currency policy would be so detrimental? I apologize for not being taught the Monetary policy of "Helicopter Ben"...
The fact the Euro is still ambulatory makes it more of Frankenstein's monster than if had gone quietly into that good night.
It will continue razing havoc among the states that spawned it until the infected members are amputated.
The best hope for the Euro zone is that the governments all adopt Sharia, acknowledge subservience to the Calipha, and learn where to bow five times a day. Marrying a nine year old bride cannot be that bad, even if they've never seen them. They can be whipped if they get fat. Why worry about banks if there is young snatch to be had.
In Europe, people used to marry younger people than that. Sometimes around four years old.
But hey, hate is hate and the Internet is a great place to propagate hatred.
Are you seriously saying you don't have a problem with the treatment of women (now, today, not in the Middle Ages) in a majority of Islamic countries, and in significant parts of the Muslim populations of many Western countries? The comment you replied to is undoubtedly crude and simplistic, exaggerating with satirical intent, but the cultural conflict between post-Enlightenment secularism and effectively pre-Enlightenment Islam is a real, pressing and dangerous global issue, and glossing over Islam's failings in the name of tolerance and getting along will not make it go away. I believe that 12th Century Islamic culture was significantly preferable to 12th Century European culture. I believe those roles are currently reversed. I believe a degree of fear is both natural and reasonable, but contrary to what George Lucas would have you believe, I do not think that need necessarily lead to anger or hate. One can see Islam as a problem without seeing Muslims as the enemy.
Same stuff as usual. At least, this site shows everytime its leaning.
Very likely, that Mr.Lelouche guy is not against the bail out(or more exactly the provisional package) He is pressing for a EU constitutional reform aiming the fiscal department. In other words, they say they want to force a new EU department, that the current state of affairs is inappropriate to tackle the challenges of the 21th century etc... The conventional drivel.
Last time, on this site, the message "there would be no bail out" was hammered with some authority like Mr.Piltchard to explain how the German laws could not accomodate a bail out prescription.
We all saw what happened.
I never hit exactly what on this site led to such misanalysis. One hypothesis is it is composed mainly by US citizens and that US citizens usually grow upset, angry or afraid when they see others countries adopt the US recipes of success. Who knows?
Fiscal department goes hand in hand with euro weakness.
No fiscal department goes hand in hand with euro extinction.
"We all saw what happened."
Really? I for one am decidedly unclear as to what has happened, or will happen. Certainly a bailout (or more accurately several bailouts) has/have been announced, but so far as I am aware it is far from clear which or how many of them will ultimately take place, whether member nations will be able or willing to come up with the money, or what or when the German constitutional court will rule. I feel confident in saying that we are all (Eurozone, US, UK, U name-it) in a horrible mess, but the specific details of how it will play out seem to me very unclear. A small part of that lack of clarity stems from the constant stream of mutually contradictory statements emerging from ministers and civil servants at both the European level and that of individual Eurozone member states (as here).
Just posted a EURO monthly chart ...
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
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The Union shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of any Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project. A Member State shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of another Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project.
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In essence, the claus is worthless. It just means that someone can't be forced to participate in a bailout.
As it stands, all Eurozone governments feel that they should willingly partake (as opposed to be liable) as the consequences of saying no are likely to result in some considerable financial and legal upheavals followed by a period of anything but center politics.
It's worth remembering that there's a large portion of Europe that isn't moderate (even in good times) and a lot of people feel that a vaguely benevolent dictatorship in Brussels might be better than trying to maintain relationships with nearby far right and far left governments while they all try to steal each others' resources.
Should make for fun trading when it happens.
I'm sorry, where in Europe is there or has there recently been a far right government? I struggle to think of one since Franco. Substantial opposition movements/parties, sure, but a government? Or were you just talking about a long enough timescale to include the mid-20th Century? If so, fair enough.
For the Euro to survive, the EU must centralize not only monetary policy, but fiscal policy as well. Basically, the euro's demise is guaranteed unless the European elites can force the creation of the United States of Europe. If they don't, and member state fiscal policy remains detached from monetary policy, the euro cannot survive, and won't. I don't know how long it will take, but it's only been 10 years since the euro's creation, and the cracks are already apparent. I really don't see how it would ever be possible to centralize fiscal policy across such a diverse swath of old, insular cultures, each speaking different languages and with a history of hate for their neighbors. But what do I know?
agreed completely - the only way we did it was with a civil war, and that was with only 2 warring factions who shared the same language and much of the same culture - relying upon the basic assumption that we are tribal by nature and there's always an "us vs. them" thrown somewhere in the mix, I think Europe is screwed - it's kinda like when your relationship gets to the "we're making it work" stage - by that point, it's already fubar - might as well call a spade a spade and move along
I completely agree. The only driving mechanism I could ever see working was the combination of German collective guilt over World War 2 and the willingness of most of the rest of Europe to sponge off Germany. As pretty much no German currently of working age had even been born by the end of the war, it should come as no surprise to anyone that said guilt is no longer powerful enough to create a popular willingness to subsidise the Hell out of their neighbours. A pan-European free trade zone and friendly co-operation between European nations are excellent ideas. A European super-state is pie-in-the-sky Utopian nonsense, always was, and will remain so for the forseeable future.
Tyler, a Crisis Cabinet is the Missing Link in the Eurozone Crisis debate.
The President of the European Council Herman Van Rompuy proposed a “crisis cabinet” reports Honor Mahony of the EUObserver on May 25, 2010 in article Van Rompuy Wants Clearer Hhierarchy To Deal With Future Crises. He said that “there is not much hierarchy or organic links between the main players and the main institutions”. European Comission President Jose Manuel Barroso, the head of the European Central Bank Jean-Claude Trichet and Mr Van Rompuy himself would be the triumverate in this “crisis cabinet”. And Honor Mahony again reports that at the same time the President of the European Commission, Barroso, called Germany’s plans on improving economic governance in the eurozone as “naïve”. He believes that any treaty reform is not feasible in the moment.
The May 2010 EU Finance Ministers Summit announced the foundation of European Economic Governance and waived state sovereignty. I believe The EU Crisis Cabinet could very well emerge to provide European wide policy and mechanisms for unified economic, banking, monetary and seigniorage government without Treaty reform or State Parliament approval.
A currency crisis arose which took us out of the age of national independence into the age of mutual interdependence.
We are now living in age of global governance where leaders meet in summit and announce policy, that is rules of governance; national sovereignty is foregone for the common good of all; then task forces develope consensus, and make further policy recommendations for final committment by leaders, who announce a Framework Agreement, which sets forth the economic, political, monetary and seigniorage rules for the region. Because of crisis, the word, will and way of the leaders supersedes constitutional law and national parliaments. A hierarchy of leaders, workgroups, and stakeholders govern, and the people follow.
Can there be any doubt that the 27 member Eurozone area is headed for stronger governance? Herman van Rompu said …. Being in the ‘Euro zone’ means, monetarily speaking, being part of one ‘Euroland’.” relates Forside blog which provides the following quote: “I have no doubt that monetary union can function very well without far-reaching political union. On the contrary, there could even be a risk that excessive centralisation or harmonisation of economic policies might stifle healthy competition and weaken economic efficiency”. – Then ECB Chief Economist, Otmar Issing, 2001.