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Sarkozy: “The Risk That Europe Will Explode”
By Wolf Richter www.testosteronepit.com
The Swiss government is preparing for a collapse of the euro, according to Swiss Finance Minister Eveline Widmer-Schlumpf. She told parliament that a work group was studying the imposition of capital controls and negative interest rates to protect Switzerland from the capital flight that a euro collapse would engender (Handelsblatt). A tidal wave of euros would drive up the Swiss franc, devastate Switzerland’s export economy, and devalue its vast wealth invested in other countries. Already in August, the Swiss National Bank instituted a currency peg and swore to defend it by acquiring “unlimited” amounts of euros, a risky strategy if the euro were to collapse (for the debacle leading up to the peg, read... Swiss Franc Wreaks Havoc In Switzerland).
Meanwhile, 27 heads of state convened in Brussels for another European Union summit to find that elusive solution to the debt crisis. It began with dinner at around 8 pm and will continue on Friday. Goal: changes in the EU treaty that would impose Germany’s new religion of budgetary discipline on all 27 member states. Violators would be hit with automatic sanctions. The European Court of Justice would have final control over national budgets. (Ironically, Germany was one of the first EU members to violate the existing 3% deficit limit and was the primary reason existing sanctions have never been applied). Short-term measures to keep contagion at bay are also on the agenda.
“Europe has never been in so much danger,” said French President Nicolas Sarkozy a few hours before the summit (Le Figaro). He worried about “the risk that Europe will explode” and urged that an agreement be found because there were only a few weeks left to make the decisions. He called for more solidarity, more discipline, and more governance within the Eurozone. “An agreement on Friday is crucial,” he said. “We won’t have a second chance.”
But Angela Merkel’s fiscal-union dictate of belt-tightening and central control over budgets isn’t going down all that well elsewhere.
“I don’t have any support in Sweden for changing the treaty,” said Fredrik Reinfeldt, Prime Minister of Sweden upon his arrival in Brussels (Le Figaro). Sweden is one of the 27 EU members but not in the 17-member Eurozone. To contain the debt crisis, he proposed instead the reinforcement of existing bailout funds and more IMF involvement.
David Cameron, Prime Minister of the UK, had already thrown down the gauntlet: he threatened to veto any measures that would hurt London’s financial industry or would shift sovereignty from the UK to the EU.
“A new treaty can’t be imposed,” said Vivian Reding, Vice President of the European Commission (Le Figaro). Instead, measures should be implemented on the basis of existing treaties. She contended that Angela Merkel’s plan of centralized economic governance was “just a copy of the Stability Pact that France and Germany had torpedoed in 2003-2004. The mechanisms to contain the excesses that have led to this crisis existed for a long time but were never applied.”
Treaty changes require participation of the European parliament, the EU Commission, and all 27 national parliaments. Then the treaty must be ratified by all member states—by referendum in some cases. It would take years and could be derailed by the referendum of a single country.
A less onerous alternative: treaty changes that would impact only the 17 Eurozone countries. Sweden, the UK, and other non-euro countries would not have to agree to the changes. It might speed up the timing a little, but if successful, if might split Europe in two: the Eurozone with iron-clad budgets in Merkel’s sense, and the remaining ten EU countries with no such restrictions.
A simplified procedure has been bandied about: decision by EU countries and ratification by member states. But even that takes time—at least one and a half years, according to an expert cited by the Handelsblatt—as national parliaments might not readily agree. But deep changes, such as outside control of national budgets, would require the normal procedure, rather then the simplified one. In addition, they might require constitutional changes in some countries, which would add to the uncertainty for years to come.
Yet everything must be squared away by March, according to Merkel—a deadline, actually: Sarkozy may lose his job during the elections in April/May, and his potential successors to the left and to the right have vastly different ideas and might not bend as easily to Merkel’s will.... French Presidential Election: Coup De Grâce For The Euro?
Wolf Richter www.testosteronepit.com
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I would put my money on war, but who over there can afford tanks, planes and ammo?
If there's no one to buy those BMWs, the Germans can't very well let all that factory infrastructure go to waste, eh? They still build excellent tanks and submarines. A cheaper euro/d-mark, thanks to negative interest rates and other new taxes, will help the marketing of these new "defence" systems and keep the German workers busy. Busy workers don't have time to make trouble for the politicians and bankers.
More of the same, Sitzkreig, where the Italian bond yield bounces up and down around 10% and the ECB prints/promises not to do so. Leaders don't lead, they wave pieces of paper at each other.
Meanwhile, the price of crude steadily declines as the world slowly goes broke. (It's broke already, it pretends otherwise.)
How long does the charade last? Not much longer, children.
This keeps promoting the narrative that the *people* were profligate and all the governments spent money on them.
Merkel is acting like a German stereotype in buying into this, instead of the truth:
The so-called BANKS got these governments into bad 'investments,' (like Greece in 2001 in Goldman CDOs and CDSs).
These are BANK BAILOUTS!
Jeez, you'd think the Europeans would be able to see what happened here to understand... bailouts without end (and without effect!)!!
17 EUROPEAN Countries have said YES to the Agreement in SOLIDARITY to ride out the storm over EUROPE .. BRAVO to the political leaders committing to this NECESARY STEP !
9 Countries have declared an interest in JOINING the AUSTERITY AGREEMENTS as well as participating in FUNDING the various FINANCIAL STABILITY MECHANISMS to be put in place amongst these SWEDEN , but need to consult their national Parlaiments . Thats OK.. for such serious matters !
Hungary got it WRONG and wanted out ..initially ... but have quickly realized .. that they will be quit ISOLATED in such a case .. and are therefore RECONSIDERING ... right now . ( They are also quite broke .. soo.... )
Only ,,the UK .. has opted out .. bowing to pressures from THE CITY OF LONDON where more than 75 % of all the FRAUDULENT and LEVERAGED FINANCIAL DEALS of THE WORLD have been done during the last decade... leading to the current GLOBAL CRISIS ... enriching FINANCIAL SHARKS ... making the COMMON PEOPLE of the western nations POORER
THe UK ..is OUT ... ISOLATED and WITHOUT INFLUENCE . They choose that themselves ,, regrettably so ..and in my opinion to the detrimony of the COMMON BRITISH PEOPLE
BUT the steps taken today .. are a great STEP FORWARD .. in the RIGHT DIRECTION ... for EUROPE !
I REJOICE !
And then the US and Financial Times and all that CRAP can scream n propagate as they like ..
WE ..in EUROPE wont give a damn !
Ride out the storm? Silly person, that isnt a lifeline youre making, its a noose large enough to fit all of your necks simultaneously.
Wow. Good luck with that.
i almost got a chuckle out of that rant.
Another overheated and addled mind from the Eurozone rejoices as the toilet swirls them to oblvion, gurgle, gurgle, gurgle. Nothing to see here, move along....
Verily, the turd in the loo must believe he's going to a better place.
Who cares? They think the American Sheeple care? We don't care what our own Federal Reserve is doing to us, don't look for sympathy or oncern from these parts, buddy.
Stabiloity pacts don't work.
In fact two countries that broke the stabilit pack last time were: Germany AND France.
Ones that did not are: Spain and Ireland
The UK is going to have to trade with the rest of the world, especially Asia. Not a bad result considering thats how we originally made our dough in the first place.
The UK/British Empire did not trade with the rest of the world. They stole from the rest of the world with the use of the British Navy and a conscripted army. They're still doing that, the big difference now being the British Navy has been replaced by the City of London financial "services" industry.
Ding-ding!
Naval gunnery and ponzi gunnery.
Europe is not the same as the EU.
How would I explain the EU?
EU is like locusts in your field, huns at your gate, zombies at your door.
EU has never been anything else but a job opportunity for politicians and bureaucrats.
Die, EU, die. Let the 27 countries regain liberty and independence!
For a guy whose name sounds vaguely central european, he doesn't seem to grasp what's going on.
First, even Germany announced that they were planning for the collapse of the euro a few weeks back. Everybody and their pet dog have plans for that contingency. Why should the Swiss be any different?
Second, all 27 members of the EUnion were never going to agree in toto to have their fiscal policies dictated by Brussels. The 17 in the EMonetary Union should since they share the currency - the same risks and benefits, but wtf is the point for the 10 outside the EMU? No point at all, except perhaps for those who want to join the EMU later, or those politicians who have to implement unpopular austerity measures at home and want to shift the blame to Brussels to keep their jobs in the next elections.
Third, as has been touted almost everywhere, no doubt there is always the spectre of opportunity for Germany and France to hijack the control of the monetary policies of the whole of the eurozone when they have the power to dictate the fiscal policies of its members. But I don't quite see it that way, yet. With its revolving presidency, the EU council and the ECB does not work that way - power can easily revolve to other member states. Besides, the ECB is nowhere near as powerful and controlling of the currency as its counterpart, the Federal Reserve and the US Treasury. Germany will never allow itself to be in a position where it is possible to be caught in the risk of hyperinflation, and that's the only good thing in this sorry affair.
Fourth, Before hailing Cameron as a hero, one must ponder on the reasons why he went vocal in the first place, and the primary reason was to be the mouthpiece for the City of London Financial services companies. Cameron will definitely end up with a few directorships with multinational banks when he leaves office. Everything else about sovereignty and British interests is guff.
Finally, this isn't exactly a new treaty. Lisbon, and Maastricht before it gave clear fiscal guidelines to the 17 about constraints on joining the eurozone. The fact that almost all the members, including Germany and France, have been naughty is the real bone of contention about sanctions and punishment. Based on past performance, I don't expect any of the signatories to honour their commitments to the "New" treaty within the eurozone, and I don't expect any sanctions or punishments to be doled out either. If they go against my expectations then the Euro might have a chance, else as this article says, the Euro will implode sooner or later.
When there is so much shit running and ruining Europe no one should be suprised at the mass quantities of gas. It is that gas (created by bad government policy) that may fuel the European explosion that Sarpoussez is bitchin about.
the risk that euro explodes is beyond europe's reach; it part of US contagion. And Merkel had said no to joining band wagon. Now the markets, aka GS cabal, will choose when and how they spread contagion mayhem to their own back yards. You guys across the pond don't like to look at yourself in the mirror do you?
I have seen the enemy and it is us...is what every american citizen should be thinking as he is the voter who supports US global ponzi and PAX AMERICANA, mother of this dysfunctional world. Every american can vote against that; just saying. We deserve the leaders we elect. And we do elect or choose not to!
"Those who vote decide nothing. Those who count the vote decide everything." - Joseph Stalin
"The conscious and intelligent manipulation of the organized habits and opinions of the public is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country." Edward Bernays
As long as the media is controlled by the Power Elites, voting is nothing but an expensive rubber stamp. The American sheep are well controlled, thanks to Hollywood and Madison Ave., even if sometimes they appear to be a bit unruly. Overly unruly ones will be jailed and/or executed. The rest of the sheep, after they are "educated" by the MSM will just say "good riddance".
This is the end game, and I think that end game is making the dollar the global fiat legal tender for all debts, public and private. Gold and silver will not even be available to most of the proles to use as money.
About bloody time.
Negative interest rates are a stealth tax imposed by the bankers on an unsuspecting proletariat. That tax is very difficult to evade/avoid as long as the proles depend on the sovereign for manufacture of legal tender.
awaiting the day when these clowns come out and say something just as daft as, well, like always, and all that we hear is laughter and gawfs.
Did somebody say bomb?
This sounds like, "Beat me, beat me! Make me write bad checks!" You have 27 countries with not so bright ideas to do, with money that doesn't exist. Quick, run to Wal Mart and buy another Monopoly game. They need the extra currency.
http://georgesblogforum.wordpress.com/2011/11/02/the-daily-climb-2/
More BS... They will turn the market in the direction that most benefits thithier bankster buddies. It is a rigged game.
I was thinking just the same.
Yes, it must be done by March because the will of the French people is against it and they will not be able to vote their feelings until April.
Germany wants closer political integration while dumping their continued support of their bankrupt Eurozone 'Brothers and Sisters'. Well one can only imagine what their extended family of Europeans will think of that shitty offer ...good luck with that Merkal
which leads us where 40 years of idealistic integration always leaves us: very real disintegration
if you don't know what the last days of Rome looked like, just keep watching the ivory/calamity towers of Brussels crumble and unfold in farce before your very eyes ..enjoy, it's an historic once in a lifetime event watching an Empire collapse
Socialism and idealism are completely bankrupt (again). The parasites of politicians and bankers have bled their nations dry (again) ...Welcome to History repeating on itself so many times in human history you wonder if we aren't truly insane. Maybe this time we learn something
Zero Govt
yes .. this time is different
yes ..this time people stop paying tax and don't ever again in their lifetimes
Govt is stone cold dead ..long live a free society
Head'em up and move'em out...Heeyahh, little kitties, get along there...
Didn't Switzerland just peg their currency to the Euro a couple months back? Now they're planning for its collapse?
Sorry -- but given the fact that they're now pegged to the Euro, I'm pretty sure the first step in planning for its collapse would be to "un-peg". Are they doing that? No?
Then I'm not sure what constitutes "preparation". Seems like they are significantly less prepared now than they were last year.
Switcherland it is. But the real story is still France. They're on the ropes and England ain't lookin' to see them in alliance with Germany.
PoPo. Pegging the franc to the euro bought them a couple of months if that. If I was Swiss I would be pissed:)