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German Economic Council Backs Exit For "Uncooperative" Eurozone Members
Now more than ever, the world is raising serious concerns about the long-term viability of the EMU. The crisis in Greece and the deep divisions between Athens and its creditors regarding the viability of fiscal “adjustments” have laid bare the currency bloc’s weaknesses and have underscored the difficulties inherent in managing a common currency in the absence of political and fiscal unity.
Reservations about the "experiment" recently caused the likes of Poland and the Czech Republic to express their reluctance to adopt the common currency with Polish central bank chief Marek Belka hilariously characterizing the EMU as a "burning building." "You shouldn’t rush when there is still smoke coming from a house that was burning. It is simply not safe to do so. As long as the eurozone has problems with some of its own members, don’t expect us to be enthusiastic about joining," he said.
Indeed.
Of course once the house burns down and the former occupants (those that made it out anyway) are standing around outside surveying the still-smoldering ashes, no one wants to be labeled an arsonist, which is presumably why Germany’s five economic "wisemen" decided that now might be a good time to pen a "special report" (press release, executive summary) on crisis response in the euro area.
Unsurprisingly, the "independent" assessment of the German Council of Economic Experts concludes austerity programs in Spain, Ireland, and Portugal were "successful" and as for Greece, well, they don’t know what happened there but it’s certainly not entirely the fault of misguided crisis management and if anything, it simply means that member countries should turn over more of their fiscal autonomy to Berlin Brussels.
"The situation in Greece should not be taken as proof of failure of the rescue policy as such. Firstly, the crisis response averted a systemic crisis and thus maintained the cohesion of Monetary Union. Secondly, the time was used to implement reforms to make Monetary Union more resilient against economic crises. Thirdly, the economic situation in Ireland, Portugal, and Spain has improved markedly," the council says, before adding that "it has become evident in the past years that the euro area member countries are overwhelmingly unwilling to give up national budget autonomy."
The wisemen continue:
The recurring debates about assistance for Greece should, in the Council’s view, not distract from the evident successes of euro area crisis policy. Firstly, it managed to avert a systemic crisis in the currency area, which would have done great damage to all its member states. Secondly, important institutions like the banking union and the ESM were created to make the euro area more resilient. Thirdly, assistance programs adopted by debt-stricken states shielded their citizens from the worst effects of the crises.
Yes, successful austerity programs "shielded citizens from the worst effects of the crises," which we suppose is why debt-to-GDP ratios in the periphery are even higher now than they were before despite a few rather unfortunate economic outcomes such as 25% unemployment in Spain and formerly prosperous Greeks scavenging through the trash for food.
As for why Greece has yet to respond favorably to the carrot-stick approach which has proven to be so "successful" in Spain, Ireland, and Portugal, well, it has a lot to do with Greeks being unwilling to take responsibility for their own actions and, perhaps more importantly, to the Greek government’s refusal to "make use" of the experts at its disposal who have recently demonstrated a remarkable penchant for Einstenian insanity by demanding that Athens adopt a policy of deep fiscal retrenchment in the middle of a depression:
The economic turnarounds in Ireland, Portugal, Spain and - until the end of last year - also in Greece show that the principle "loans against reforms" can lead to success. For the new program to work, Greece has to show more ownership for deep structural reforms. And it should make use of the technical expertise offered by its European partners.
Fortunately, the report makes some recommendations to improve the long-term viability of the currency bloc. First, there should be a plan in place for states to go bankrupt and in the event a member state - get this - "fails to cooperate", the euro area must "stand firm against [these] uncooperative debt-stricken governments" and allow them to "exit the Monetary Union" - as a last resort of course.
"The goal is to reduce sovereign debt through the consistent application of fiscal rules, and to make the no bail-out clause credible by establishing a sovereign insolvency mechanism. To ensure the cohesion of monetary union, we have to recognize that voters in creditor countries are not prepared to finance debtor countries permanently. A sovereign insolvency mechanism would be an important tool to prevent crises. Much like the recently agreed creditor-participation in the event of bank insolvencies, a sovereign mechanism would force creditors to shoulder losses if states went bankrupt. This would spur investors to assess sovereign risk in more detail. Given high euro area sovereign debt levels, the Council views the introduction of fixed debt thresholds for bankruptcy proceedings as impracticable in the near-term. But that should not stop euro area governments from starting work on an insolvency regime immediately. This would reduce the chance that taxpayers would again have to take over the risks of sovereign bondholders when a state stumbles over its debt mountain. A permanently uncooperative member state should not be able to threaten the existence of the euro. In view of this, the Council of Economic Experts recommends that the withdrawal of a member state from the currency union must be possible as an utterly last resort.
But the real punchline here is the council’s take on increased fiscal and economic unity, which it does not support - unless of course everyone cedes their sovereignty to Berlin Brussels, in which case it might be ok.
In consequence, the Council rejects reforms currently being discussed, for example, the creation of a euro area fiscal capacity, a European unemployment insurance scheme, or an economic government for the currency bloc. Making the euro area collectively responsible for potential costs without member states giving up any national sovereignty over fiscal and economic policies would – sooner or later – make the currency union more unstable.
All sarcasm aside, the report highlights the extraordinarily difficult situation which arises when the burden for funding crisis management mechanisms is shared but the fiscal and economic decisions which lead to the crises are not.
Whether or not this is a problem that it's ultimately possible to solve or whether this ill-fated experiment simply needs to be abandoned now before it ends unceremoniously in political coups and popular revolts is something that needs to be addressed sooner rather than later, because as the recent revelations of secret redenomination plots in Greece have shown, the eurozone currently has a date with the wrong side of history.
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Stop resisting!
Admiral sailing his battle ship out to sea sees a light up ahead in the distance, heading straight for him. He radios to the other ship and is surprised when his hail is answered by low-level Petty Officer. Admiral demands that the Petty Officer tell his captain to alter course. The petty officer sheepishly replies "no, sir, I believe it is you who needs to change course." Infuriated, the Admiral snaps back at him over the radio "Son, I demand that you change course right now. I am an Admiral and I'm sailing an Iowa-class battleship at full steam straight at you."
The Petty Officer replies "Um, Sir, we're a lighthouse."
(This was roughly the conversation that went on prior to the creation of the Euro. Obviously, they didn't change course.)
So then the choice is a) European economic integration while giving up sovereignty or b) European economic integration "without" giving up sovereignty. Hegelian dialectic at its finest. I wonder if we'll get European economic integration (s).
The establishment of a United States of Europe is a necessary stepping stone towards global integration, i.e. a one-world totalitarianism.
Well, there's precedent; when I was belligerent, dropped trou and puked all over the bar, they'd 86 me. Said that I was "disturbing" everybody elses' drunken experiences
http://hosted.ap.org/dynamic/stories/N/NATO_TURKEY?SITE=AP&SECTION=HOME&...
interesting argument. I wonder if someone in 1780's ever wrote:
"The establishment of a United States of America is a necessary stepping stone towards global integration, i.e. a one-world totalitarianism."
or, later,
"The establishment of a Soviet Union is a necessary stepping stone towards global integration, i.e. a one-world totalitarianism."
or, later,
"The establishment of a People's Republic of China is a necessary stepping stone towards global integration, i.e. a one-world totalitarianism."
oh, and I nearly forgot this one:
"The establishment of a United Kingdom is a necessary stepping stone towards global integration, i.e. a one-world totalitarianism."
True. You could also cite Alexander the Great, the Roman Empire, the Byzantine Empire, Ottoman, etc. etc. Totalitarianism indeed seeks, as a hegemonic constant, to centralize and uniformize; and the known world has always been the tyrants' limit and wet dream.
However it is probably within reach for the first time. And actually, a global empire already mostly exists ("world's sole superpower"). But I guess I agree with you when you imply that yet again, and as always, the tyrants' plan for world domination will fail.
Deep Throat's advice is still timeless: "Follow the Munny!"
If I didn't know better I'd think those quotes were referring to Germany, not Greece, All they ever say is Nein, Nein, Nein!
Receivership you say?
And that is how you send the Socialist Losers packing. About time. Let each country choose their own path but don't let them screw up the productive, responsible countries.
The charter of the Euro doesn't account for forcing a member state out of the Euro. Sounds like Germany, the ECB, Brussels and the GCEE want to play Calvin Euro and make the rules up as they go along.
FUCK.THE.CENTRAL.BANKS!
EDIT: eCONomic ecspurts, sounds like another one of those oxymorons, or in this case, just morons.
Bait and switch
http://mediacenter.imf.org/
Everything will be fine. They're "Economic Experts".
Read: Submit to Germany's will or be deemed 'uncooperative' and be forced out of the Euro. "Alle Menschen werden Brüder". Germany's smaller brothers, whether they like it or not.
Edit: Actually, I agree. Germany has been very uncooperative when it comes to restructuring of Greece's debt even after the IMF says that that is necessary (they would know being 'financial experts'). Therefore, Germany should leave the Euro.
The carrot and the stick: "C'mon donkey, get moving."
LOL, until the banksters get paid, you can never leave..that is this game, keep the banks solvent, well at least get most to think they are..debts er vig gotta get paid or legs get broken.
who run bartertown?
Germany take first prize when it comes to being shamelessly evil. If the Greeks had any balls they would target everything German.
Much as I deplore the German's lack of principal on many issues to do with Greece, I consider targeting of German people or property to be cowardly when the fact of the matter is that the Greeks proved to be even more cowardly when they passed up the opportunity to exit the Euro and send the whole debt pyramid to cardiac unit.
Alas, regardless of their doom, the little victims play!
No sense have they of ills to come, nor care beyond today.
-Thomas Gray
All they want of the member countries is, 'do as you are told and STFU'
Remember your sovereignty is now only a mirage, bend over so we can rape you so hard, make you bleed and scream, to help German industry grow some more.
Germany is revealed as so hard-lined on this sometimes I have to think is this 1940?
"to help German industry grow some more"
PIGS austerity will obviously hurt german exports to PIGS countries, genius. If this was really about helping german exports they'd have a debt jubile and go right back to letting the PIGS live above their means on borrowed money used to import german products. Austerity will not help german industry at all. This is not hard to figure out. It is very simple logic.
The German "Council of Economic Experts"...lol
where can i apply for non-cooperation ?
I am especially interested in non-cooperating paying taxes that go for my state's debt repayment i never signed for
Hitler or Churchill would never listen to Merkel. Roosevelt, maybe but I doubt it.
How far we've fallen in less than 100 years.
Let us hope this includes Britain. Both Cameron and Osborne are uncooperative.
Hey! Greece, we won! (You lost,ha ha!)
... " ... the world is raising serious concerns about the long-term viability of the EMU."
... not nice to talk about the Mennonites (http://www.emu.edu/ ;) ...
... seriously, the Europeans should listen more to Mr. Putin ... >>> "Putin: ‘Europe should be more independent, defend own interests’" >>> http://www.rt.com/news/310908-putin-eu-us-politics/
The floggings will continue until moral improves!
And you will like it...You will love it!
What we see is the impossibility of creating a comprehensive fiscal super-system in a union of countries that have already developed capitalism. Internal differences make it impossible without de facto conquest of the weaker by the stronger. The results will be no different in Portugal, or Ireland, or for that matter, France. The EZ is a goner. What we don't know is how much else goes with it.
So long as the "currency" is debt based there is no capitalism. There is also no way to avoid an eventual debt burden crash.
Its crapitalism.
More German control or out the door you go. And the FAZ newspaper recently wrote an article how unfair it was that Germany was seen as the villain in the situation and that if anything Germany deserved pity for trying to make Europe more competitive. This is how blinded Germany is in its pursuit of more Europe...
We hear the same line after every policy debacle right here in the Yew Ess Ay.
It's not about trying to make Europe more competitive, it's about KNOWING the differnce between right, and wrong, that's the hard part.
Clearly a move to a Nordic Euro.
The problem is they lack the courage of their convictions.
On the one hand the DEFINING PURPOSE of fiat currency is wealth transfers from saver/producer to debtor - specifically debtor banks and governments.
Yet their argument is against countries who INTENTIONALLY structure their fiscal policy to be the recipients of such transfers.
If they were serious they would do away with legal tender and back the Nordic Euro with a commodity.
It is a very weak argument to say "We'll print for THESE debtors but not THOSE." In doing so everyone recognises that the Latin countries are already excluded.
Ha-ha! Der Krautzenspiel ist zehr gut. Where are the Panzers?
'Ou est le masse de manoeuvre?', as Churchill would ask
varoufakis is right : this german council wants war with France to ensure EVERYBODY FOLLOWS THE GERMAN AUSTERITY MODEL.
Greece will serve as the FALL GUY, the sacrificed son; so as to be an example to all others.
His interview made that CRYSTAL clear.
This is a sign of whats ahead in Euro land!
Germany has been setup how many times now?
"German austerity model"? there are other names for that. Ordoliberalims, or just fiscal conservativism. Austrian School comes to mind, too. or just a principle: "balanced budgets"
half of the freedom lovers of this blog constantly harp against "the government", but as soon as someone says: make it just spend as much as it takes from us in taxes...
... "OMG! they are starving mother!!!"
Varoufakis is a gutless piece of shit representing a gutless piece of shit party. Syriza doesn't have to play along with the eurocrats, yet they willingly cling to the disaster that is the EZ like flies to a dog turd. Your great greek hero Varoufakis voted for the "austerity model".
Just another knee jerk reaction from a bunch of jerks.
They were responsible for the bad architecture and bad foundation of the euro and now they think they can mend everything by redecorating.
Minus Germany (for all its faults) and there would be no Euro. That's how ridiculous it is to think of this as some sought of powerful UNION.
Since the entire purpose of the banks is to trade paper debt-based fiat for real assets and loot every country and every person while simultaneously throwing people, countries and corporations into debt slavery, it would behoove everyone to resist this looting. Be uncooperative. Get tossed out. Reduce their power... and see how they change.
This is not a new phenomenon. Our forefathers were very aware of the methodology of the banks and warned us against it.
The Euro is a looting mechanism, just as the dollar and all other fiat currencies are.
I wish my govt had the guts to drop the Euro and tell GErmany to go pound sand.
We want the guilder back.
I second it, netherlands never wanted the eu constitution, nor the euro
yet we pay for all of it, and now they are forcing politcal union, eu's own direct taxation and finance minister
ALL goverments of the EU Countries are made by Talmudists! There is no german or spanish goverment! They are all puppets in the Zionist Game!
Council on Foreign Relations: EU Synchronizing Our Views of European Past by Legislationg Our Memories – Ideological Falsification of Historyhttp://new.euro-med.dk/20150728-eu-synchronizing-our-views-of-european-p...
You vill obey, unt you vill LIKE IT.
Crazy times.
Hahahaha this has been entertaining , German economic council are a bunch of hilarious morons, they live in a parralel universe called dumbland reich.
I like the photo of the peanuts with the fat lady in the middle. European royalty no doubt ... :)
"The true purpose of proposing a single currency is to force through the creation of a unitary European state while pretending to promote a purely economic idea. It is yet another example of the Eurocrats acting by stealth so as to achieve their aim of a homogenized European union."
https://solari.com/blog/sir-james-goldsmith-2/
Francois Hollande calls for eurozone government
http://www.telegraph.co.uk/news/worldnews/francois-hollande/11749947/Fra...