Wolf Richter www.testosteronepit.com [8] www.amazon.com/author/wolfrichter [9]
On Wednesday, German Chancellor Angela Merkel set foot in the European Parliament for the first time since 2007 and addressed the only democratically elected European institution—by design, an emasculated one that cannot even originate its own laws, though it is allowed to vote on proposals by the other European institutions. There, she laid out her plans to bring European nations together to where their budgets and other matters would become part of her “domestic policy.”
But first, the current problems should be focused on, she said to the drumbeat of economic deterioration—a day when Greece reported that unemployment jumped [10] to 25.4% in August from 24.8% in July and from 18.4% August last year. It was 7.5% in August 2008 when borrowed euros were still growing on trees. Young people got slammed: 32.9% of the 24-to-34-year-olds and 58% of the 15-to-24-year-olds were unemployed. Revolutions have been triggered by the utter frustrations in those age groups.
So, as tens of thousands of Greeks filled the streets in protest, Parliament approved the austerity package demanded by the bailout gang from the EU, the ECB, and the IMF, the beloved Troika. Another €13.5 billion in spending cuts and tax increases would be imposed on the people so that the next bailout payment of €31.5 billion would wash over the land—actually, most of it would head straight back to the ECB to service Greece’s existing debt.
The Troika should have sent the money in June, but after the election chaos, it sent its inspectors instead. They’d write up a big report behind which all politicians could take cover. In August, Greece ran out of money, and desperate measures began [ Greece Prints Euros To Stay Afloat, The ECB Approves, The Bundesbank Nods, No One Wants To Get Blamed For Kicking Greece Out [11] ].
The report would be finished by September, and if it said so, Greece would get the €31.5 billion. Then rumors surfaced that the White House wanted to have the report delayed until after the election. So the meeting of the European finance ministers on November 12 became the decision date. Turns out, the report still won’t be ready, and the next decision date might be November 26.
Greece might not make it that long. It ran out of money months ago. The government is delaying payments to its suppliers, businesses are shutting down, the healthcare system is cracking... and unemployment in November will be much worse than it was in August.
Even in the previously calm core of Europe, the ground is shaking. Thursday, it was the lifeblood of the German economy, exports [12]. They fell 2.5% in September; exports to the Eurozone plunged 9.1%. And industrial orders, which had been skidding for months, caught up with industrial production [13] in September, dragging it down 1.8%.
Hence, today’s corporate austerity programs: Commerzbank, Germany’s second largest bank, might chop off [14] 5,000 to 6,000 of its 56,000 employees; and Siemens announced that it would shave off €6 billion in costs over the next two years and trim its workforce of 410,000 people—due to the “slowing global economy and more headwinds,” explained [15] CEO Peter Löscher.
Accompanied by this drumbeat, Merkel explained her dream to the European Parliament. It was all about a big power shift from democratically elected national parliaments to European institutions. The European Commission of bureaucrats and appointed politicians would become the actual government of Europe with executive powers over national budgets. The European Council, similarly composed of bureaucrats and appointed politicians, would become an “upper chamber,” she said. And she threw a bone to her listeners: the European Parliament would receive a bit more power as well.
“We need to be ambitious and demanding and should not shy away from a change in the contractual foundation,” she said. So treaty changes. Or just treaty violations, which has been one of the strategies so far. The new system would “coordinate more strongly” a variety of national prerogatives, such as taxes.
Then the instincts of the powerful political animal broke the surface: she proposed a fund to deal with the pandemic of youth unemployment. Because “Europe is all of us together,” she said. “Europe is domestic policy.”
Her domestic policy. The Greeks, for example, didn’t vote for her, and they might not want her to run their show. They didn’t vote for the European Commission either. They might despise Greek politicians, but at least they’re their politicians. Merkel’s dream had no such room for doubts. Together, she said, Europeans would create “a Europe of stability and strength” where some day all European countries would have the same currency. And why not with her on top of the heap?
The EU has already created a ballooning superstructure of governance manned by 41,000 bureaucrats and mostly unelected politicians. But now, the European Court of Auditors released its annual report—a damning document that outlines how up to 4.8% of the EU budget seeped through the cracks and disappeared. Read.... The Art Of Siphoning Off EU Money [16].