German Bailout Rebellion: “We Have Euro-Anarchy”

Wolf Richter

For German Chancellor Angela Merkel and her ilk, it’s going to be a steamy August and an even steamier September and October with political battles left and right, to be fought mano a mano, as the Eurozone debt crisis and the growing bailout rebellion in Germany are migrating from parliamentary discussions, closed-door meetings, and shaky EU summit deals—21 of them so far—to electoral politics. Voters may finally have a say.

She has consistently driven her agenda towards a more integrated Europe, but her solutions to the debt crisis have butted into the German constitution. The Fiscal Union treaty and the ESM bailout fund are currently being dissected by the Federal Constitutional Court, with a decision due on September 12. These mechanisms would transfer budgetary sovereignty and other rights from the Bundestag to the EU government, and thus from voters in Germany—or Italy and Spain, for that matter—to unelected bureaucrats in Brussels.

More mechanisms with sovereignty transfers have appeared on the horizon as the EU government has embarked on a power grab—supported by many national politicians with visions of upward extensions of their careers. Might German Finance Minister Wolfgang Schäuble be dreaming about a promotion to EU Finance Minister? And the inevitable Merkel to EU President?

Thus, a few weeks ago, Schäuble had voiced the word referendum, sending shockwaves through the system. With that word, he’d called for a new constitution that would permit the transfer of sovereignty. A constitutional convention would draft it, and the people would vote on it. Politicians on all sides jumped in behind him. On the right, coalition partner CSU was enthusiastic, particularly Bavarian Minister-President Horst Seehofer. Saturday it was Foreign Minister Guido Westerwelle (FDP) who came out in favor. The next day, it was Sigmar Gabriel, President of the center-left Social Democrats (SPD) who wanted “to ask the people.” But the agendas couldn’t be more different.

Seehofer wants to drive a wooden stake through the heart of the mechanisms that transfer Eurozone debt to Germany, such as Eurobonds or a banking union. And he sees the referendum as a chance for voters to say heck no! His party faces strong opposition in Bavaria from the Freie Wähler (Free Voters) who have demonstrated in the streets against a future where a “child, just after being born, is already liable for the bailouts that great-aunt Merkel had signed” [Bailout Rebellion Reawakens in Germany].

Westerwelle might be more interested in creating a European constitution, an effort that had already disastrously failed when the Constitutional Treaty, signed by the 24 member states in 2004, was rejected by French and Dutch voters in 2005. They’d been given a vote. Germans had not.

Gabriel lashed out against Merkel. The liabilities from the bailouts were already enormous, he said, but “without control.” Merkel is “tolerating with a wink” that the ECB buys sovereign debt of Spain and Italy, “while her party colleagues criticize it.” Through the bailouts, Merkel had already created a “secret debt union,” but didn’t want to tell the people. He accused her of always acting too late and without a “clear crisis solution strategy.” It could not be that there is a common currency, he said, “but other than that, everybody is doing whatever they want.” While some countries might not increase their taxes and run up deficits, Germany would have to pay in the end. “Today we have euro-Anarchy,” he said.

His solution to the euro-Anarchy: Eurozone-wide mutualization of debt linked to a centralized control of national budgets by the European government, in which he would no doubt play a large role. The Greens are already in his camp.

Just when there is less agreement within the Eurozone than ever before, and more tensions and discord, all seventeen member states should suddenly fuse together into a solidarity that has never before existed, and integrate into a happy union, subservient to a mega-federalist construct run mostly by unelected bureaucrats, at the expense of taxpayers in Germany, France, and elsewhere.

Even in the US, after two hundred years and a civil war, states are still responsible for their own debts, though we’ve come close to Gabriel’s model via the indirect federal bailout programs for states and the Fed’s printing press that threw so much money into the air that some of it even reached California—which was issuing IOUs at the time.

The French and Dutch, when given a chance to vote on the European constitution in 2005, “unexpectedly” voted for sovereignty. Referendums are risky. And in Germany, voters might follow the French and Dutch example. Meanwhile, the referendum, though it might never come about, is already doing something else: it’s eating into the substantial support among the opposition for Merkel’s policies, and difficult battles and compromises lie ahead.

Germany and Austria may have their differences, and their love for each other may not always be palpable, but when it comes to money, they’re joined at the hip. And now the euro debate took on sharp tones in Austria as well. With a new theme: “Insolvency Procrastination.” Read.... The Euro Revolt Spreads To Austria: “Europe Can Only Function If Every Country Has Its Own Currency.”