The Eurozone crisis/break-up may crash the system?

[SleeperService]

Unfortunately the freeing-up of international trade brought about through GATT and the WTO has created a race to the bottom in manufacturing and raw material extraction costs. As long as this prevails, there will always be one unfortunate corner of the World that is prepared to accept primeval working conditions in return for being lifted even slightly out of abject poverty.

Indeed.

Strange how a country develops with a level of protection, but once top dog and able to enforce and abuse market dominance it's a change of heart and Free Trade, GATT, WTO, NAFTA etc.

I heard on the World Service recently (hardly a hotbed of radicalism) that the IMF always push the Washington Consensus. Not good for ordinary people, for long-term sustainability or stability in the world; there has to be a better way.

For the people at the top THIS is the best way. The rest of the population are just a resource like oil to be used and discarded as they see fit.

IMHO Africa will be developed as the next centre of exploitation the Chinese are already getting the groundwork in....

[ziggy12345]

Working for a Chinese oil company currently in Nigeria I can confirm the above

[Lord Beria3]

http://www.spiegel.de/international/eur ... 40634.html

Collapse of Currency a 'Very Likely Scenario'

Investment experts at Deutsche Bank now feel that a collapse of the common currency is "a very likely scenario." German companies are preparing themselves for the possibility that their business contacts in Madrid and Barcelona could soon be paying with pesetas again. And in Italy, former Prime Minister Silvio Berlusconi is thinking of running a new election campaign, possibly this year, on a return-to-the-lira platform.

Nothing seems impossible anymore, not even a scenario in which all members of the currency zone dust off their old coins and bills -- bidding farewell to the euro, and instead welcoming back the guilder, deutsche mark and drachma.

It would be a dream for nationalist politicians, and a nightmare for the economy. Everything that has grown together in two decades of euro history would have to be painstakingly torn apart. Millions of contracts, business relationships and partnerships would have to be reassessed, while thousands of companies would need protection from bankruptcy. All of Europe would plunge into a deep recession. Governments, which would be forced to borrow additional billions to meet their needs, would face the choice between two unattractive options: either to drastically increase taxes or to impose significant financial burdens on their citizens in the form of higher inflation.

A horrific scenario would become a reality, a prospect so frightening that it ought to convince every European leader to seek a consensus as quickly as possible. But there can be no talk of consensus today. On the contrary, as the economic crisis worsens in southern Europe, the fronts between governments are only becoming more rigid.

The Italians and Spaniards want Germany to issue stronger guarantees for their debts. But the Germans are only willing to do so if all euro countries transfer more power to Brussels -- steps the southern member states, for their part, don't want to take.

This is a great and interesting article from a German magazine which is now for the first time seriously thinking about a Euro break-up. This is ground breaking in itself as the Continent until recently thought that a euro collapse was unthinkable.

Just because euro-sceptic Britain has been talking about it for a while doesn't mean our Continental cousins have thought the same way.

[UndercoverElephant]

This is very good. Quite long and detailed, no holds barred.

http://lewrockwell.com/north/north1159.html

For the first time in my career, I see the international establishment, sometimes called the New World Order, facing a crisis so large that its very survival is at stake. For the first time, these people are scared.

There are not many of them. In his book, Superclass, author David Rothkopf estimates that there are only about 6000 people at the top of the pyramid of world power and influence. They are mostly males, and at least a third of them have attended America's most prestigious universities. Most of the others have attended comparable universities in Europe.

The crisis in Europe is clearly beyond anything that this generation of establishment leaders has ever seen. The last time that anything like this faced the European establishment, it led to World War II....

The meltdown in the eurozone has already started, we're just not having it spelled out to us because nobody wants to be blamed for making the banks runs worse. There is nothing stopping money from just disappearing from Greek and Spanish banks, only the ECB, which can, but apparently won't, print money to keep those banks "afloat."

[energy-village]

http://www.spiegel.de/international/eur ... 40634.html

This is a great and interesting article from a German magazine which is now for the first time seriously thinking about a Euro break-up. This is ground breaking in itself as the Continent until recently thought that a euro collapse was unthinkable.

Yep +1 . . . excellent stuff.

[Aurora]

The Independent - 26/06/12

Chancellor refuses to give ground despite leaked report detailing impact of eurozone collapse on Germany

Angela Merkel quashed hopes yesterday that Germany's resistance to eurobonds is weakening, even as a leaked analysis from her Finance Ministry suggested a break-up of the single currency would have a devastating effect on Germany's own economy.

The German Chancellor has come under intense pressure ahead of a European Summit this week to give the go-ahead to the mutual issuance of sovereign debt by the countries of the eurozone to calm financial markets and ease the unsustainable borrowing costs faced by Spain and Italy.

In a fresh reminder of the fragility of the currency bloc, Cyprus yesterday announced that it would become the fifth eurozone nation to seek outside assistance. Cyprus said it needed help because of "negative spill-over effects" on its banks from the Greek financial sector.

But despite the mounting woes in the troubled union, Ms Merkel played down expectations of a major shift in policy from Germany at the summit, which begins in Brussels on Thursday, and reiterated her longstanding view that common eurozone bonds would be "economically wrong and counterproductive". She said: "When I think of the summit I feel concerned that yet again we will have too much focus on all kinds of ways of sharing debt."

Article continues ...

[Little John]

The Independent - 26/06/12

Chancellor refuses to give ground despite leaked report detailing impact of eurozone collapse on Germany

Angela Merkel quashed hopes yesterday that Germany's resistance to eurobonds is weakening, even as a leaked analysis from her Finance Ministry suggested a break-up of the single currency would have a devastating effect on Germany's own economy.

The German Chancellor has come under intense pressure ahead of a European Summit this week to give the go-ahead to the mutual issuance of sovereign debt by the countries of the eurozone to calm financial markets and ease the unsustainable borrowing costs faced by Spain and Italy.

In a fresh reminder of the fragility of the currency bloc, Cyprus yesterday announced that it would become the fifth eurozone nation to seek outside assistance. Cyprus said it needed help because of "negative spill-over effects" on its banks from the Greek financial sector.

But despite the mounting woes in the troubled union, Ms Merkel played down expectations of a major shift in policy from Germany at the summit, which begins in Brussels on Thursday, and reiterated her longstanding view that common eurozone bonds would be "economically wrong and counterproductive". She said: "When I think of the summit I feel concerned that yet again we will have too much focus on all kinds of ways of sharing debt."

Article continues ...

In terms of Eurobonds, I have some sympathy for the German people's position.

There is an inescapable logic to Eurobonds. That logic is that they should form part of a more general political as well as fiscal integration of the Eurozone. In other words, the bulk of the money for Eurobonds is going to come from Germany. It therefore naturally follows that Germany is going to want to have significant say in how member states spend that money. This, in turn, requires that those states give up a significant part of their sovereignty to the Franco/German centre. Mostly, the German centre. In the absence of such centralization of power, there is no reason why German taxpayers should be expected to want to hand over the money.

Now, of course, this problem was always waiting in the wings for a crisis to force it into the open, It was the inherent contradiction at the heart of the EU project from the very outset. Or, if one is being more cynical, it was always the central plan of the EU engineers to achieve eventual full integration into a super state. They just didn't feel politically able to express that overtly at the outset way back in the seventies. Presumably, they hoped that it could be done, piecemeal, over the years as opportunity allowed. This crisis has merely pushed the issue front and centre.

The real question is and always has been whether or not the various countries in the EU wish to go all the way and have total integration to the point of a single EU super state. This is a fair question so long as the peoples of those countries are given the clear and unambiguous opportunity to answer that question. The problems arise when the EU engineers try (and have tried) to sneak (or even overtly force) such a process in under the democratic radar. For what it's worth, I think if such a question was put to the various countries, the majority of citizens in a significant number of them would reject further integration.

Consequently, I think one possible outcome of this crisis is a further integration of the Germanic countries (Germany, the Netherlands, Austria etc) into a core Eurozone and the rest will be left to economically fend for themselves. In other words there will, ironically, be greater inclusion of those countries who economically need it the least and exclusion of those who economically need it the most.

However, an even worse outcome is if the EU elites try and force further integration on those countries whose populations do not want it. If they do there will be violent, bloody resistance all over Europe.

[Lord Beria3]

Brillant post steve.

http://www.financialsense.com/node/8617

I strongly recommend that you listen to this broadcast by Chris Martenson.

It is very good (about a hour long) and goes though how f***ed the global economy is. His predictions on the eurozone are startling - probably disintergration next year.

His thoughts on Japan are even more interesting.

[Aurora]

I strongly recommend that you listen to this broadcast by Chris Martenson.

Thanks LB3. Martenson always seems to have his finger on the pulse.

Listening as I type.

[Aurora]

Latest from Van Rompuy of the European Council:

See: http://consilium.europa.eu/uedocs/cms_d ... 131201.pdf

This report sets out a vision for the future of the Economic and Monetary Union and how it
can best contribute to growth, jobs and stability. The report proposes to move, over the
next decade, towards a stronger EMU architecture, based on integrated frameworks for the
financial sector, for budgetary matters and for economic policy. All these elements should
be buttressed by strengthened democratic legitimacy and accountability.

[biffvernon]

I think one possible outcome of this crisis is a further integration of the Germanic countries (Germany, the Netherlands, Austria etc) into a core Eurozone

I think you may find that many of the people of the Netherlands would be very opposed to the notion of their being described as Germanic.

[Little John]

I think one possible outcome of this crisis is a further integration of the Germanic countries (Germany, the Netherlands, Austria etc) into a core Eurozone

I think you may find that many of the people of the Netherlands would be very opposed to the notion of their being described as Germanic.

I am really only referring to their economic policies and the more general way in which they run their economies. Although, this does at least imply that there are some fundamental similarities in their essential cultures that consequently lead to these similar economic approaches.

Perhaps "Germanic" has too many historically negative connotations attached to it. Perhaps a more neutral term might be "Northern European"

[Little John]

Brillant post steve.

http://www.financialsense.com/node/8617

I strongly recommend that you listen to this broadcast by Chris Martenson.

It is very good (about a hour long) and goes though how ****** the global economy is. His predictions on the eurozone are startling - probably disintergration next year.

His thoughts on Japan are even more interesting.

Thank you LB. I'll take a look.

[Aurora]

BBC News Magazine - 27/06/12

Germany v France: The eurozone's next big battle?

EU leaders will this week debate proposals for closer unity between the euro countries, as they seek a way out of the crisis. But could greater integration be what finally blows the eurozone apart?

If you thought the Greek or Spanish crises were bad enough in the eurozone, imagine this: a eurozone split so fundamentally in the future that Germany and France end up on different sides - and a dispute about saving the single currency that leads to rows about, say, whether France can keep nuclear weapons.

It is a scenario European leaders would, in public at least, reject as ludicrous. The partnership between France and Germany has been at Europe's heart. Preventing conflict between the two countries was why European integration began after World War II.

But listen to top Harvard political scientist Dani Rodrik who thinks that, five years down the road, the eurozone will have shrunk to a core group centred on Germany, with a "50% chance that France will remain in".

And David Marsh, historian of the euro and co-chair of a group linking central bankers and financial organisations, says the battle over the single currency "will be joined across the Rhine. Which way the French decide to go, which way the Germans decide to go I do not know."

Article continues ...

[Little John]

BBC News Magazine - 27/06/12

Germany v France: The eurozone's next big battle?

EU leaders will this week debate proposals for closer unity between the euro countries, as they seek a way out of the crisis. But could greater integration be what finally blows the eurozone apart?

If you thought the Greek or Spanish crises were bad enough in the eurozone, imagine this: a eurozone split so fundamentally in the future that Germany and France end up on different sides - and a dispute about saving the single currency that leads to rows about, say, whether France can keep nuclear weapons.

It is a scenario European leaders would, in public at least, reject as ludicrous. The partnership between France and Germany has been at Europe's heart. Preventing conflict between the two countries was why European integration began after World War II.

But listen to top Harvard political scientist Dani Rodrik who thinks that, five years down the road, the eurozone will have shrunk to a core group centred on Germany, with a "50% chance that France will remain in".

And David Marsh, historian of the euro and co-chair of a group linking central bankers and financial organisations, says the battle over the single currency "will be joined across the Rhine. Which way the French decide to go, which way the Germans decide to go I do not know."

Article continues ...

Yes. I've been thinking about this. I think it is up in the air as to whether France would be included in that "Germanic" core I was mentioning. In many ways France, both economically and culturally, has as much in common with its southern European neighbours as with its northern neigbours and this crisis is serving to highlight those similarities and disparities.