The Mother of all Jobs in the EU

Ironically, the more Eurocrats try to integrate the EU through imposition of fiscal, monetary, banking, and political straitjackets, the closer the Union comes to disintegration.

By Don Quijones, Spain & Mexico, editor at WOLF STREET. His blog: Raging Bull-Shit.

As of a few days ago, the European Union has a new government and president to run its affairs. In the deeply dysfunctional model of European “democracy,” neither the Commission not its President were elected by European voters. Only the 400-odd comfortably closeted MEPs had a chance to vote on them.

The new President is Jean-Claude Juncker, a man who notoriously confessed to lying only when the going gets tough and who, as prime-minister of Luxembourg for close to two decades, is largely credited with reinventing the tiny landlocked principality into one of Europe’s largest tax havens and dirty money channels (just behind Switzerland and the City of London).

As the European Corporate Observatory observes, the Commission he leads includes:

An ex-petroleum company president as climate commissioner (Miguel Arias Cañete); an ex-corporate lobbyist in charge of financial services (Jonathan Hill); a former vice-president of the industry lobby group Le Cercle de l’Industrie in charge of economic policy (Pierre Moscovici); an ex-Goldman Sachs financier as research commissioner (Carlos Moedas); and the former political no.2 to a Czech multi-billionaire as consumer commissioner (Vera Jourova).

Now this newly unelected, highly compromised Commission faces the mother of all jobs: to prevent the stagnating Eurozone economy (now in its seventh year of on-off crisis) from going completely off the rails. What’s more, it must somehow pull this off at a time of growing tensions between and within the governments of EU member states, as well as rising public hostility to the European Project itself.

A Disunited Union

As the past week has revealed, the cracks are already beginning to show in Europe’s flimsy façade of Brussels-imposed unity. In the last 48 hours alone:

  • The Italian government, much to the ire of former Commission President Manuel Barroso, posted on its website a “strictly confidential” letter it had received from the Commission’s economic chief, Jyrki Katainen. The letter outlined additional austerity measures to “streamline” the nation’s finances – measures that Italian Premier Matteo Renzo has repeatedly rejected.
  • France’s deeply unpopular prime-minister Francois Hollande demanded that EU budget rules be adapted to support economic growth, French-style.
  • The British PM David Cameron bewailed a €1.7 billion surge in Britain’s EU membership fees, prompting one Daily Telegraph writer to wonder whether Brussels is intentionally seeking to push Britain into leaving the EU.

As if that were not enough, on Thursday 14 EU Member States, including the UK, Spain, Ireland and Denmark, sent a letter to Juncker urging him not to make any concessions to MEPs on investor-state dispute settlements (ISDS) in the Transatlantic Trade and Investment Partnership (TTIP). One can only assume that the other 14 EU Member States are not so convinced by the need to include ISDS as part of the ultimate deal; most importantly, as I reported a few weeks ago, those countries include Germany.

Granted, such spats have been part and parcel of European politics for decades. The problem is that they are growing at precisely the time when strong unity is most needed in order to complete the full integration of the Eurozone economies. Of even greater concern to Brussels, a growing number of so-called “populist” movements (meaning any party or politician even mildly opposed to the current state of affairs) are beginning to challenge even the basic ideas and mechanisms keeping Europe together.

The Rise of “Populism”

In Italy, recent months have seen the early stirrings of the Great Lira Revolt, lead by Beppe Grillo’s 5 Star Party Movement. “We must leave the euro as soon as possible,” said Mr Grillo, speaking at a rally over the weekend. “Tonight we are launching a consultative referendum. We will collect half a million signatures in six months – a million signatures – and we will take our case to parliament, and this time thanks to our 150 legislators, they will have to talk to us.”

For other Southern European nations, it’s arguably already too late. In Spain debt galloped across the €1-trillion mark this year. However, unemployment remains stubbornly on the wrong side of 25 percent, despite the fact that many of the nation’s best and brightest have long left for brighter shores – or at least shores with jobs.

As a direct result of austerity imposed from abroad and an endless stream of political scandals at home, Spain’s establishment now faces a dual threat: first, the breakaway of its richest province, the North Eastern region of Catalonia (most likely followed by the Basque Country); and second, the Phoenix-like rise of Podemos (“We Can”), a left-wing political party that is very successfully courting desperate, disaffected voters with the promise of an end to austerity and political corruption, not to mention an independent audit of the nation’s debt.

In crisis-ridden Greece Alexis Tsipras’ Syriza Party is hotly tipped to win the next elections. Given the current coalition government’s razor-thin majority, that could come a lot sooner than Brussels would like, especially considering that Syriza advocates a “significant” write down on Greek government bonds, a reversal of the economic reforms imposed by the Troika, and also a full audit of its public debt.

Perhaps most worrisome for the eurocratic elite, the cracks are beginning to branch out from Europe’s periphery to its core. In France, Marie Le Pen’s National Front continues to make hay while the approval ratings for Francois Hollande, already the most unpopular president of France’s 54-year-old 5th Republic, plumb new depths. Even Europe’s reluctant sugar daddy, Germany, has witnessed a surge in popularity for its anti-euro party, Alternative for Germany. This, in turn, heaps even greater pressure on Merkel’s coalition government to put a stop to Arch Alchemist Mario Draghi’s mad plan to buy up every dodgy financial product not yet nailed down.

No Reason to Panic

All the while, fears are growing about just how many of Europe’s ailing and failing banks will fall short of the mark in the ECB’s soon-to-be-released stress tests. At the last provisional count, the number had shot up from 13 to 25, representing close to 20 percent of the 130 banks assessed.

According to the EU’s latest rules on bank failures, some of those banks will have to be wound down; others may be bailed in and/or bailed out (or indeed both); the rest will be gobbled up by one of the continent’s strategically vital institutions (Deutsche, Santander, BNP Paribas, HSBC… they’re all waiting in line, just salivating at the prospect of getting even too-bigger-to-fail). Naturally, the whole process will go perfectly smoothly… as long as everyone makes sure that “financial market players don’t panic” (not my words, but the comforting words of the New York Times).

Taken together, the recent developments in Europe do not bode well for a continent already boasting unprecedented levels of debt while also locked in an escalating tit-for-tat trade war with its most important neighbour and biggest gas supplier, Russia. To make matters worse, there is a growing reluctance among countries on the periphery to bear the brunt of the social and economic pain of monetary union (hence the rise of Podemos, Syriza, 5-Star…), while in Germany and other core countries there is a growing reluctance among the public to fund what it sees as the reckless profligacy of Southern Europe.

Unless Germany steps up to the plate soon to temporarily stop the rot – namely by giving Draghi the green light to unleash his no-holes barred bond buying program, followed by the mutualization of Europe’s debt through the creation of euro bonds – Europe’s fragile unity could unravel surprisingly quickly.

Ironically, the more the Brussels elite tries to forcefully integrate Europe through the imposition of monetary, banking, fiscal and political straitjackets, the closer the Union comes to disintegration. Given the EU’s glaring democratic deficit and blatant disregard for the lives of most Europeans, that may not be such a bad thing. By Don Quijones. An exclusive for Wolf Street.

In Spain, the policy of the national government has been to threaten Catalonia and sow seeds of discord in its fragile coalition government. Now it’s reaping the spoils. Read… Spain’s Divide and Unconquer of Catalonia

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  11 comments for “The Mother of all Jobs in the EU

  1. Vespa P200E says:

    Sounds like the EU about to break in its seams. Next up is popular discontent and protests by the people of highly indebted “slave” PIIGS (Portugal, Italy, Ireland, Greece, Spain) and even France the classic example of nanny socialist state.

    Yep this is from the very continent that brought 2 World Wars in last 100 years with rather ugly history of countless wars. And the politicians thought they can bring Europe together…

    • Adam says:

      France that “classic example of nanny socialist state.”

      Yeah, right. That country where 100% of the citizens get 100% medical care. It’s horrible what these horrible “nanny states” do. Taking care of each other with, oh my God, socialism. They need to stop it and get with the program. The program being, as it is here in the land of the free America, people out of sight and alone dying in their houses because they have no ability to get proper medical care. (And even people who HAVE health care insurance, dying TOO because they’re denied the health care that they need by their “health care providers.”)

      The cost of an MRI in France: $280 (paid by that horrible socialistic nanny state government). the cost of an MRI in America: over $1,000. This BULLSHIT was all in place before Obamacare (a gift to the insurance companies who have killed 1,000s of Americans by the way) so don’t go blaming it all on our idiot in chief.

      I live in Japan and what I and my wife pay for health care is a fraction of what we’d have to pay in America. Why? Well, there’s a lot a “nanny” here, I guess. The idea of people dying for that red white and blue idea of “death to socialism” is viewed as totally stupid by the Japanese.

      America should just copy the Canadians who ALSO have a socialized health care system that 99% of conservative Canadians AGREE is right for Canada — and the BS propaganda that is heard in the USA about Canada is just that, BS.

      • Chris says:

        What the hell does this have to do with Wolf’s article? Do you just troll sites and post unrelated nonsense like this? And by the way Obamacare is nothing more than corporate fascism. Users are forced to line the pockets of DNC donors or face a fine. Great bit of corporate fascism you got going there.

      • Vendetta says:

        Vespa P200E, I think Adam’s comment was about the cost of healthcare in general. Its NOT a ‘liberal/conservative’ false, highly emotional dichotomy issue that so many people have been suckered into for endless banter.
        I think an MRI is at most worth $280 NOT that the govt should be paying it. Why can’t all these services be freely advertised so our ‘freedom and let the market rule’ mantra live? I know the answer: they don’t want to .. they want pricing hidden behind the private insurance schemes with secretly negotiated pricing while the ‘consumer’ (all of us) are screwed over royally. I had two similar and recent tests to an MRI that took a grand total of 2.5 hours by healthcare workers that earn significantly less than I do that cost just under $5,000 … why the hell does it cost that much? I don’t need nor want the govt to pay for it I want reasonable prices for these damn things… it is not reasonable and anyone who believes it is is completely out of touch with reality.
        Newsweek is a propaganda rag just like most if not all ‘well respected’ media outlets… you have fallen for the rigged mind game vespa therefore the real problems never get resolved or debated properly.

      • Adam says:

        Trolling? I’m discussing a topic! (I don’t make personal attacks which I guess is what trolling is.) .Just roll out 1984 and stop ALL discussion. Or restart the House UnAmerican Activities Committee — “everybody SHUT UP — those in control, those feeding us BS lies, those running the NSA, they all know what’s best for us. So everybody SHUT and stop discussing!”

        I was responding to a comment above me.

        The ONLY reason some neanderthals hate the NSA now is because Obama is doing it. If it were Bush, they’d have no problem with it at all. Deep thinking!

        I’m sick to the teeth gum and jawbone of this mindless right-left palaver.

  2. Petunia says:

    The bigger picture is that people no longer have confidence in global governance or global finance. There is definitely some large reset coming. The only thing people are certain of is that the people in power have no idea what they are doing. We need to take back the reins of power and just start doing the right things.

  3. Adam says:

    Sorry … I forgot myself and “name called” above. It won’t happen again. America is being destroyed by the left’s PC and the right’s lock-step thinking. PS: Don Quijones is very anti-establishment so … what does that make him?

    • Fred says:

      Adam I think you are an absolute spot on. This world is in a brutal chaos. I don’t know whats wrong with people but they seem to be brainwashed from every side. There is so much extremism probably in every group possible. Right or left, liberals, conservatives…. even groups that probably fight for a good cause are only spreading more nonsense, hate, confusion and extremism. Regarding Europe…… there are no jobs… at least we have a healthcare system somehow but then dentists cost insane amount of money. Things like healthcare, education, housing, food should be a basic human right. Without place to stay, food and education there are no employees… But who cares when some people work insane hours just to have more money and the rest is made by robots……….. This system is nuts and its collapsing. There is no way out. Only wars, catastrophes, diseases, or some massive revolution like sharing economy a la Venus project and basic income can change it. Wars are already happening, diseases are spread, and we are waiting for some massive global revolution.

  4. LG says:

    I was going to read the whole article until I saw the words
    “Goldman Sachs”.

  5. Mark says:

    most conservatives LOVE the nanny state when it comes to the taxpayers giving welfare to the Military Industrial Complex—Like $10,000 Toilets, $500 Roofing Hammers–$30 billion for Helicopters that don’t work and are scrapped.
    They LOVE that kind of Socialism

    • Fred says:

      Thats exactly what I was thinking today. Same goes for Liberals and Leftists. They are so loving and have so much empathy especially for things where morality is totally excluded but when they do not like something or someone they become as brutal as Fascists. It simply means one thing – people are hypocrites and selfish it doesn’t mean to what group they belong to. They are hiding behind some ideology in order to have some excuse for their nasty behaviour. If Greek philosophy was mandatory at school our society wouldn’t probably as confused and selfish as it is today.

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