The financial markets, which the EU embraces, are wrecking the euro and the EU. The experiment of a monetary union for Europe has failed. The EU is disintegrating before our eyes. On 10 May, EU finance ministers agreed a $1 trillion package of loan guarantees, designed to stop the debt crisis spreading. If a receiving country fails to pay back the loan, all 27 EU member states would have to cover the default. We would be liable for about £8 billion.
But, as the Financial Times pointed out, “for the package to serve its purpose, sustained eurozone growth must return. Yet the fiscal adjustment required to meet its conditions may shut off the very growth it is designed to inspire.”
The EU is exposing us to the ever-growing debt burdens of governments over which we have no democratic control. This is unsustainable – both from a democratic and an economic point of view. It costs more to keep the eurozone going than it would to let one or more countries leave the euro and devalue.
The Financial Times noted, “Now governments are struggling to cope with the aftermath. But, in insisting that there will be no defaults they are protecting the financial sector from its stupidity. The people of indebted countries are expected to pay, instead. Is this going to prove an acceptable bargain, in the absence of a return to growth in stricken countries? Hardly.”
Economist Paul de Grauwe observed, “the source of the government debt crisis is the past profligacy of large segments of the private sector, and in particular the financial sector.” As the Financial Times’ Martin Wolf wrote, “The financial markets financed the orgy and now, in a panic, are refusing to finance the resulting clean-up.”
The German government is also proposing a plan for eurozone members to examine each others’ budgets before they go to national parliaments. They could reject the budgets by majority vote, with the country whose budget is being examined unable to vote. Germany is openly seeking to run Europe.