Tuesday, 31 July 2012

Ordinary Germans also suffer to pay the bankers!

Anti-German feeling is prevalent in Ireland. One hears it vehemently expressed in the most general terms at public meetings dealing with the economic crisis and even in everyday conversation.
A greater amount of caution needs to be exercised concerning such sentiments. The ordinary German citizen is not responsible for the actions of the German banks and their political representatives in government. Germany’s working people are not benefiting from the policies of Merkel and Co., even though many of them might gullibly believe the propaganda of their masters.
Visit Germany’s capital city, and poverty is plain to see—not just people begging on the streets and in the underground but also well-dressed individuals of both sexes and all ages rummaging through street bins in search of returnable bottles.
Supermarkets pay 8 cents for certain glass bottles, 25 cents for plastic ones. Germans are indeed resourceful. Many of these bottle-hunters travel the city on bikes, carrying a number of large bags for their glass and plastic booty.
There is an element of surprise when one first becomes aware of the poverty. Unemployment in Germany may be at a relatively low 6.6 per cent, but a recent study carried out by the the German Trade Union Congress, the DGB, found that of those in full-time employment 29 per cent of West Germans and 34 per cent of East Germans receive social welfare assistance to supplement their inadequate wages in order to survive. In total, this costs the German taxpayer €6 billion per year. In other words, many German employers are being heavily subsidised by the state.
There is no minimum wage in Germany, and the average wage in the low-wage sector is €6.50 per hour. Another study carried out by the German Institute for Economic Research (DIW) showed that 22 per cent of the work force is employed in this sector—7.3 million people in total. The report reveals that low wages inevitably means that these workers have to work long hours—an average of 50 hours per week—to earn a basic wage.
The authorities have made eligibility for unemployment benefit or social welfare extremely stringent. The unemployed are put under constant pressure to take on “mini-jobs” and part-time work at extremely low rates of pay or else face the loss of benefits.
As in Ireland, the ruling political class want the ordinary person to pay for the economic crisis. In late June the German parliament, the Bundestag, debated the ESM and Fiscal Pact Treaties in the one session. Only Die Linke (Left Party) opposed both treaties. The Green Party and the Social Democrats supported the governing coalition proposal to pass both.
Sahra Wagenknecht of Die Linke spoke against the treaties. She argued: “You are behaving like puppets. The puppet-masters are the bankers, and the result has been treaties in which citizens are short-changed in order to rescue the fortunes of the richest and keep the financial market casino rolling along . . . This is a project for the smashing of employees’ rights and a project for the reduction of wages and pensions. It is a project by Deutsche Bank, Goldman Sachs and Morgan Stanley for the plundering of European taxpayers.”

Monday, 30 July 2012

ECB calls for “further sharing of sovereignty"

EU Observer reports that a member of the board of the European Central Bank, Jörg Asmussen, has said that euro-zone states need to give up more sovereignty in order to fix the construction flaws of the euro, with the bail-out fund possibly turning into a budget authority further down the road. “We have construction mistakes of Economic and Monetary Union, and it is time to correct them. It is clear that the core of the current debate has a name: further sharing of sovereignty,” he said.
Part of the vision—which the ECB is shaping in a report drafted by Herman van Rompuy—is a cap on how much debt countries can issue, intervention in national budgets, and fiscal corrections imposed if a country deviates from the deficit and debt limits imposed in the euro zone. A common budgetary authority could also be formed, Asmussen said, with the forthcoming ESM a “starting-point.”
“The ESM is a fiscal authority by definition, because it deals with taxpayers’ money,” he explained, adding that it would have to be put under the scrutiny of the European Parliament—or a subdivision of it, pooling members from euro-zone countries only. The ESM is yet to be set up, pending a ruling of the Constitutional Court in Germany, due on 12 September, and in Ireland the outcome of Thomas Pringle’s appeal to the Supreme Court.
Under the existing rules the Parliament has no say over the ESM. Asmussen said this needed to change and that the ECB itself should be under more scrutiny from the EU Parliament, as it will acquire new supervisory powers over banks in the euro area. “Deeper euro-area integration can only be sustainable if there is progress on democratic legitimacy.
And it should not be only the ECB continuously emphasising it,” he said, adding that already national parliaments could be involved more, so that they “internalise” what it means to be an economic union.
Asked if he thought all present euro members were “willing and able” to go this path of further concessions of sovereignty, he said it was “worth fighting for,” and that majorities in those countries needed to be convinced that it is the only way to achieve prosperity.
Asmussen, a former official of the German ministry of finance, also defended the sometimes criticised stance of the ECB when giving advice to politicians on how to change the structure of the euro zone. “It is clearly not beyond our mandate. If we can’t answer where we want to be ten years from now, no-one will buy a ten-year bond from us, and that is very much an issue for the ECB,” he said.

Sunday, 29 July 2012

“We need more Europe”—Merkel

The German chancellor, Angela Merkel, has said the euro zone was moving inevitably towards a “political union,” requiring countries to cede more sovereignty and leading to more of a multi-speed Europe, with non-euro states in the slow lane. “We need more Europe, we need not only a monetary union, but we also need a so-called fiscal union, in other words more joint budget policy,” according to Merkel.
She emphasised that a political union was also necessary. “And we need most of all a political union—that means we need to gradually give competencies to Europe and give Europe control,” she said. “Whoever is in a currency union will have to move closer together. We have to be open to make it possible for everyone to participate. But we cannot stand still because some do not want to go with us,” she said.
Most EU officials see the process of integration taking five to ten years at best, much longer than the view of the markets. According to the president of the European Council, Herman van Rompuy, the aim is to have detailed proposals in October.
Merkel’s push for greater EU integration also underlined a growing rift with our major trading partner, Britain, which said that it would not take any part in a euro-zone banking union as envisaged by the ECB and the Commission. The chancellor of the exchequer (finance minister), George Osborne, told BBC Radio: “There is no way that Britain is going to be part of any euro-zone banking union.

Saturday, 28 July 2012

The Austerity Treaty (and its discontents)

One aspect of the voting pattern in the referendum on the Fiscal Compact Treaty on 31 May last that was strangely remarked upon by, among others, the Financial Times and the Economist was what the Financial Times called the “class divide” that it revealed.

Five constituencies voted No, three of them Dublin working-class constituencies—Dublin North-West, Dublin South-West, and Dublin South-Central—and the two Donegal constituencies. Academic gurus were cited as finding a growing “left-right” divide in Irish politics, caused by austerity.

Four major unions—UNITE, the TEEU, Mandate, and the CPSUcampaigned for a No vote, on the grounds that the Fiscal Compact regime would not create jobs and is in effect anti-worker.

The referendum clearly revealed an understandable measure of alienation among a section of the working class at the price that it is being forced to pay by the present economic crisis.

But that alienation was not a sufficient basis on which to mobilise a No majority in the referendum, much less to build a politics that can get the country out of the crisis.

The Yes campaign was based on the usual combination of patronage and blather but also skilfully used the fear that a No vote would cut the country off from access to economic recovery. A No vote would mean the country being barred from the European Stability Mechanism (ESM).

The No campaign emphasised austerity but largely failed to bring home the fact that there were significant issues about the European Stability Mechanism.

There was little understanding that constitutionally the ESM Treaty and the amendment to an existing EU treaty authorising the ESM Treatyrequire a further referendum in Ireland, and that politically the EU treaty amendment provides Ireland with a veto that is a powerful bargaining card with which to bargain for relief on the private bank debt.

Compliant media failed to tell the people that in fact the ESM was much more complex than what it was being portrayed as, and that in fact “best boy and girl in the class” behaviour can get us nothing but more and more austerity.

Enda Kenny’s reflections a couple of days after the referendum are very revealing about how he understands his role as head of the government of what its constitution still describes as a “sovereign, democratic, independent State.” He proclaimed that the Yes majority “strengthened Dublin’s hand in its negotiations in Europe over introducing measures to boost growth and in dealing with the tens of billions of euros of bank debt that Ireland had assumed during the crisis.”

He was probably not even aware of how ironic his statement was. In four years the state will be marking the hundredth anniversary of the 1916 Proclamation, which asserts “the right of the people of Ireland to the ownership of Ireland and to the unfettered control of Irish destinies.” The great and the good of the state will be dancing at the crossroads to mark the event.

Having to “negotiate” with others so as to be able to “introduce measures to boost growth” is clearly not the mark of “unfettered control,” nor is having to lay out 40 per cent of the state’s GDP to bail out banks on the instructions of others an assertion of “the right of the people of Ireland to the ownership of Ireland.”

But even more bizarre was the admission made a few days before the referendum by the Fianna Fáil leader Mícheál Martin about the blanket bank guarantee by the Fianna Fáil and Green Party coalition government on 30 September 2008, which shifted the debt of insolvent private banks onto Irish taxpayers: “We did it for the euro . . . We did it to prevent contagion across the euro zone.”

As a historian, Mr Martin would be aware of another act by Ireland as a small nation in the interests of a great-power enterprise. The price paid was of a different kind, but in both cases the action was not truly a self-determined one but rather that of a dependent.

On 20 September 1914, a little over a month after the outbreak of the First World War, John Redmond, leader of the Irish Party in the British House of Commons, made his call at Woodenbridge, Co. Wicklow, for Irishmen to fight for the British Empire “wherever the firing-line extends.”

Many answered his call, and nearly fifty thousand were killed.