GERMANY’S Chancellor, Angela Merkel, says she is satisfied with the EU deal to help finance the debt-laden eurozone banks without the sovereign state, in which they are based, taking the primary responsibility for debt repayment.
Since the debt of the Spanish banking system is said to be in the 450bn euro region, the continuing bailout of the Greek, Irish, Portuguese, Spanish, Italian and Cypriot banks, to start with, is a recipe for runaway inflation, leading to worthless paper masquerading as money, and another ‘Weimar nightmare’, this time EU-wide.
Merkel’s response to this position is to state that: ‘The details affecting liability … will have to be discussed … those negotiations are going to be anything but easy.’ Ultra-harsh measures are still to be the order of the day.
In fact, nothing has been decided, except that juggling with the massive euro debt mountain is to get even more risky, with all of the political consequences that have already begun to appear, with the emergence of appointed, unelected Prime Ministers and Finance Ministers in Greece and Italy, and the demand that a European Central Bank be complemented by a European central government.
Merkel added about the deal: ‘I think we found a good compromise.’ There is to be a new supervisory body that will enable the European Central Bank (ECB) to ‘keep a very close eye on the banks’, she said, and presumably, in a situation where the ‘risk’ has been greatly increased, it will have to be ready to pull the rug with great ruthlessness from beneath those banks that cannot repay their debts, ruining their depositors, and toppling the national governments involved.
Merkel insisted that the deal on lending would provide sufficient safeguards for the taxpayers’ money used by the EU bailout funds. Once again, more dictatorship.
However, the funds will not only be lent direct to banks. They will also be used to buy bonds of countries like Italy and Spain whose borrowing costs have soared – with the intention that those countries will not have to apply for a formal Greek-style bailout.
This can only mean a central regime emerging to impose even harsher austerity programmes than we have seen in Greece all over Europe. The more centralised banking system will lead to the emergence of a more centralised EU regime based on Germany, that will wrest power away from the individual EU governments.
Eurozone leaders agreed to begin implementing the decisions by 9 July but the cash transfusion will not begin until the end of the year.
Germany, the chief lender is supported by the Netherlands, Austria and Finland, while France is leading the debtor states. There is a fault line down the middle of Europe that can only widen, and turn into virulent hostility as the tensions between lenders and debtors increase.
EU Council President Herman Van Rompuy has said the deal will break the ‘vicious circle’ between banks and national governments. He did not say that this will be replaced by a raging conflict between lender and debtor states, and between the working class and the ruling classes of Europe.
Cameron is calling for a more centralised EU, at the same time as he raises the issue of a UK referendum to weaken its relations with what he is campaigning for, a more centralised EU.
His call exposes UK capitalism. Its ruling class needs the EU market but dreads that further EU centralisation will see a rapid decline of its own importance. The UK ruling class is already only a shadow of its former self, the victor has turned into a victim.
The UK working class must have a completely different perspective. It must be for the UK leaving the EU, and for a British socialist revolution to put an end to British capitalism and its ruling class as a as part of the struggle for a Socialist United States of Europe, the only way that a viable united Europe can emerge.