GERMAN Chancellor Merkel and French President Sarkozy on Saturday decreed that the preservation of the euro required a 70bn euro currency reserve fund and an ‘intervention unit’ that must be in place by the time stock markets open this morning.
The EU summit however did not meet for this purpose.
It met to ‘sign off’ the 110bn (£95bn) EU-International Monetary Fund rescue package for Greece to try and prevent the international speculators spreading the debt crisis and driving Spain and Portugal down the Greek road and the EU onto the rocks.
The stability plan emerged after Merkel had words with President Obama, who demanded a stronger policy response to the Greek crisis and the growing threat that it posed to the world economy.
Stock markets in London, New York and Shanghai crash-dived on Friday after speculators’ confidence grew that they could bring down the euro.
The summit in Brussels originally called to ‘sign off’ the Greek bail-out plan, was suddenly turned into a panic crisis-management action to try to halt the collapsing markets with a 70bn euro reserve fund and the intervention unit.
Australia’s prime minister, Kevin Rudd, joined the demands for action. He was scathing about the three-year EU-IMF package for Greece, insisting that, ‘Markets have judged those arrangements to be inadequate.’
Japan’s deputy finance minister, Rintaro Tamaki, was just as unimpressed, declaring, ‘This is a global issue. All the financial markets are now in turmoil. The impact of the Greek crisis has gone beyond the euro area.’
Merkel and Sarkozy were driven into action with him declaring, ‘The euro is an essential element of Europe. We cannot leave it to speculators. We will not let others undo what generations have created.’
Merkel added that the new euro plan would send a ‘very clear signal’ to market speculators to back off.
However, one of the problems for the two leaders is that their domestic position is being undermined by the development of the crisis, and their counter measures.
Sarkozy faces a strike wave of opposition while Merkel faces the beginning of the end of her coalition.
Earlier this week, she declared that ‘politics have to reassert primacy over the financial markets’, and that the ‘speculators are our opponents’ and the banks were ‘perfidious’.
Today, voters in Germany’s most populous state, North Rhine-Westphalia (NRW), are voting in a regional election, where her unpopular ‘rescue’ of the Greek capitalists while NRW cities are going bankrupt, could see her defeated, and her German coalition greatly weakened by the ending of its majority in the upper house of parliament.
In Britain, the same world crisis is provoking the same economic and political crisis. Again, the financial masters are demanding that there be a government in place by this morning, or else there will be a major run on the pound that will destroy any remaining hopes for a recovery from the crisis, and plunge the UK into a round of interest rate rises and a savage deflation.
The ruling class is in a desperate crisis. Instead of the required strong Tory government, to press home the required savage cuts programme, there is no government at all. The Tories are seeking to cobble together a shaky coalition with the Liberals that because it does not have any workers representatives in it, will not be able to impose the savage cuts programme, without provoking a massive revolutionary response from the working class.
The current coalition alternatives are the Tory/LibDems with the latter having to concede the dumping of their proportional representation demand, or a Labour/Lib-Dem/Nationalists coalition that will have to take on the working class head on.
The prospect is that the rival coalitions will never get off the ground, and that a rapid run on the pound will bring the right wing of the Labour Party into play, with it joining the Tories and Lib-Dems in another Ramsay Mac-style national government that will have to impose its crisis programme onto the working class, aided by a split Labour Party.
The working class must be ready to bring down such a government with a general strike, to go forward to a workers’ government and socialism.