THE man who is credited as the principle architect of the single European currency 14 years ago has just warned that his ‘project’ is unworkable and on the verge of ‘collapse’.
Professor Otmar Issing, the European Central Bank’s first chief economist, expressed his fears that the euro and with it the eurozone and the entire basis for the EU was heading rapidly towards collapse in an interview with the magazine Central Banking, the trade journal for central bankers around the world.
In this remarkable admission that the entire project to create a united capitalist Europe is disintegrating, Issing squarely placed the blame on politicians.
From the moment it was created in 2002, the perfect plan for a single European currency devised by Issing and his fellow economists was ‘betrayed’ by the bourgeois politicians.
Issing is angry that his great experiment has degenerated, picking out the bail-outs of countries like Greece, Spain and Ireland as examples of this betrayal and saying that the failure to enforce the rules means: ‘The moral hazard is overwhelming’ and that the European Central Bank (ECB) is on a ‘slippery slope’.
The first bail-out of Greece in 2010 he correctly identifies as nothing more than a bail-out of the German and French banks who had recklessly forced billions of debt onto the Greeks in the certain knowledge that this debt would be repaid by the Greek working class through the most savage austerity cuts demanded by the ECB, the EU and the IMF.
Of the 216 billion euros handed to the Greek government, less than 5% actually went to the Greek state budget to spend on its own economy.
The other 95% went straight into the pockets of the bankers.
Issing now believes that Greece should just have been kicked out of the eurozone and left to fend for itself.
He castigates the ECB for deserting its role as a banking regulator and instead rushing around Europe bailing out bankrupt nations while its own ‘financial integrity’ is in meltdown.
Its policies of Quantitative Easing and ‘artificially low’ or negative interest rates have led it to buy up over one trillion euros of bonds dirt cheap and any increase in interest rates will cause huge losses to the ECB from which it will not be able to recover.
At the same time, Issing warns that stopping these policies would be ‘difficult, as the consequences potentially could be disastrous’.
While Issing is correct in his analysis of the impending collapse of the eurozone and with it the European banking system, his blunt attack has a sinister side to it. He squarely blames the politicians for being too concerned about the effects of not bailing out the banks and thereby letting a number of German and French banks go under back in 2010 for the greater good of capitalism.
The fact that such a course would have lit the fires of revolution across Europe is not his concern. The working class would have to be dealt with by the capitalist state smashing the resistance of the working class and there is an end to it.
In this, Issing is at one with the governor of the Bank of England, Mark Carney, who recently told the Tories to get lost and he wouldn’t be taking orders from politicians about how to rescue a bankrupt British capitalist system.
Carney openly declared independence for the bankers and his determination that they will survive and flourish when catastrophic collapse happens. Issing is issuing the same call on behalf of the European bankers.
They are relegating the capitalist state to its prime function; that of protectors of the owners of capital against the working class now being revolutionised by the crisis.
This crash that Issing and Carney are openly admitting is inevitable in the very near future, means that immediately on the agenda for workers in Britain and Europe is the question of organising to smash the dictatorship of the banks through socialist revolution and establishing a socialist state that will expropriate the bankers and bosses and bring in a planned socialist economy.