Mario Draghi wants EU leaders to ‘form’ a 10 year vision’ for the Euro. Fuck me. I’ll bet he does. Uncomfortable wee truth, in a globalised economy, power was always going to federalise up and devolve down. I know that seems like what the Euro and EU did, and it certainly is why the political union of the EU came about. But it is difficult to ally a political union between sovereign democratic countries with different cultures and economies (political or otherwise), with a single market, a single currency, and a central bank. In fact, doesn’t look like it was ever possible at all.
The EU as a political alliance, and a single market, is inevitable, not aspirational. Of all those things, a single currency is the least useful and having the most damaging effect. I am betting there are important people who think there are more important things to save in Europe. The realisation that power federalising up wasn’t democratic, was enough it itself to ensure that something would happen to correct it. The stuff Draghi is spouting won’t win an election for anyone, and pantomimes they may be, the legitimacy conferred by elections is still required.
In hindsight, institutions which were actually a plaything of whoever has power, to use on behalf of banks, were not what anyone expected or needed from the European Union. When ‘technocrats’ replaced democratic leaders everyone was going to notice something was wrong, even if the media this type of politics uses to manage the message attempted to normalise it. The whole equation falls down if the democratic check and balance to organised international money is a bank… That a meeting of the ECB requires 8000 police officers to be deployed, should have set off some stonking great alarm bells before now.
Draghi wants a ten year plan to commit to the Euro, while the European Union finds it has been pushed to its limits democratically, politically, socially, and economically, by a dysfunction in financial systems, originating in the UK and US. Hollande’s victory signals that that the days of such demands sounding reasonable are to come to an end, not yet, but soon.
He sees recovery on the horizon, which is astonishing considering the level to which banks are supposed to contract their balance sheets in the next year. Another wave of credit crunch already hitting the businesses austerity and the financial crisis already undermined. Mr.Draghi wants ‘growth back at the heart of the agenda, without contradicting the need to continue, to perservere, with fiscal consolidation’. This is a nonsense we will hear a lot. Post Hollande’s election win, Christine Lagarde saying the same to anyone who will listen. Fiscal consolidation is governments deleveraging onto populations, using rationale which never had a hope of doing anything but increasing government deficits, especially in the UK where none of the risks afflicting other countries are present.
There is a widespread realisation of the corruption and paralysis Western Democracy has inflicted on itself, as it distanced itself from voters and assumed banks would serve them. Politicians and their shitflinging media monkeys, with domination of the media narrative, have only existed to tell us what we need to hear since at least the mid-nineties, and they don’t understand much outside it. Now they fight for their survival.
People commit suicide in Athens and we have seen the depths mainly white, male, elite educated politicians will sink to in exploiting inequality and demonising those on the receiving end of this everywhere.
Banks including RBS are now looking at moves to ‘outsource’ small business lending. In moves which expand the shadow banking sector, drive up borrowing costs, and remove ever more of their responsibilities to the real economies of nations. The finance/real economy relationship seems entirely the wrong way round. The shedding of the responsibilities that justified the bail-out, are no concern to anyone, while RBS pursue an aggressive mortgage strategy to aid its recovery. It’s not like a personal debt and housing bubble are not already huge problems. Apparently as other banks rein in their lending, RBS is going to roll it out, but not to the SME sector that is one of the only possible sources of future growth we have. They cheer that they have managed to nearly repay £75billion government money, as if a number like £75billion is significant enough to dent our consciousness any more, now the world spins on the consequences of the crisis that necessitated those loans.
Bankers demanding governments ‘do’ something to create growth in within these circumstances, the slightly unhinged demands of tyrants, with no mandate or understanding outside their own interests. The only place something is ‘to be done’ is at the source of the crisis. We are not yet allowed to say so yet.
For future reference, you can’t starve yourself Monday to Monday, have a cheese sandwich on a Tuesday night and a stick of butter on a Thursday morning, buy bigger clothes, and expect to gain weight and treat the problem that caused the weight loss in the first place. You’ll get ill.
The ability to tell people this is how to respond to a banking crisis no longer exists. It always depended on an ability to deliver the message required undiluted, along with an iota of trust in that message and ignorance of its reality. That this is the narrative our political media will use to try and detoxify neo-liberalism is entertaining at least. In the year that this saga is likely to conclude, it’s probably unwise, but shitflinging politico monkeys have never been stupider so they may convince themselves.
Angela Merkel may want to see the winner of the French election in her office, first thing, while the world waits with bated breath for this breath of fresh air to clash with the lynchpin of austerity politics, but Francois Hollande is not the radical alternative that Europe will eventually need. While his tone is confident, he is offering nothing hugely different. The centre position has crumbled, those reliant on it won’t give it up, and everyone knows they need to move away from it. Hollande is not a radical saint, but has shown we can, even if the markets throw a strop.
Hollande is actually offering warmed up Keynesian and socialist rhetoric, racism, and a slightly less austerity. The change in focus to incorporate the word ‘growth’ welcome, but this is not a crisis which requires retrospective nostalgic machismo willing to bully the weakest. The reception his slight change in tone received, giving confidence to a growing change in tone across Europe, in a climate where the word growth is now on everyone’s lips.
Recognition that austerity is unsellable is something to work with, as Europe bargain so they don’t fall down the hole the US created, following the suicidal short term blindness that caused this crisis. They have had terrible prescription, and need a second opinion. The US are beginning to be perceived as undermining recovery in the Eurozone, the separation of US interests from European financial negotiations is happening swiftly, which raises huge questions for us. The word ‘growth’ on its own is not enough to provide the political strength to address the questions that have been raised, or an economic alternative that flies.
This is not Alice in Wonderland, and we can’t just look for a bottle with a different label. But from now, we should see questions more openly asked about what an economy is and what has gone wrong.