Remember the Maastricht Treaty? The one which as the main aim for the creation of the European Union offered, the "balanced and sustainable economic and social progress" and the raising of the living standards of poor southerners to converge with the rich northerners? The project that would have the Economic and Monetary Union as a tool for achieving this aim? Forget that! The so called European Union has degenerated into a transfer union, where only Germany and a handful of other countries, those with a current account surplus, are able to benefit. How did this happen? Simply by transferring to Germany et al. the most valuable assets -in terms of economic policy- of the “poor south”, in the course of only twelve years.
- Competitiveness: By joining a monetary union without a real economic and fiscal one, the weaker countries forfeited their flexibility. A simple example: Back in 1978 it took 20 drachmas to buy a German mark. By 1988 the exchange rate was at 70 drachmas to the mark. By 1998, two years before the monetary union, it had climbed to 170 drachmas to the mark. All “poor south” countries had to follow similar, if not so steep devaluation paths. Their current account deficits were transformed into rampant internal inflation (here is the ECB's grand failure on its main task towards weakest member-countries) with an inflexible internal and external exchange rate, through a euro which was being gradually overvalued in relation to their national accounts and the real economic developments. On the other hand Germany et al. enjoyed the benefits of a cheap euro -relative to their trade balance- hence their ballooning surpluses. A hard-core euro would most definitely have made German exports too expensive.
- Employment: After the initial euphoria of cheap money, leading to wage inflation, and with Germany et al. not doing their Hausaufgaben (their beloved expression is “do your homework”) of boosting internal demand and intra-union investment, they exported their unemployment to the lazy southerners and they cheaply imported highly skilled workforce. Benefits from decades of investment in education by Greece, Italy etc. are now reaped by Germany.
- Low borrowing cost: What was originally supposed to be a principal growth tool for poor countries -under a common currency- was quickly transformed into a burden. Borrowing costs for Germany are now negative and at the same time prohibitive for Greece et. al. With deflation being a real threat, repayment of debt by the most indebted is now impossible. By showing solidarity with the banking system, the EU has made things even worse. It broke all rules in order to transfer the risks -undertaken by reckless banks while lending to reckless governments- on the shoulders of Greek and Italian citizens and eventually to all European taxpayers.
The list could grow but the main point is not there any more. It has now boiled down to a political confrontation between the German speaking “establishment” of the neoliberal Europe and the “renegade” left-wing government in Greece, which is trying to cut free from this asymmetrical transfer union. The institutional establishment has chosen to sabotage this government, instead of assisting it to do the “homework” of purging the corruption and mismanagement of decades past. By imposing -through the ECB- the financial and liquidity chokehold (to Greece now and to any other country in the foreseeable future), Germany has made the first step towards the next phase of the “Union”, where in essence only the wealthy can have voting rights on issues that really matter.
Δεν υπάρχουν σχόλια:
Δημοσίευση σχολίου
behave or be gone