Euro-System on the Brink of Collapse: Should Germany Pay for Everything?
February 12, 2010 • 10:00AM

by Helga Zepp-LaRouche

The EU-Summit in Brussels has done absolutely nothing to avert the looming collapse of the Euro-system. The demand, that Greece should reduce its 2010 budget by 4%, repeats the error of the austerity policy of Bruening and cannot in any event be realized in the face of the massive resistance. The question of who should pay for the refinancing of the Greek debt (the German taxpayer, naturally) was postponed due to the explosiveness of the question until Feb. 15-16. Unashamedly in contrast was the announcement of van Rompuy, that with immediate effect the European Council should be responsible for the economic policy, budget plans, structural reform plans and measures regarding climate change(!).

Even if the term European Economic Government was avoided, the European Council intends to operate precisely as such, i.e., to treat not only Greece as a protectorate, but rather all Member States, and thus to dictatorially launch the entire disastrous arsenal of criteria of the Maastricht Treaty, the Stability Pact, and the debt brake. Thus, the EU of the Lisbon Treaty has been molted precisely into the monster, of which we have warned before its signing: an oligarchical imperium, in which the final remnant of sovereignty of the nation-state has vanished.

Significantly, the adviser to the EU-Commission, Alberto Giovannini, who led the group, which had elaborated the technical transition from national currencies to the euro, expressed himself on the day before in the Italian daily newspaper Il Sole 24 Ore with the following outrageous words: "History teaches us, that empires always achieve greater efficiency and prosperity; with an extensive geography the imperial model is more successful."

If it is impossible to change this policy dramatically, the entire European system will collapse. For in the face of the huge deficits almost of all Member States, only the German taxpayer remained as the great paymaster. Thereby the excessive focus on Greece already itself represents again a deception, for the Greek debts to the various European banks are a comparatively small problem. The far more dramatic problem is the debt position of Spain, whose banks spread their subprime mortgages by means of securitization in all of Europe.

In December 2007 alone, Spanish banks obtained 63 billion Euro through the Repo facility of the ECB, and between the middle of 2008 and the end of 2009 an additional 27.7 billion from the ECB in new money, for which they deposited to a large extent toxic real estate titles as securities, and thus titles of a market, which according to the words of the president of the Spanish Mortgage Association, Santos Gonzales, are de facto bankrupt. The Banco Santander, which is closely connected with the Royal Bank of Scotland in terms of personnel and business practice, sits on gigantic bubbles such as the "bolha Brazil," the Brazilian bubble. Between the Brazilian "carry trade," with which investors receive money at almost 0% in Europe, the USA or Japan, and then invest at 8.75% interest in Brazil, and an appreciation of the Real of 27% in the year 2009, speculators could pocket a profit of 35.75% at the end of the year. However, this bubble is just as stable as similar profits which Santander has made with business operations in Great Britain.

In reality, with the imminent state bankruptcies of Greece, Spain, Portugal, Ireland, Italy, Turkey, Dubai, Great Britain and the USA, to name only a few, it is the same question as already occurred with the gigantic trillion-dollar bank rescues for the banks in the USA and Europe, the banks themselves and their continual gambling, for which they are then to be rewarded by the governments with new public money. If this policy should be continued, it would end very soon in a dramatic inflation.

This has obviously also caught the attention of Frankfurter Allgemeine Zeitung (FAZ)-editor Holger Steltzner. He wrote in an alarmed lead commentary on the day of the EU-Summit:.... "In plain language that means: Germany should be responsible for the debts of Greece. But this is not the way one once sold the Euro to the German. Before the farewell to the German Mark, the Maastricht Treaty was solemnly signed, which explicitly bans a member of the monetary union from being held accountable for the debts of another member. If this central dictate of financial-policy stability is no longer valid, then also the Maastricht Treaty, the Stability and Growth Pact, and also the debt brake in the German constitution are not worth the paper praising stability, on which they are written. Then, the Germans will desire the mark back." The survival of the European Monetary Union and the stability of the common currency would be at stake, the depreciation of the money and the pensions of the citizen would be threatened. Strong words for a newspaper, which seemed to be married to the neo-liberal paradigm.

In fact, the European nations will only survive, if they once again attain sovereignty over their own currency and economy policy. And they will also only survive, if the high-risk speculation, to which the G20 governments have consistently given their blessing since the outbreak of the crisis 27 months ago, is brought to an end once and for all through the reintroduction of the Glass-Steagall standard, which strictly separates the business of commercial and investment banks and cancels toxic waste.

We will see how the Constitutional Court in Karlsruhe, that in June 2009 had explicitly ruled, that the EU is not a Federal state, and had confirmed the sovereignty of the EU-Member States as well as its own supervisory authority, responds to the latest EU-summit. In its so-called "Maastricht-Judgment" of October 1993, Karlsruhe had in any case granted any German government the right to leave the monetary union, if the stability of the Euro should be exposed as a false conclusion and should lag behind the D-Mark.

In this highly dramatic and high-risk situation it is indispensable, that mythologies be cleared up and the truth be reestablished. It is such a myth, that banks have a "systemic" character, and they therefore have to be "rescued" over and over again by the taxpayer. If something has a systemic character, then it is the real economy, the General Welfare and the life of the citizen.

Another one of these mythologies, anthropogenic Global Warming, has just now disappeared under mountains of falsified emails, non-melting Himalayan glaciers and large amounts of real snow, which St. Peter has kindly and demonstratively toppled on the northern hemisphere.

Not much time remains to act.