EU Crisis: A pact of two parasites

29 June 2012 — Comment – Morning Star

The European Union took another step along the road to a capitalist united states of Europe at the eurozone summit in the early hours of yesterday morning.

It is a journey riddled with contradictions, as the different member state governments primarily represent the interests of their own country’s capitalist monopolies.

These interests, of course, include the massive profits they can make in a Europe-wide market in which capital, labour, goods and services can circulate free from national planning and regulation.

Naturally, the Brussels deal is dressed up as a fresh agreement to boost economic growth, investment and good governance.

When has an EU plan or treaty ever been presented as anything else?

Hence a minor part of the Brussels proceedings was devoted to putting more money into various EU structural and investment funds, a necessary wheeze for presentation purposes.

But the overriding reality is that new ways to channel yet more public money into the banking system are also being used to promote banking and fiscal union across Europe.

The two EU banking bailout funds, financed disproportionately by German taxpayers, will be used to assist banks which lose money on government bonds and need to build up their reserves.

But eurozone member states will have to agree to a new EU-wide system of banking supervision.

Once this is in place, the EU subsidies will be paid directly to the banks, keeping the debt off the books of member state governments.

Linked to the deal was a 10-year plan announced by unelected ‘president’ of the EU Council Herman Van Rompuy for the creation of a European treasury to control EU member state budgets.

Greek, Italian, Spanish, Portuguese, Irish and Cypriot banks need the dosh, their governments need an improved credit record, while German banks want the power that greater European integration will give them.

It’s a symbiotic pact between lesser and greater parasites.

Germany’s Chancellor Angela Merkel is resisting demands that the European Central Bank be empowered to issue Eurobonds to provide member state governments with the cash to redeem their own treasury bonds, thereby guaranteeing bond-holders’ profits.

She is holding back any such concession in order to exact further steps towards integration when the new deal comes unstuck, as it surely will.

It remains an article of faith for German as well as British bankers that, in the event of a member state default on its debt, that private-sector banks are first in the queue for any bailout money.

Accordingly, this was endorsed in Brussels.

But the summit did nothing to steer Europe away from the disastrous austerity regimes that mire so many member states – not least Britain – in recession.

The banks and financiers who made capitalism’s gravest international crisis for almost a century so much worse continue to be bailed out at public expense.

Bank losses have been nationalised so that bank profits can remain privatised.

Tighter regulation will not halt short-termism, greed and corruption in the financial sector, any more than decades of anti-monopoly legislation have curbed monopolism throughout the capitalist economy as a whole.

Public ownership, economic planning and progressive taxation are the cornerstones for rebuilding a modern, productive economy in Britain, as elsewhere.”

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