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Eurozone Lying: The Root Of The Debt Crisis Problem

Politics / Eurozone Debt Crisis Mar 20, 2013 - 04:19 PM GMT

By: Andrew_McKillop


After the ritual tussles and plays to the crowd, any German-French bilateral summit or private bilateral meeting "on the margin of" similar ritual EU-27 summits, will wind up with a rousing declaration of complete and total agreement: We will tackle the root of the problem. Believe us!

With total predictability the most recent March 14 get together of Merkel and Hollande, "on the margin of" a two-day EU summit in Brussels rolled out the lies in royal fashion. Both leaders told the press that, in Europe, "the crisis" is now 3 years old. Not 4 or 5 or longer, but 3 years young or old. In 2009 for example, things were simply humming for Europe's economy!

One of the precious insights to the common thinking of the Eurozone's two most powerful leaders, whatever you might think looking at them, was supplied to the media by their "sherpahs". We were told that both of them believe that: “Markets kill you if you lose fiscal credibility, and they also kill you if you don’t have any growth, so it’s quite a narrow path to tread”. This "crystallizes the debate" between austerity and economic growth stimulus. It incites "all Europeans' to budgetary discipline, but at the same time it also stimulates flexibility, for example on new symbolic banking regulations. Add in Europe's struggle for  human rights, such as gay marriage and the fight against youth unemployment, reaching 55% in some Club Med PIIGS countries, as well as Europe's own War on Terror in Mali and (they hope soon) Syria - and you have a heady list of ingredients for Eurocrat lying.

If you asked why Europe is in such deep trouble you have good answers right there.

The lie machine of the Eurozone and its low level, low cost. interchangeable demagogue leaderships has built itself a range of Straw Men to take pot shots at. Especially for the French, but also for Merkel the UK of David Cameron is always good for a hit. To be sure, this is grist to the mill for Cameron, who is applying exactly the same mix-and-mingle of crony capitalism, Stalinism and pot luck "policy" as the Eurozone Czars. Cameron can play the true grit True Brit, but not exactly to rapturous applause. His opposite numbers in he Eurozone do the same - but with more class and even less applause.

Everywhere in Europe, in a drab and continuing "fatal convergence" economic growth is failing. In no way does "Cameronomics" differ from Merkelomics or whatever Hollande thinks he is playing at. FX markets, right now, are grilling the GB pound - described by the business press as the pound "bearing the brunt" of a loss of confidence in the economic policies of Prime minister Cameron.

Since Jan 1, sterling has weakened more than 7 percent against the dollar, which is almost a miracle given the openly stated QE policy of Ben Bernanke: but it can be done! Investors, that is speculators are evoking the week of Black Wednesday, the week through Sept. 16, 1992 when arch speculator George Soros and his office boy Sir James Goldsmith "earned" $1 billion by forcing the GB pound out of the European exchange-rate system that preceded the euro: sterling dropped by 9.5 percent.

The net result of this for the famous man in the street (called the Man on the Clapham Omnibus in Brit talk) was very close to zero, but at least it enriched Soros and his office boy. For elite thinkers and plotters however, this was a key event. It was arguably the key event in creating the future European economic lie machine, which above all needed a money-symbol. To kick around.

Certainly since 2009, European leaderships do not simply feel obliged - but are obliged - to lie about national economic prospects. There simply is No Alternative, as Britain's Iron Lady Thatcher cackled and croaked as she junked a generation of British young people into the gutter. Never mind, they crawled away and surviving members of the cohort invented Punk Rock!

Lying about the economy is now a tradition. Cameronomics is a highly predictable and now-classically normal example. When Cameron and budget director Osborne took office in May 2010, they predicted the economy would grow more than 5 percent over the two years to 2012, the budget deficit which was running at an incredible 11 percent of GDP would fall to 2 percent by April 2015 and the UK's credit rating ase set by the reliable, truthful, business friendly and oh-so-independent ratings agencies would stay AAA. Instead, GDP rose 1.1 percent, the deficit is still 8 percent of GDP and most likely Fitch Ratings and S&P's will follow Moody’s in downgrading Britain’s credit score pretty soon.

In the long-drawn-out negotiations on possible UK membership of the Eurozone, True Brit Gordon Brown, on several occassions rejected any idea of the UK "surrendering the pound" at 1.50 euros per pound. Maybe he wanted 2 euros? We can check out the GBP/EUR rate of today.

Both Germany and France wanted the UK in the Eurozone, as a co-administrator of the following rout where The Club Med countries became economic toast, and could be sucked dry by the powerful. It would have been fun-fun-fun until, quite simply, it all fell apart.

Certainly in the French case, given the French national character, there is "lingering animosity" about the UK's churlish rejection of Eurozone membership. As a member of this not-very-exclusive club, now including openly declared money-laundering centres, called Cyprus, Britain would have fully benefitted from the altogether better and shinier lies told by the Eurozone machine.

UK economic lying is far behind. Eurocrats have, on occasions, given their "insights" on why and how Britain's lies are simply not in the same class as their own. Some have even said this is a fault of Anglo-Saxon culture: marooned on their muddly, overcrowded island packed with the jobless, window cleaners and credit default traders - and incredibly aged punk rockers like David Bowie (with cardiac problems!) - the Brits aren't able to lie with the same flair and skill as continentals. In brief, the Brits tell simple straight economic lies, but the Europeans tell work-of-art lies.

Almost ignored by the British press (and in normal times ignoring these lies would be normal), Eurozone summits, that is German-French summits, have for weeks if not months to date dangled the Cyprus rout in almost full display. The summits have their reliable and masterful "anonymous spokesperson" commentaries, written by pure artists of falsehood, telling us that Cyprus intends to pursue its request for a bailout of up to €17-billion ($22 billion) and negotiations among finance ministers are "thrashing out" the details of the bailout. There is no question of anything so dire as taxing all depositors at Cypriot banks. Everything is fine, only "the details" need to be fixed.

These summits are now state-of-the-art lying. They also enable tried-and-trusted Eurocrats, already soundly and totally rejected by voters, in formal and legitimate elections, to be wheeled on stage and talk as if they were still in power.

Described by the Euro-friendly press as "outgoing technocratic Italian Prime minister", Mario Monti is able to primp and preen before the microphone and flashlights, explaing that his ouster means that Italy is ungovernable, and he must forthwith be returned to power. Jobs for the Boys! The lies are ladled as thick as a well-crafted bechamel sauce on the sumptuous dinner plates. Italy may face "economic challenges" but oh gosh are they simple to manage - under Mario Monti.

Anonymous spokespersons "on the margin of" the European Commissaire-level meeting (itself private), in Brussels, February 28, told the mindless witless Euro-friendly press that Spain's economy is "almost triumphantly progressing". So much so that "Spain will not need new austerity measures this year after its public deficit beat forecasts of a deeper effect from prolonged recession".

Through 2012, Spain's Eurozone-friendly technocrat-stuffed government passed over 60-billion-euros ($78.4 bn) in new and unpopular tax hikes and spending cuts. Its hand out to Spain's banks, only in 2012, were equal to 3.25 percent of GDP. A so-called "cash inflow" in late 2012, from an across the board hike in VAT by 3 percent "helped the government reduce the deficit". With those flexible, growth-stimulating and budgetarily responsible austerity measures, who needs new ones?

Not only any idiot, but the straight majority of all Spanish economic think tanks say this is a simple trick: load the austerity measures for 2013 from 2012, and trim a few fractions of 1 percent off the 2013 deficits - showing that "all is well". Spain has an adult unemployment rate of 26 percent.

Europe's most recent full and formal summit, of March 14, with reporters allowed in the building was a predictable masterwork of, lets not say lying but "obfuscation". European parliament chief Martin Schulz's  sherpahs said that Schulz is convinced that a blind austerity drive might save Europe's banks, but this would "cost" an entire generation of youngsters with no work. Depriving young European of a job "can save the banks". That is Euro-logic. Possibly they will not have the spare change to play the financial markets, shorting bank equities we might guess.

His native country, Germany very predictable said that sticking to EU deficit and debt rules, many of them unpublished and hearsay-value notes scribbled at the bottom of speeches, and cutting back budget deficits "will make it easier for companies to hire and fire workers". This of course is despite the strange and unwelcome economic forecasts that Europe will have "a longer-than expected" recession. That really is a surprise! Even better, and passing into masterwork territory, for lying, the rout in the Club Med countries is also preventing companies from hiring-and-firing, in Germany. Or at least from hiring anybody like Mario Monti.
Showing the Eurozone Czars have a gameplan for "diverting attention" from the economic ruin they have smugly engineered, a plan to move on from bread and circuses, to war and circuses, recent EU summits always take a poke at Russia and-or China. The March 14 summit placed Russia at the top of its "informal discussion of leaders". Criticising human rights abuses in Russia was a natural - although 55 percent youth unemployment in Spain is not a human rights abuse. One of course anonymous EU spokesperson at the summit put things into context: Russia operates Cypriot banks, European leaders quietly sign energy deals with Russia, and: "The point is, Putin is there to stay. Like it or not, we have to deal with him". A similar "strategic argument" is produced for any discussion about China.

What we can sincerely hopt is that today's Eurozone leaders, who are just about able to work their economic terror campaign on countries the size of Greece, Portugal or Ireland, start to feel the heat in their own backyard. Spain and Italy are already proving too big to ruin at a nice, safe, long distance from Brussels. Overseas, their war and circuses programme shows that Mali is about the limit of their capabilities, although Syria is very tempting. What they most need is to get flak in the street, right in from of their noses - and then we can listen to a whole new set of lies until they are popped in jail for corruption, lying and rank incompetence!

By Andrew McKillop


Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2013 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisor.

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