Why the Euro Is Heading for an Earthshaking Crisis
European leaders are in a panic. Greece’s banks are closed. Experts warn the global economy is under threat. And it all hinges on Greece’s place in the eurozone.
Fears of rioting and mass panic, dormant since the Greek fires of 2008, are rising again.
It shows just how fragile the eurozone is. In April 2014, the Greek government was able to borrow money on the normal financial markets at the relatively high, but not appalling, rate of 4.95 percent. As far as lenders were concerned, the euro crisis was over. Greece was no longer dangling over the edge of a precipice. Instead, it could borrow money just like any other normal nation.
And this wasn’t just the verdict of the bond markets. The politicians said so too.
“[T]he crisis in the eurozone is over,” French President François Hollande said just over two years ago.
And now here we are again. It is still possible for the eurozone to dodge the bullet yet again. Credit rating agencies, for example, have said that if Greece does not pay back the International Monetary Fund (imf), they won’t treat it as a default, because private investors who hold Greek debt would not be affected. Opinion polls indicate Greeks will vote to submit to the creditor’s terms. So Greece could miss the payment to the imf, come up with a deal with its creditors, and in a few months, it would be like this whole thing never happened.
A Greek exit of the euro is still certainly possible, and maybe even likely. But even if not, the past few years have proven that we’ll be back in this situation again. The euro is a crisis-making machine—because of a design “flaw” in the euro.
The euro is fundamentally incompatible with democracy. That’s a strong statement, but, if you’ll bear with me, provably true. And it has everything to do with why Europe keeps having these crises.
When a group of nations shares a currency, the nations share a lot of risk, and even a reputation. What one nation does affects all the others. If Greece goes bankrupt, investors immediately worry about the other nations in the eurozone. What about my money in Portugal? they ask. Is that safe? And so Portugal is soon in trouble.
There is a much more direct effect, too. A common currency encourages integration among the economies of the eurozone. If Greece had gone bust in 2008, it would have hurt companies in other European nations, and therefore their governments.
But this immediately creates a new problem. German taxpayers were now lending their money to Greece. Quite naturally, they wanted a say in how it was spent—they wanted to make sure they would be paid back. At the same time, and also, quite understandably, the Greeks weren’t very keen on being told what to do by the Germans.
It gets worse. If Greece and Germany had two separate currencies, the economic troubles in Greece would, in time, sort themselves out. Greece’s drachma would get weaker, compared to Germany’s deutschemark. You’d get more drachmas for your pound or dollar than you would deutschemarks, making German goods more expensive, and Greek ones cheaper, stimulating the Greek economy. In practice, it’s not quite this neat, but it helps.
The euro destroys that. The only long-term solution is for Germany to keep giving Greece money until its industry is up to the same level as Germany’s. Without this, the money only flows one way—out of Greece and into the coffers of Germany’s exporters.
And so we’re stuck with angry Greeks versus bossy Germans—forever. This provokes one crisis after another. Add to the discontent the fact that there are many other countries in the eurozone with the same kind of imbalances.
How do you stop this endless crisis? Consider a very successful economic union—the United States. In America, you don’t have angry Texans staging protests because their tax money is going to Mississippi. Both Texans and Mississippians see themselves firstly as Americans. They identify as one people, and so they’re willing to help each other out. Texans might be a bit miffed about another state getting more than its fair share of tax money, but they’re not going to protest or get outraged. They simply understand that this is how a nation works.
Additionally, America has a common government. Actually, I have no idea if Texas subsidizes Mississippi. To work that out would take a lot of painstaking pouring over federal government statistics, working out who pays in how much in tax, how much unemployment benefit goes out, etc. The process happens automatically. Texan lawmakers don’t have to sit down every year and decide whether to extend the theoretical “Mississippi bailout.”
Which is why the euro is not compatible with democracy. Every single county in Oklahoma voted to have a Republican president, yet the state currently lives under a Democratic presidency. That is not seen as undemocratic. But when Greece has policies, and even governments, forced on it by the creditor powers of Europe, it quite plainly is undemocratic.
Why the difference? It gets back to the very name “democracy”. It is made up of two Greek words: “demos,” meaning “people,” and “kratos,” meaning “power”—i.e. power to the people. It begins, just like the U.S. Constitution, with a large group that considers itself “the people.” There must be a unit that everyone identifies with. As the British political thinker and Conservative mep Daniel Hannan put it “If you want government for and by the people, you have to have a people that everyone recognizes some identity with, some allegiance to.”
Oklahomans accept that people in California or Nebraska have a say in how Oklahoma is governed, because they consider all the states of America to be part of one unit. Greek voters have never made that commitment with the rest of Europe. Instead, other European nations have a say only because of the common currency.
The result? Anger, which drove Greece to elect a radical party that was all but unknown before the Greek financial crisis and the euro had caused unelected European bureaucrats to be elevated above the elected Greek government.
As the Telegraph’s Ambrose Evans-Pritchard noted, the European Central Bank (ecb) “sent secret letters to the elected leaders of Spain and Italy in August 2011 demanding detailed changes to internal laws for which it had no mandate or technical competence, even meddling in neuralgic issues of labor law that had previously led to the assassination of two Italian officials by the Red Brigades.” He continued:
When Italy’s Silvio Berlusconi balked, the ecb switched off bond purchases, driving 10-year yields to 7.5 percent. He was forced from office in a backroom coup d’etat, albeit one legitimized by the aging ex-Stalinist EU fanatic who then happened to be president of Italy.
Lest we forget, it parachuted in its vice president—Lucas Papademos—to take over Greece when Premier George Papandreou merely suggested that he might submit the emu bailout package to a referendum, a wise idea in retrospect. That makes two coups d’etat. Now Syriza fears they are angling for a third.
This is always the way it’s going to be when a group of separate nations with distinct and even conflicting, national identities are grouped into a common currency. I said earlier this was a design “flaw” in the euro. The quotation marks are there for good reason. To those who designed the euro, it’s not a bug—it’s a feature.
The brains behind the euro expected it to force the divided nations of Europe to unite under an American-style federal government. They knew that a common currency would simply lurch from crisis after crisis without that unity.
“[T]he EU quite deliberately created the most dangerous credit bubble of all: emu [Economic Monetary Union]” wrote former civil servant Bernard Connolly, author of The Rotten Heart of Europe. “And, whereas the mission of the Fed is to avoid a financial crisis, the mission of the ecb is to provoke one. The purpose of the crisis will be, as [Romano] Prodi, then commission president, said in 2002, to allow the EU to take more power for itself. The sacrificial victims will be, in the first instance, families and firms (and banks and investors) in countries such as Ireland …. Subsequently, German savers (or British taxpayers) will bear the burden of bailouts that a newly empowered ‘EU economic government’ will ordain.”
Which brings us to where we are now. The process of forcing European nations to unite is probably taking longer than the euro’s founders foresaw. It’s now commonly acknowledged by financial writers that this was the aim of the euro—and then it is commonly acknowledged that this has failed. The lack of a common “we the people” has so far proved too hard for the United States of Europe to overcome. Those founders of the euro saw themselves primarily as Europeans. But the people of Greece, Germany, France, etc., do not.
But there is one organization with deep roots across Europe that could overcome this. In 1979, Herbert W. Armstrong, magazine editor of the Trumpet’s predecessor, the Plain Truth wrote:
The nations of Europe have been striving to become reunited. They desire a common currency, a single combined military force, a single united government. They have made a start in the Common Market. They are now working toward a common currency. Yet, on a purely political basis, they have been totally unable to unite.
This is still the way it is today. What can make it change? “This will be made possible by the ‘good offices’ of the Vatican, who alone can be the symbol of unity to which they can look,” wrote Mr. Armstrong. “Two popes already have offered their ‘good offices’ toward such union.”
This is where the euro crisis and any subsequent crises are leading—to a new European superstate, heavily influenced by the Vatican.
Some of the nations currently in the euro may not be part of the this superstate. The divisions between them may be too great to overcome. Greece may well leave the euro. The current eurozone is still too large and unwieldy to form a superstate, even with the Vatican’s help.
This crisis will have to get worse to force some eurozone nations to surrender their national powers. A Greek default or the exit or another country from the eurozone could quickly plunge Europe into this more extreme crisis at very short notice.
No matter what “solution” is reached, “it’s still going to get worse and worse, and pretty soon the European Union is going to go from 28 nations to 10,” Trumpet editor in chief Gerald Flurry said in this weekend’s Key of David program. He went on to say that “this is the beginning of the 28 nations becoming 10, and it’s going to happen really fast once it gains momentum.”
These crises will continue until Europe is brought to this more extreme crisis. Once that happens, the world will suddenly have a new European superpower, guided by the Vatican.
And that has earthshaking implications. Just from current events alone, it’s clear that this new kind of European power will completely change the world’s balance of power. But look at the history of Catholic-influenced European powers, and you’ll see an even more sobering picture.
These are the dramatic events underway in Greece. To learn more about this new European power, read Mr. Flurry’s article “Did the Holy Roman Empire Plan the Greek Crisis?”