“The crisis in Greece is a forerunner of a whole rash of similar crises set to soon break out across Europe. They will provide the catalyst for the EU’s leading nation, Germany, to rise to the fore with solutions of its own making.” Trumpet editor in chief Gerald Flurry wrote that statement one year ago.
What is happening in the European superstate is a mystery to most of the world. Yet while stock markets gyrate and bond investors panic, readers of the Trumpet know the ultimate outcome.
For more than a decade, the Trumpet has warned about the rotten heart of Europe. The Trumpet has specifically noted the flawed exchange rate currency mechanism and how the structure of the EU was a Trojan horse for stealth German ambitions.
“Who will get control of this great superstate?” asked Mr. Flurry in June 2000. The battle comes down to two nations—France and Germany, he said. But it will be the nation that controls the money (Germany) that will ultimately reign supreme.
Today, events unfolding in Europe are proving that forecast uncannily accurate. Greece’s massive debt problems are threatening the very viability of the European Union. The disparate nations of Europe are desperately seeking a savior. And all eyes are looking to the only nation that can bankroll a bailout. But what will Germany do?
From the beginning, the euro was destined—maybe even designed—to fail. At least that is the conclusion of some analysts.
When the euro was created, a chain of events was set in motion. For nations like Greece, a future debt crisis was almost inevitable.
By joining the eurozone, Greece seemingly became the recipient of two big “gifts.” First, Greece traded its inflation-prone drachma for the stability of the euro. Second, it gained the economic borrowing clout of a superstar, even though it had the economy of a small supporting actor.
Initially, these two gifts vastly improved the standard of living for the people of Greece. They allowed corporations, individuals and government to borrow money at the low rates typical within large developed countries like Germany. The new low interest rates were more than Greece could resist. All levels of society binged on seemingly cheap money. The government, for its part, embraced a massive welfare state, also made possible by easily obtained low-interest loans.
But as lenders to Greece are beginning to remember, there was a very good reason Greece paid much higher interest rates to borrow money when it was not a member of the Union. Greece has a history of borrowing too much. According to analyst John Mauldin, Greece has been in default in one way or another for 105 out of the past 200 years.
Even as luxury swiftly came to Greece, so now have the first whiffs of poverty.
With a projected budget deficit of 12.7 percent of the nation’s gross domestic product, Greece is far out of compliance with the eurozone’s mandated 3 percent maximum.
With the world in recession, investors are wondering how Greece will pay its bills.
Typically, when a country takes on too much debt it contracts Argentine-disease. Known also as “quantitative easing,” countries devalue their currency by turning on the money printing presses and simply creating the currency to pay the bills. This of course upsets creditors, but at least the bills get paid. The economy also gets a short-term kick start because a devalued currency makes exported goods less expensive; thus foreigners buy more domestic products.
Greece, however, does not have this option. Since it is locked into the euro, it does not control the printing presses. Germany does.
Analysts worry that Greece may be reaching the point where a debt spiral could bankrupt the government.
What will Europe do?
Both French and German ministers have announced that they will not bail out their Club Med neighbor. Instead, EU monetary authorities are pushing Greece to massively slash its budget. But if Greece were to implement the massive spending cuts needed to get its deficit under control, it could easily plunge the nation into an even deeper recession.
Without the welfare programs, there would be widespread rioting in the streets within weeks.
Yet if Germany and France allow Greece to continue defying its monetary agreements, there will be little to stop other deeply indebted countries such as Spain, Portugal and Ireland from also reneging on their monetary commitments. The credibility of the euro would be thrown into doubt.
The eurozone seems to be at a crossroads.
The Telegraph’s Ambrose Evans-Pritchard wrote on January 31 that the solution to the crises could involve a paring down of the eurozone. He noted the possibility of a bloc of nations centered on Germany leaving the eurozone and creating a new currency—the Deutsch mark 2. The remainder of the eurozone countries would then be free to devalue the euro (turn on the printing presses) to pay down debts.
Although Evans-Pritchard noted that Germany is currently happy with its advantageous position within the euro, he also said there would be certain benefits to a newly created German-led bloc.
Events in Greece bear close watching, especially in light of the advent of the seventh revival of the Holy Roman Empire in Europe, which officially began on January 1 with the onset of the Lisbon Treaty.
The Greek crisis warrants close watching for two reasons.
First, the Bible indicates that this final Roman imperial resurrection will be composed of 10 nations (as indicated in Daniel 2). Whether or not the current 27 EU nations get regrouped into new political regions remains to be seen, but the economic crisis in Greece could very well provoke a vast restructuring or paring down of the European Union.
Far from heralding the end of the European unification project, the current crisis in Greece may actually signal a new beginning.
Back when the euro was first created, the European Commission’s top economists warned politicians that the new currency might not survive a crisis. They knew that because the eurozone had “no EU treasury or debt union to back it up” and a “one-size-fits-all regime of interest rates [that] caters badly to the different needs of Club Med and the German bloc,” the day would come that economic crisis would threaten the EU, reported the Telegraph (Oct. 1, 2008; emphasis mine throughout).
The fathers of the euro did not dispute this. They knew European economic union was risky, but they saw it as an acceptable risk—even a desirable one—as a last-ditch option to force the pace of political union. As the Telegraph said, “They welcomed the idea of a ‘beneficial crisis.’” And as “ex-Commission chief Romano Prodi remarked, it would allow Brussels to break taboos and accelerate the move to a full-fledged EU economic government.”
Is the world about to see a vastly restructured Europe? Or something else?
The second reason the Greek crisis bears close watch is that the Bible indicates that this European superpower will be dominated by Germany. If this crisis in Europe has shown anything, it is that, at least economically, Germany holds ultimate power in Europe.
Bailout or no bailout: Either way, Germany wins.
If Germany and Europe decide to bail out Greece, what will be the cost? If Germany has to ask its citizens to reduce their standard of living to subsidize Greeks, what will it ask Greece for in return? The price is sure to be steep.
Conversely, if Germany was to work to remove Greece from the EU, the result would be a slimmer, economically healthier, core Europe with one less voice to dilute German political clout.
Sixty-five years after the end of World War ii, Germany is again dictating the destiny of Europe.
This should startle the world.
As Britain’s Iron Lady, Margaret Thatcher, warned in 1995, “You have not anchored Germany to Europe. You have anchored Europe to a newly dominant, unified Germany. In the end, my friends, you’ll find it will not work.” It is Germany’s national character to dominate, she said.
Germany has hijacked Europe. Greece knows it. Portugal and Ireland will find out next. And probably Britain shortly thereafter.
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