Amsterdam, Nice, Lisbon…

Treaty change is back on the table, thanks to Germany and Britain

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As an American taxpayer I’m personally not too concerned about the Euro Area’s problems.

On the other hand, that socialist-driven people from Greece, Cyprus, Portugal etc want somebody else to pay for their unsustainable spending, which results increasingly in excessive debt accumulation, and a lax banking-supervision, which led to banks needing bailouts from other countries’ taxpayers, cannot be seen indifferently by any upright taxpayer . . . not in those countries and not anywhere else; especially since they have discovered a secret route to my pocket book as well. It is called the International Monetary Fund of which American taxpayers are the largest single contributor.

I think that we, the conservative American taxpayers, need, as a matter of urgency, to send out a clear message that we don’t support “Socialism”, in whatsoever shape or form, and socialism is at the basis of the European plight: There are, meanwhile, so many nations in the EU, besides Greece, Cyprus and Portugal, that have similarly disastrous fiscal policies, including such heavyweights as France, Spain and Italy. These and other EU nations have far too willingly used socialist policies that resulted in massive government spending and –now- in unsustainably towering debts.

The collectively unearned ‘social benefits’ aren’t seen now by socialists as profligacy but as individually earned ‘entitlements’, which must be defended tooth and nail, even with the method of calling those strangers ‘Nazis’, who are belligerently approached for support upon the entitlement-matter, but who reputedly don’t open their purses quickly and widely enough.

This should concern us because our own position isn’t so much better. The only difference is that we control the proliferation-machine of the world’s only true reserve and trade-currency.

For perspective, if the US national debt (currently around $16.833 trillion) was 180% of GDP as the debt of the Greeks, our public debt would amount to $30.2994 trillion. If our long term interest rates rose to 7%, it would take about $2.12 trillion of our yearly tax revenue just to pay the annual interest expense. And this would be about 83.73% of the 2013 federal revenue.

Now, such calculation can be made for Italy or France as well . . . and even for Germany, and this clearly shows that there is absolutely no alternative to rein in spending to a sustainable level. That The Economist, Soros and other fellow “socialists” call this process ‘austerity’, ‘brink of starvation’, or ‘unacceptable inhumanity’ should have no bearing on us . . . because if we follow these calls we will, akin to lemmings, all march into the abyss.


The German position is like an open book to me.

The country’s willingness to share a lifeboat with those who are sitting on their fat ‘moneybags’ (, while the Germans appear to be the only ones that seem to row, is dwindling by the day.

The prospect whereby the recipients of German funding have become ‘the majority’ which can squeeze the German taxpayer any time and at will by virtually suffocating the ‘rower’ to death is surely not very attractive for “the rower”; at least I wouldn’t like to be the one “rowing” under such circumstances.

Any treaty-amendment that cements this situation must be horrifying for the Germans. It will, thus, not pass a referendum or the ruling of their Constitutional Court.

Why should German taxpayers want to establish an “authority to restructure and wind up ailing banks” (Charlemagne), when they have funded such institution for their own country already October 17, 2008, with the so-called SoFFin funds?

The question should rather be: Why haven’t all EU countries created such banking stabilization funds already? Why did the EU Commission fail to require such fund from all commercial banks that take part in the European interbank markets or draw money from the overnight emergency funds of the European Central Bank?

By establishing –again- a “joint” authority to restructure and wind up ailing banks, the EU Commission is simply trying to coerce the Germans to “sort things out” for those parasitic ‘others’ who lived like bees in clover in the past, e.g. Cyprus and Greece, but failed to do their job properly in form of establishing precautionary measures to safeguard their opulence.

To implement sufficiently-funded restructure funds on national level should be first and foremost the preemptive requirement of any common “Banking Union”.

la.výritý in reply to Jean Steed

I wrote: ". . . our own position isn’t so much better. The only difference is that we control the proliferation-machine of the world’s only true reserve and trade-currency".

As long as this is the case, the U.S. doesn't need to ask any other nation for financial support. That Deutsche and other banks made wrong investment decisions in America lies solely within their own area of responsibility. The taxpaying subsidiaries of foreign banks in the U.S. qualified, on request, for the same federal support as other American institutions.

While the U.S. dollar remains the world's primary reserve currency, the latest 'Currency Composition of Official Foreign Exchange' of the IMF shows that countries in the developing world are drastically reducing their euro holdings (

According to the report, developing economies shed some $45 billion worth of euros in 2012 and have sold close to $90 billion worth of euros since the second quarter of 2011. Global euro-holdings are actually at their lowest level since the common currency's introduction. And this has nothing to do with the America's sub-prime crisis, but rather is 'homemade' by irresponsible or 'socialist' Europeans.

Now, much of the remaining confidence in the Euro hinges on one single Euro-economy: Germany's. The lack of national self-discipline and the dominance of shortsighted self-interest have gambled away the once considered ‘Bright Future’ of this European money.

High sovereign debt loads in several countries and poor banking supervision has eroded global confidence in the euro. During the same period, US dollar holdings among developing economies have continued to rise.

"I wouldn't say there are any prospects of the Euro challenging the dollar," Jeffrey Frankel, a professor of economics at the Kennedy School of Government at Harvard, told the Financial Times when asked about the IMF report.


This trend also shows that ever more debt-financed stimulus programs don't make sense when overseas governments and institutional investors realistically see the Euro's problems in the lack of structural reforms and irresponsible national budgets.

The Germans are the Europeans who have shown that it can work. A country can have both with a successful belt-tightening program: solid budgets while making growth possible.

According to a Bloomberg report 3 days ago Germany’s GDP will expand 0.5 percent in 2013 and 1.6 percent in 2014. However, it doesn't take a rocket scientist to understand that Germany's (admittedly highly efficient) workforce of approx 41.6 million is, by far, not big enough 'to save' 332,839,084 Europeans, when they aren't willing to live within their means.

It is easy to see for an American taxpayer why German taxpayers have had enough. Throughout this crisis, risk has constantly been transferred away from private creditors on to the balance sheet of taxpayer-backed institutions (EFSF, ECB etcetera).

After two bailouts, Greece’s public debt is now around 70 per cent owned by eurozone taxpayers of which, in reality, only those of the few solvent states bear the brunt of the burden, while investors and banks are largely let off the hook.

This is particularly hard to swallow in Germany as it comes down to broken promises. In the 1990s when the single currency was forged, German taxpayers were given two cast-iron guarantees: you will never have to bail out another eurozone country, and the European Central Bank will never enter the realm of politics by propping up insolvent governments.

To reassure the Germans, a “no bailout” clause was cemented in the EU treaties, explicitly stating that one eurozone country “shall not be liable for” the debt of another. Time and again, the Germans were also promised that the European Central bank would be the heir to the universally trusted Bundesbank.

Some 15 years and several bailouts later, German exposure through various loans and liabilities to (supposedly) insolvent eurozone countries — including via the ECB’s government bond-buying program and TARGET2 accounts - tops a nerve-rattling €1 trillion.

I sympathize deeply with the statement of Bernd Lucke: "The euro was a failure, and it would be bad if we continue to believe in this fairy tale!"

This man is the leader of a new anti-euro party in Germany which wants Germany to leave the common currency or, at least, stop that taxpayers must rescue bankrupt southern European countries whose people, on top of it, denounce Germans, as Nazis for their efforts.

If I were a German taxpayer and voter, be assured I'd vote for this Alternative for Germany party!


Europe does not need another layer of political institution and taxation. Any cost/benefits analysis will tell you that. How can increased interference and blame of successful economies be conducive to progress? The communist economy retarded growth that has led to eventual collapse was attributed to a central political body’s inability to allocate scarce resources efficiently.

Europe will be strong only if its integrated economy and that includes the single currency is strong and not because of some bureaucratic institution deciding on Roma mobility. The EU concept and not the Euro became “white elephant”.


“Associated Press Twitter account hack causes panic on Wall Street and sends Dow plunging.”
The psychological warfare is very effective. Its use is also effective on Euro/US$ rivalry. One does not have to repeat the benefits of US (desired) monopoly position (actual 61%) in reserve currency theatre.

Why it is that Euro having debt/GDP ratio at 90 is subject of constant turmoil and US$ having debt/GDP ratio of 102 is construed into a stable situation? It is media’s; including this magazine’s unrelenting “support” for Euro that plays a significant psychological role. It has nothing to do with the empirical findings but everything with constant negative gossip. Nevertheless Euro is here to stay – BRIC’s preference.

Former U.S. Federal Reserve Chairman Alan Greenspan said: It is "absolutely conceivable that the euro will replace the US dollar as reserve currency, or will be traded as an equally important reserve currency."

la.výritý in reply to Jean Steed

The dollar is, of course, a fiat currency and acts like a fiat currency. As such it doesn't need any 'collateral', other than the US treasurer's/taxpayer's promise.

That the greenback is also the world's only true trade- and reserve-currency was determined July 1944 during the Bretton Woods conference, when the US dollar replaced the gold standard.

However, its statutes didn't become fully operative until late December 1958, when all the European currencies became became dollar-convertible under the Bretton Woods system and when the IMF was established.

This is an advantage the Euro never had. On the contrary: the Euro must struggle for its 'place in the sun', which became now an almost impossible task, being obstructively dragged down by a bunch of suckling PIGSlets.

This is why Germany needs to abandon the 'pigspen'.

Wilhelm Röpke

I suppose European heads of states must acknowledge that there are deep concerns for any deeper integration. The EU and the euro zone of today have reached a point that is entirely disappointing.

That complete project Europe does not fit to the European people's need anymore.

I would suggest taking a break and a deep breath. That means on the other hand to let countries, the people, a choice to vote over: opt-in or opt-out.

I believe all European people should think about and decided what this one Europe should look like and which powers it should has. Politicians went on and on without taking along or considering the European people and their interests.

Unfortunately the political class throughout Europe seems to be unaware of those defects and concerns.

So should it be an European state?

Germanambassador in reply to Pedro Macedo

All facts now give clear proof that a Europe as it is existing now does never work!
The end of this type of Europe is absolutely clear and near.
Germany must withdraw back into the strictest neutrality with strict borders and strictly stop immigration.
Germany can only reduce and concentrate on itself if it wants to survive.
Each German of every generation is very well aware and reminded daily a few time that we have lost 2 World Wars and that we the Germans are the losers and scapegoats forever.
So only strictest neutrality which should be stricter that that one of Switzerland can save Germany from an involvement of new European troubles which are not at all a German business.
Neither France, nor Italy, nor Greece ever can be any kind of a German business.
The European Union is facing its complete and total failure and this will the very best that ever happened to Europe.
Nobody in Europe needs a United Europe, except some lunatic politicians and civil servants with their unbelievable privileges.

Wilhelm Röpke in reply to Cutters.

That all is a mixed bag.

The Nordic countries should remit money and would like to have a voice/veto.

On the other hand the Club Med countries urge for more and more money without being prepared to provide any transfer of powers of their national budget, policies....

What they have done over 10 years is: decided nationally at their advantages and now they forward their invoices to the Nordic countries and urge them to remit the outstanding amounts.

Personally, I am convinced that the crisis has reached a point, Germany should rethink its participation in the euro zone and should consider an exit. The sooner the better.

I would project that no agreement can be reached as regards a political union. Attitudes are too contrary. And if there is a commitment Club Med is going to break it - again. The critical point is that there is not any trust left in Club Med that they observe commitments given to Germany. Nor can Germany be assured that the money remitted will be payed back and NOT set off against "outstanding" reparations.

Against all odds and what is said through the media, Germany must write off the money provided.
That is fact. Unfortunately all parties and politicians deny this fact.

Be lucky that the UK is outside this misery.
Ms Thatcher was very wise to oppose joining the €.

So, we will see how this is developing, shall we?


The main fault of Germany's euro policy is clearly a petite bourgeoise shyness in being the commanding force of the integration. The Brits are simply exploiting this shortcoming, in the line of their long-lasting diplomatic "divide et impera". As a nation of shopkeepers they know that just too well.

Pedro Macedo

"Winners don´t punish."

A fabulous scientifc article published in 2008 (Nature Publishing Group: A program for evoutionary dynamics: a "joint venture": Harvard University, Stockolm School of Economics). The Key here is "cooperation". The essence ("ratio essendi") of human behaviour is cooperation. We tend to help others even if costs are involved. That was how the european project was born. Of course, like the artilce recognizes, "we are more likely to help when the costs are small and the benefits for the other person significant."
Europe faces what could by described as "the Prisioner´s Dilemma". The choices are A) cooperation; or B) defection.

On one side countries like Germany, Holland, England, Finland, Sweden, say that is not their fault. The crisis (the european crisis) is the sole responsability of Countries like Greece, Portugal, Ireland, Spain, Italy and othres (Countries that do not "represent" more thatn 15% to 20% of the total European Union GDP). So they represent up to 20% of teh total European Union GDP, but they have 100% of the responsability for teh present crisis. The Sartre" argument: "Hell is other people".
On the other side, those countries say that Germany, and Germany alone, is to blame. Those countries "public or government debts (or deficits) are higher than their GDP.

The truth? Goethe used to say that "wisdow is only found in truth" .I do not want to bear or carry that cross. Lets see some recent data: more than 26.338 million men and women in the EU27, of whom 19.071 million were in the euro area without a job.


Two wise advices:

"All men by nature desire knowledge." Aristotle.

Cutters. in reply to reader735

Have they not continued to support the same parties that would keep them in, without a referendum on the subject?

Labour in the UK got in promising a referendum on what became the Lisbon treaty, it did not hold the referendum, so how any can think that the UK is beholden to it is lunacy.

Same can be said for Germany holding up the single currency, with the aid of the IMF (which is going outside its mandate by helping a currency area).

Wilhelm Röpke in reply to Jean Steed

Well that would mean that the lender of last resort were France.
To be clear, France had then Germany's role in.

Questions will arise if France could handle that?

I would conclude an German exit could let the euro-remaining implode.
What is meant good is going to developing in the opposite direction.

I would prefer an exit of Greece... with an option to join later again.

The question: dividing France and Germany?
Hm, that is highly precarious!

Jean Steed in reply to Wilhelm Röpke

Agreed, German exit and Eurobonds for those who remain. George Soros' solution, slated by the prabda. The German worker then works the same hours as, more productively, rather than the fewer hours they currently work than their colleagues in Europe in the DM in order to compensate the hike in their currency. They can then buy in the € zone in DM and afford it. Perhaps they should also give some of their Eastern Lander the democratic choice of leaving so that they do not have to get into debt? Germany is an exporting state, let them get on with it, without, in both senses of the term, the €. However, can the rest of the World afford German prices? Probably not as much. That might assist Japan.

Cutters. in reply to Wilhelm Röpke

They have a choice to remain in the single currency, their countries could leave it.

Why exactly should the richer countries backstop the poor ones when they have no say in their budget.

The only way for the single currency to continue is through political union.

Meryl Davids

The constitution aka the lisbon treaty was rejected by most of the countries who gave their citizens a vote on the matter, but forced through by the political class, the unelected political pygmies and failures who make up the commission. It is this democratic deficiency more than anything which makes the eussr unworkable, just as the original ussr failed because of over regulation and lack of debate this new version will also crash and burn, the euro is only the catalyst.

jean guy giraud

Angela Merkel also said "that a Union which is incapable of changing its treaties has no future" . The Lisbon treaty has left untouched many hurdles to the proper functioning and progress of the EU, namely the right of veto of each and every member states (27 of them) on many decisions, namely those relating to the "fiscal union". Also, Charlemagne is right to say that the legal basis of some recent decisions on EMU have a very fragile legal basis indeed. Let's hope that Cameron proposals will not be the only ones on the table for the 2014 european debate. JGGIRAUD

Jean Steed in reply to la.výritý

Perhaps, had the US " conservatives'" spent less time and, incidentally, even less money on flipping "eternally" increasing realty through sub-prime, and drawing down the remainder of the Worlds liquidities into the US stoic stock markets to keep them trading, and retain some semblance of value, the shock of austerity for the remainder of the Planet would have been easier to support?
The fact that the Deutsche Bank ended up owning a significant surface area in Cleveland Ohio, and is still currently struggling with its capitalisation ratios is evidence of that.
Perhaps you might care to comment upon the Great Depression following 20 years after the dawn of US capitalism in 1901, and the 2007 crash following on the US instigation of Globalisation in the 1980s. There have been two significant worldwide crashes based out of the US, in part, coupled with a singular lack of "austerity" there. The US stock market system functions on 100% reliability of paper, yet enables defaults on the assumption of a growth postulate.
The notion of funding socialist housing policies through a stock market is not a European concept.


Treaty change is the only way the single currency is going to be made to work, and the UK is well within its rights to demand something in exchange that benefits it as are others.

The truth is that those members of the single currency signed away their sovereignty when they joined, and it was all done through a referendum with all the facts well within reach.



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