Ryan’s notes on 11/29 discussion of the Eurozone crisis

Tonight we discussed the Eurozone crisis, mainly via this article presented by Roger:

The article focuses on the conflict in the EU between advocates of a stronger central banking authority, led by the European Central Bank (ECB), and Germany, which opposes greater centralization (i.e. pooling national debts). All of this comes after interest rates on Italy’s bonds exceeded 7%, Belgium’s credit rating got downgraded to AA+, and even Germany had a weak bond auction (bad because Germany has been the economic powerhouse for the EU). Banks are responding by hoarding capital and giving fewer loans, which threatens to send the Eurozone into recession.

The ECB is now trying to push through a proposal for a European Stability Mechanism, which would have the authority to draw on a pool of $700,000 billion euros to ‘bail out’ struggling countries by buying their bonds (debt). It would have legal immunity, no democratic oversight, and the authority to increase that pool without individual countries being able to do anything about it.

We talked about how the proposed ESM and the current ESFS (European Financial Stability Facility) are just surrogates for more or less what we have in the U.S. — a quasi-autonomous Federal Reserve with the authority to set interest rates and lend money at will — which would be illegal under current EU law.

We also wondered what would be the effect of individual countries choosing to go off the Euro and whether the resulting recession/depression (b/c investors would pull their money out) would just be short term, or would cause the huge disaster mainstream economists predict. James suggested Greece (which is probably the most screwed right now) could basically move to barter even for international trade and would be better off. There were other digressions (on Malthus, Chris Hedges, and anarchism) but that’s more or less it for the Eurozone.


2 thoughts on “Ryan’s notes on 11/29 discussion of the Eurozone crisis

  1. if you can forgive all the Trotskyist rhetoric, this is a pretty good little piece on the consequences of last week’s EU summit agreement:

    The treaty has been described as a plan for “slave states” inside the euro zone. More accurately, it is the blueprint for enslaving Europe’s workers, who are to be reduced to little more than indentured labour for the international financial oligarchy represented by the European Central Bank and the International Monetary Fund.
    The legal framework is to be created to enforce “fiscal discipline” in every country, with the European Commission and the European Court of Justice empowered to control national budgets. “Labour market reforms” will be constitutionally enshrined to overturn workers’ rights, extend working hours, and slash pay, pensions and other entitlements. This is to be backed up with automatic sanctions—including stripping states that fail to comply of EU voting rights and even potentially expelling them from the euro zone.

    at the end of the piece they argue for socialist revolution, as per their editorial policy. i only find it interesting this time because our discussions of Europe always seem to flatline at the level of individual nation states (like should Greece drop out of the EU). as these policies take effect and piss everyone off, could a pan-European people’s alliance actually emerge? does resistance to the demands of global capital that restricts itself to the nation-state risk encouraging fascism?

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