The Monetary Union drives Europe into dangerous paths, CoR demands an EMU of regional content

Corina Creţu, Member of the European Commission in charge of Regional Policy (in the center), received a group of Members of the Committee of the Regions (CoR). Location: Brussels - EC/Berlaymont. © European Union, 2015 / Source: EC - Audiovisual Service / Photo: Lieven Creemers.

Corina Creţu, Member of the European Commission in charge of Regional Policy (in the center), received a group of Members of the Committee of the Regions (CoR). Location: Brussels – EC/Berlaymont. © European Union, 2015 / Source: EC – Audiovisual Service / Photo: Lieven Creemers.

Last Thursday 7 April, the European Committee of the Regions (CoR) concluded that there is “No successful reform of the Economic and Monetary Union without a regional dimension”. Indirectly, this means the EMU remains a system just to support the banking industry. In other words, the banks are still completely unregulated, high flying and counting on public money for rescue, whenever things turn sour.

The (CoR) is an assembly of regional and local representatives democratically elected. They are regional presidents, mayors or elected representatives of regions and cities of Europe. Not by chance then, this key EU institution of 350 delegates last week decided to tackle the state of the EMU. The reason is that Europe’s ‘systemic’ banks state continues to haunt the financial skies. The fact that the CoR has a central position in grassroots developments, this gives its opinion on the EMU paramount importance. In reality, this is the first real political intervention in EU’s financial affairs.

Finance is not just mathematics

So far, all Brussels legislation on the banking industry has being presented and approved, as if there was only one ‘technically’ best option to be followed. No real political confrontation has taken place in the Old Continent, over the possibility to break down the banking Leviathans in two, a regular bank and an investment firm.

The former companies will continue, under very strict regulations, to accept deposits. The investment firms will be free to bet their own capital wherever they like, be ‘free’ to go bankrupt and not count on taxpayers’ or central bank money for rescue. Let’s start from the beginning.

The crisis is still here

In 2012, in the dire aftermath of the global financial meltdown of 2008-2010, the European Union felt that something had to be done about EU’s EMU. The dreadful social and economic repercussions of the catastrophic financial meltdown, caused by the imprudent banks, had to be tackled. Unemployment was rising fast, incomes fell, a number of euro area countries were on the brink of insolvency and only the banks keep receiving hundreds of billions from governments and the European Central Bank, to cover their huge losses when risky placements go sour.

Voters were and still are enraged about that and have started voting for non conventional political parties, which appear at both extremes of the spectrum. That’s why Brussels decided to ‘reform’ the EMU. The problem was that the widely advertised ‘achievements’ of the European Monetary Union and the introduction of the common currency, the euro, had worked only to the benefit of the major lenders. After the financial meltdown, many people started to suspect this.

Super dangerous profits

For as long as the banks’ bets yielded super-profits, bankers and ‘dealers’ cheerfully pocketed the money. However, when the bubbles burst in 2008 -2010 and the entire world suffered a meltdown unseen after WWII, the only ones to be saved were the bankers. The Eurozone banks received €5.4 trillion of public money in order to continue playing their game.

In view of that, Brussels and the major European capitals advertised in 2012 that under the new plan, the Monetary Union won’t be working only to the benefit of banks. The plan started under the banner to ‘Reform of the Monetary Union’. Unfortunately, this initiative didn’t lead to the breakdown of the colossal banking conglomerates. Instead, Europe turned out the ‘Banking Union’.

The banking Union

This is a non-EU institution, hastily constructed ahead of the May 2014 European Parliament elections. At that time the Brussels bureaucracy and some governments feared that the new Parliament would not be so flexible, as to permit this real monster to be birthed. Finally, the Banking Union was approved in April 2014 by the then bound to be dissolved Parliament, as an intergovernmental agreement. This is in reality an international accord, not an EU institution, non accountable to any democratically elected body and practically controlled directly by Berlin and Paris.

Alas, this is a mechanism to safeguard the ‘systemic banks’. The banking giants are still alive. It’s a lie that the Banking Union makes sure taxpayers will never again pay to save the usurping and imprudent colossal lenders. If not, who will pay in case the so called Single Resolution Mechanism and Fund (the central mechanism of the Banking Union) cannot save a ‘systemic’ bank in a case of crisis? Obviously, public money has to be used again as in the 2008-2010 crisis.

The politico-banking system

The favoritism with which the political establishment dealt with the ‘too big to fail’ banks hasn’t passed unnoticed, despite the absence of headline reports from mainstream media. The only top end western politician to have made this issue as his main banner is Bernie Sanders, a candidate for the Democratic nomination for the US presidential election of November. He says that if the banks are ‘too big to fail’, they are also ‘too big to exist’ and they have to break down.

In Europe no major politicians or parties have attacked the problem of the ‘too big to fail’ banks head on. A number of democratic institutions and civil society organizations though have strongly criticized the way the Monetary Union works. More precisely, the efforts to create a democratic and genuine EMU, which works for the real economy and not only for the bankers, have attracted some genuine interest. This is the case with the CoR, a body representing the grass root economic activities all over Europe, with the small and medium enterprises being at the heart of any region and city.

The CoR intervenes

In detail now, the CoR drafted an opinion on the “The Five Presidents’ Report”. This is a paper which sets out a plan to “strengthen the Economic and Monetary Union by 2025 to make it more resilient to economic shocks, introducing reforms to make the EMU more democratically legitimate and consolidate the quick fixes of recent years”. The Five Presidents’ report has been prepared by the President of the European Commission, in close cooperation with the President of the Euro Summit, the President of the Eurogroup, the President of the European Central Bank, and the President of the European Parliament.

According to CoR, the “social, economic and territorial disparities can only be reduced through a regional dimension and results-oriented cohesion policy”. The real meaning of this is that the social, economic and regional inequalities are still growing. This CoR’s opinion was presented by Paul Lindquist and was adopted by the members of the CoR during their plenary session on 7 April in Brussels. Lindquist (SE/EPP) is the Commissioner of the Stockholm County Council. Undoubtedly, the local and regional representatives are authentic transmitters of the repercussions of the financial problems on people’s lives.

It’s always the banks

One decisive reason why the Eurozone economy is in its sixth year of recession or stagnation, is that the banks cannot or don’t want to support the real economy. They still refuse to increase their financing to consumers and businesses. Instead, the lenders soak up every month tens of billions of ECB’s freshly printed money and use it for their own private interest.

They still bet it on risky placements in the grey financial system and the derivatives market, exactly as they were doing before the 2008-2010 crisis. Reportedly, the Deutsche Bank today sits on a pile of risky derivatives of some tens of euro trillion, tens of times the GDP of its home country, Germany. This and all the other ‘systemic’ banks of Eurozone to this date receive an increasing bonanza of public money for free, despite the promise that the citizens will stop rescuing the banks.

Real economy still stagnates

The overall effect on the economy is that retail trade stagnates, unemployment remains in the double digit area and industrial prices keep falling. In short, the real economy is in agony and only the banks are quite immune from the repercussions of their own imprudence and greed.

According to Eurostat, in February 2016 compared with January 2016, the volume of retail trade increased by a meager 0.2% in the euro area and fell by 0.1% in EU28. The same source estimates that also in February 2016 unemployment in the Euro area was still at 10.3%. Last but not least Eurostat says that again in February 2016 compared with January 2016 industrial producer prices fell by 0.7% in euro the area and by 0.6% in EU28.

The worst disease

Falling industrial prices have been haunting Eurozone’s real economy for many years now. Falling prices is a quite gloomy reality for any economy and constitutes the main symptom of the worst disease; recession. It may be a fact that the banks cannot be held entirely responsible for the long term anemic state of the European economy. However, they are the main culpable party for the 2008-2010 financial crisis, which has sent Europe and the world to the present obnoxious state. They are also culpable for the prolongation of this politically and socially unsustainable situation.

Sadly, this reality has still not received the needed attention from the political establishment, leaving this task to extremists. And this is a quite dangerous state of affairs, because it may, and occasionally has already, promoted radical political groups to governing parties. On top of that, if a new crisis breaks out it, it will be questionable if the ‘free money for bankers’ recipe can offer an effective remedy.

 

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

EU-China Light Bridge in Brussels signals the bright coming of the Year of The Dog

Re-open EU: Commission launches a website to safely resume travelling and tourism in the EU

‘Words must never be met with violence’ urges UN, following Taliban threat to journalists

CLIMATE CHANGE FOCUS: Cows, coffee and sustainable farming

Deutsche Bank chased away from US, threatened with more fines

MEPs approve EU’s spending in 2017

European Commissioner for Youth wants young people to be at heart of policy making

SoftLayer, an IBM company, @ TheNextWeb 2014: Masters of Failure and Change

The EU Commission openly repudiates the austere economic policies

The global economy is woefully unprepared for biological threats. This is what we need to do

The Parliament paves the way for the creation of the European Banking Union

Mindfulness: a freedom we can still have in the pandemic

The Linde Group Logo (Source: The Linde Group website, Press Services, 2018)

EU starts in-depth investigation of Linde-Praxair merger over competition concerns

Trade/Human Rights: Commission decides to partially withdraw Cambodia’s preferential access to the EU market

Is 2019 the beginning of the end for coal in Europe?

Security Council: UN welcomes efforts to de-escalate crisis in northeast Syria

COP21 Breaking News_12 December: 195 countries adopt the First Universal Climate Agreement

Drastic deterioration in security across Burkina Faso as 70,000 flee their homes in past two months, UN warns

Impressions of China

‘Dire consequences’ for a million children in the Middle East, North Africa, as funding dwindles

UN unveils global influenza strategy to prevent ‘real’ threat of pandemic

1 in 13 young British people have PTSD. Here’s why

Presidents of pan-European youth organisations call upon the European Council to preserve the Schengen principles

Parliament approves €34m in EU aid to Greece, Poland, Lithuania and Bulgaria

More funds needed to counter ‘persistent and multi-faceted humanitarian problems’ in Ethiopia

How to turn Africa’s manufacturing sector into a high-tech powerhouse

In 2020 Asia will have the world’s largest GDP. Here’s what that means

The Amazon is reaching a dangerous tipping-point. We need to scale solutions now if we have any chance of saving it

Why Eurozone can afford spending for growth

Commission launches new edition of the Cultural and Creative Cities Monitor 2019

Coronavirus: rescEU medical materials dispatched to Serbia

‘Brutal weather’ continues as Rohingya refugee children endure devastating rainfall in Bangladesh

Ercom, cutting-edge Telco solutions from Europe

Greece may offer to China a European gateway

Are ECB’s €500 billion enough to revive Eurozone? Will the banks pass it to the real economy?

More efforts needed to boost trust in business and finance

This is why Dutch teenagers are among the happiest in the world

Reject passivity and embrace ‘responsibility for our future,’ Lithuania’s President tells UN Assembly

Worldwide terror attacks have fallen for the third year in a row

What cryptocurrencies will do to the integrity of politics

New committees begin their work

How smarter machines can make us smarter humans

Why Europe’s high productive performance is discredited?

The European Brain Drain: a truth or a myth?

A reality check on inclusive innovation

Humanitarian aid: €7 million for disaster preparedness in Southern Africa and Indian Ocean region

EU elections 2019: Trump’s share in the support of populism

Back to school: Schoolchildren to receive milk, fruits and vegetables at school thanks to EU programme

UN agencies call for action to bolster rights of Europe’s stateless children

‘Wind blowing in the direction of peace’ in Africa: UN Secretary-General

EU Facility for Refugees in Turkey: €5.6 billion out of €6 billion now allocated in support of refugees

India is now the world’s 5th largest economy

The technologies – and thoughtful collaborations – that can build resilience in the food system after COVID-19

A shocking new report reveals what we’ve done to the natural world

World Maritime Day: Commissioner Vălean calls for support and safe return of seafarers

Corruption is rife in the COVID-19 era. Here’s how to fight back

Climate change: Parliament’s blueprint for long-term CO2 cuts

Coronavirus Global Response: European Commission pledges €300 million to Gavi

EU4Health: 9.4 billion EUR budget needed for new EU health programme

Eurozone: Sovereign debt decreases for the first time since 2007

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s