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.

 

Advertising

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

Cheese energy could power hundreds of UK homes

Aung San Suu Kyi defends Myanmar from accusations of genocide, at top UN court

UN health agency launches week of action to ban lead paint

‘Abhorrent’ ambulance attack in Libyan capital imperils life-saving work, warns UN

An open letter from business to world leaders: “Be ambitious, and together we can address climate change”

Federalist EU ‘naively’ believes Washington shares her TTIP high fever

Eurozone’s central bank leadership prepares for shoddier prospects

Cohesion Policy: involving citizens to ensure better results

How to end overfishing in the global South

How green investment will help Latin America and the world fight climate change

Minority governments ‘à la mode’ in Europe but can they last long?

Raw materials: Commission launches new online portal to support responsible sourcing in businesses

World Migratory Bird Day highlights deadly risks of plastic pollution

State aid: Commission approves €3.2 billion public support by seven Member States for a pan-European research and innovation project in all segments of the battery value chain

Alarming number of women mistreated during childbirth, new UN health agency figures show

A Sting Exclusive: “Leading by example! EU must push for UN deal to avoid dangerous climate change”, European Parliament Vice-President Ulrike Lunacek cries out from Brussels

We are on the edge of a new ‘cyber’ space age. This is how we make it a success

UN says ‘many humanitarian achievements’, one year after ouster of ISIL from Mosul

To tackle climate change, we need city diplomacy

Ethiopia planted 350 million trees in a day. And its fight against deforestation does not stop there

Japan’s agro-food sector would benefit greatly from policies to boost innovation, entrepreneurship and sustainable resource use

These deepwater fish farms could help natural stocks recover

Senior UN adviser sees ‘rare’ victory for humanitarian diplomacy as aid convoy reaches desert camp in Syria

Why climate change matters for future health professionals

June infringements package: key decisions

Malaria could be gone by the middle of the century. Here’s how

Amazon wildfires are tomorrow’s breathtaker

A free press is ‘cornerstone’ for accountability and ‘speaking truth to power’: Guterres

Privatisation and public health: a question of Human Rights

Concern rising over fate of Rohingya refugees sent home by India: UNHCR

UN agency chiefs issue ‘call to action’ on behalf of refugee children

Human trafficking cases hit a 13-year record high, new UN report shows

End of plastic water bottles at European Parliament

A for-profit project has improved nutrition in Rwanda – is it a model that can eliminate hunger across Africa?

Alarming level of reprisals against activists, human rights defenders, and victims – new UN report

Parlamentarians to “break up” with reality in the Google antitrust case

Security Council unanimously agrees to extend UN Cyprus Mission amid political impasse

7 surprising and outrageous stats about gender inequality

How trade tariffs could help combat climate change

COP21 Breaking News_08 December: Global Business Community Comes to Paris with Solutions for Taking On the Climate Challenge Across the Board

From the boardroom to the consulting room: pharma’s role in curing gender bias

Public Policies for LGBT in Brazil

China Unlimited: the dragon’s long and winding road

Situation in central Mali ‘deteriorating’ as violence, impunity rise, UN rights expert warns

Korea should improve the quality of employment for older workers

Afghanistan: top UN official denounces ‘extreme’ suffering of civilians in Ghazni

Violence against women a ‘mark of shame’ on our societies, says UN chief on World Day

Women-Friendly Spaces for Rohingya refugees: A place for protection and care

Here’s how to help India’s rural population go digital

Airships, solar planes and Soviet-era sea skimmers … here’s how we fix air travel

Commission reaches agreement with collaborative economy platforms to publish key data on tourism accommodation

The EU and North Korea: A Story of Underestimation

Brexit casts a shadow over the LSE – Deutsche Börse merger: a tracer of how or if brexit is to be implemented

IMF’s Lagarde to Peoples of the world: You have to work more for the banks!

Climate change update: will the UN member states regain momentum despite the little progress at COP23?

The Europe we want: Just, Sustainable, Democratic and Inclusive

EU Cohesion Policy invests over €1.4 billion in green projects in 7 Member States

EU budget: Stepping up the EU’s role as a security and defence provider

Banking package: Parliament and Council reach an agreement

These Dutch microgrid communities can supply 90% of their energy needs

More Stings?

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