Remarks by members of the European Union‘s elite suggesting that banking deposit seizures may become standard practice appear to have heightened the risk of a European bank run and perhaps even a catastrophic collapse of the euro. Any threat to the euro is a threat to the European public’s conception of the Union’s manifest destiny. As such, I believe members of the EU elite may be purposefully leveraging the crisis to push for a centralized European banking system to cement the political framework of an EU superstate.
Don’t be fooled by the haphazard developments of the ongoing eurozone crisis; anyone with an economics background can see how this crisis will broadly play out. But rather than pursue policies to restore fiscal sanity, the EU leadership has made moves to continue its policy of the past two decades: bring as many Europeans as possible into the sphere of a centralized EU superstate. Under the pretense of democracy, the EU has expanded to 27 member nations, mostly through democratic referendums (though not without considerable backlash from wealthier, northern European nations). Some may wonder why so many countries would yield their sovereignty to a remote body of bureaucrats in Brussels.
The truth is that many of these countries (especially the ones on the periphery of Europe, with relatively little experience with democracy) received vast so-called “development” funds upon joining the EU, mostly provided by northern European nations like Germany, Great Britain, and the Netherlands. The German Constitutional Court referred repeatedly to the “democratic deficit” within the EU even as membership grew, and last year it urged the German government to make German taxpayers increasingly liable for the economic shortcomings of fellow member-states.
This is unsurprising, given the fact the German citizens never even had a referendum on the EU constitution. They are thus more subjects than citizens of the EU.
When it came to the euro, Germany only accepted the currency provided it was run as soundly as their steadfast Deutsche Mark. While the euro did quickly prove weaker than the Deutsche Mark, Germans were somewhat assuaged by the boost to their exports. However, for countries like Portugal, Italy, Spain, or Greece that had been used to endless currency devaluations, the relative strength of the euro highlighted severe problems.
For years, member-states papered over these problems by borrowing money based upon the credit rating of the EU. But some of the EU banks that bought government debt became far too over-leveraged, so that in the financial meltdown of 2007-08, both European central banks and their host governments began to suffer from the toxic debt. This has continued as a serial crisis in the intervening years, and with each subsequent incident, the European Central Bank (ECB) stepped in at the eleventh hour with a solution that strengthened its grip over not only the eurozone, but every member-state of the European Union.
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Contributed by John Browne of thedailybell.com.