Frederick Sheehan will speak at
the Committee for Monetary Research and Education (CMRE) dinner on Thursday,
May 17, 2012. It will be held at The Union League Club in New York. He will
discuss "How We Got Here."
Various interpretations of recent European elections
have been put forward, one of which gets short shrift. The voters have, for the
first time, been given the opportunity to approve or disapprove of the euro.
They are voting nein. There is a parallel in the United States.
Before the euro was launched, both Eurocrats and national governments prevented
the people from voting for (or against) the single currency (and its
appendages, such as the EU's ECB). There were at least two reasons for this.
First, the desk clerks knew the commoners were not sophisticated enough to
throw their allegiance behind an acronym. Second, the sophisticates did not
care what the people thought, since the transfer of power to Brussels and
Strasbourg isolated the masters from their help. (There have been referendums
in a handful of countries over the years. Some have voted in favor, some
against. In countries that voted nein, the commoners were subjected to
more referendums until they understood what was best for them.)
The most important question today is whether that power is shifting. The
potential shift of power was not a theme in newspaper interpretations of the
French, Greek, and German elections held this past Sunday (May
6, 2012). The post-op reports followed conventional formulas, all of which fall
under the heading of a vote against austerity.
One note on austerity: it has barely begun. According to James Aitken (Aitken
Advisers L.L.P,), Italy has only implemented 10% of government-approved
spending reductions or tax increases. Spain has barely started.
A second note on austerity: no matter who is in charge, austerity will be much
larger than is generally understood. It will cross the Atlantic. There is no
point guessing when that may be.
Many of last weekend's voters surely believe tossing
Sarkozy into the Seine will restore their eight-hour work week. They are wrong.
Others understood they were voting to restore national sovereignty. Such a
Eurocrat as Italian Prime Minister Mario Monti (European Commission, Goldman Sachs) understands where loyalties lie. He asks Italians to adopt austerity for
the good of Italy.
An earlier call to internationalism died in August 1914. A fundamental tenet of
Marxism was the international uniting of workers. Not a single English factory
worker crossed the channel to fight beside his German comrades. The floor
sweepers at Rolls-Royce assembly plants had more in common with their chairman
than a single Pomeranian granadier.
The test today will be after the banking systems fail. That will follow the
ECB's inability to supply the loans or euros needed to prop the commercial
banks. Brussels' finances and authority will wither. The question then will be
the legitimacy of national institutions. Without banking systems, governments
will not be able to meet financial commitments. The next question will be
whether the people permit national governments latitude during the chaotic
austerity that follows. (Unlike Americans, Europeans have lived through this,
most recently in 1945.)
The help may opt for the liberating panaceas of freedom, liberty, or anarchy.
Such slogans usually boomerang and eat their own. Americans are advised to
study the transfers of power. Who knows when, but the American government debt
bubble will burst.
Posts
