Well, no sooner said than done, it appears.
In the latest Solari quarterly wrap up with Catherine Austin Fitts, we had a bit of a discussion about Mad Madam Merkel, her lap poodle Emanuel Macron, and their plans to "fix" the E.U. Catherine drove over, and we talked a bit about this on Friday night and then again on Saturday during the recording session. We both had the impression that the European powers-that-be were a bit "anxious" and in a hurry to "fix" things. We all know who those powers really are; they're certain banking families and dynasties that are looking at the EU fall apart (due to their own disastrous policies), while the world moves on and Mr. Abe, Mr. Xi, Mr. Putin, and Mr. Trump are reordering the geopolitical-financial world. Meanwhile, the world's biggest market - Europe - is beset with disunity and lots of problems. And Italy, home to some of those "old families" has suddenly gone off script and isn't playing ball for the same team any more.
Catherine and I discussed the idea that the EU was going to have to restructure itself. The Common Market was one thing, the common currency is quite another, and it's playing havoc in the southern tier countries. Greece we know about. But Italy and now Spain are where the action is now, and accordingly we advanced the idea that the EU may stay the same on the outside, but that it will look very different on the inside. I've been of the opinion, for some time, that some sort of revival of the old "Exchange Rate Mechanism" would perhaps eventually be restored, centering again on currency pegs to the Deutschmark, i.e., to Germany, with the smaller nations of northern and central Europe - oh gee, look, there's Bettmann-Hollweg's Mitteleuropa again! - becoming part of that, with perhaps some similar arrangement in southern Europe, with France left in the middle.
And in the midst of all that speculative prognostication, I advanced the idea for a new "Euro-prize." Currently, Europe has the annual "Charlemagne Prize" to the European leader who advances the idea of European Union. Needless to say, Frau Merkel has worn the imperial crown many times, and more recently, M. Macron has had the pleasure. I advanced the idea that what Europe needs is a "Richelieu Prize", for the European leader who most successfully stands up to Berlin and Brussels. We might envision a "Bonaparte Prize" for the European leader who most effectively - but without any foresight but a continental-sized ego - plays into the hands of Germany for a German hegemon in Europe.
But I digress, because the following article, shared by many people, indicates that perhaps our speculations and prognostications may be coming true faster than we imagined, and that the Richelieu Prize currently has several strong contenders:
The plan, as one can gather, is to "fix" the problem by having a common European budget, which effectively means that Madrid, Rome, Vienna, Prague, Budapest, Warsaw, The Hague, Copenhagen, and just about everyone else, now have to kowtow even more to Brussels, meaning in reality, to Paris and Berlin, meaning in even deeper reality, to Berlin, and yet deeper, to Frankfurt. To the growing demands in the rest of Europe for policies that represent the genuine will of the people of those countries, including in Germany and France, the Eurocrats have shown once again their profound deafness, and called for even more centralization in an already unresponsive bureaucratic mess:
We did not have to wait long for confirmation, because just two days later, Europe's two self-proclaimed leaders were facing an unexpected backlash from most other European governments against the German and French plans for a common eurozone budget, dealing a blow to the two countries’ ambitions for a big overhaul of the single currency area.
As the FT reports, the rest of Europe's "core", including the Netherlands, Austria and Finland are among 12 governments questioning the need for any joint eurozone “fiscal capacity”, challenging a central tenet of French President Emmanuel Macron’s vision for the eurozone that he has successfully pressed Berlin to endorse.
As we reported on Wednesday, increasingly unpopular French president Macron and the politically embattled Merkel tried to restart their close collaboration this week ahead of a wider summit of EU leaders. They agreed that a new common pot of eurozone money could be funded by a mixture of national contributions and new EU levies, such as a financial transactions tax.
Ironically, while their agreement supposedly forms part of a broader deal between Paris and Berlin on how to strengthen the currency bloc, the rest of Europe generally disagreed, which incidentally is also the reason why any attempt at "Federalizing" Europe is doomed to failure: Europeans tend to frown upon self-declared "master states" who tends to decide for everyone else, even if these states end up paying for much of the outlays (largely thanks to the presence of the EUR and the absence of the DEM).
As a result, EU diplomats said Merkel’s concession to Macron - as a reminder, having found herself isolated at home, Merkel has been forced to see support abroad - had emboldened other countries to resist the blueprint, out of concern that it would leave their taxpayers too exposed to problems in crisis-hit member states. And, as the FT writes, the splits were observable at a meeting of EU finance ministers in Luxembourg on Thursday, with increasing signs that governments have formed competing camps with distinct visions on the direction of further integration.
Now, it's that last paragraph that's the key, for what it is saying is that the Eurocrats will continue to flood Europe with refugees, Merkel and Macron will continue to support open borders, Italy and Spain will continue to be flooded, and Spanish, Italian, German, French, Dutch, Austrian, Czech, Finnish, Danish et al. taxpayers will continue to foot the bill. Presumably, M. Macron's "plan" simply means the Brusselscrats will simply decide who gets to foot most of the bill, and given the French and German "weight", it's fairly easy to guess that the bill will fall the heaviest on everyone else. The revolt against this nonsense has named itself...well, I'll let you read it for yourself:
According to a letter seen by the Financial Times, Dutch finance minister Wopke Hoekstra has written to Mário Centeno, the president of the eurogroup, to underline that there is “wide divergence” on the need for any budget, with a number of countries concerned about “moral hazard risks” and questions of “fiscal neutrality” posed by the plan.
The letter insisted that the lack of the agreement on the budget be clearly communicated to leaders at next week’s summit.
"There was clearly no consensus on starting to explore options" at Thursday’s meeting of finance ministers, the Dutch finance minister said in the letter, adding there was also no agreement to start exploring the use of a financial transactions tax to finance it.
And the punchline: the letter was written by the Dutch finance minister on behalf of Belgium, Luxembourg, Austria, Sweden, Denmark, Finland, Latvia, Lithuania, Estonia, Ireland and Malta.
The simple math: 2 vs 12, and it is safe to say that the rest of the eurozone is not aligned with France and Germany either.
It gets better: according to the FT, the 12 countries expands a coalition called the “Hanseatic League” (a reference to the commercial and defensive confederation of merchant guilds and market towns in Northwestern and Central Europe, which in the late 1100s, grew from a few North German towns to dominate Baltic maritime trade for three centuries along the coast of Northern Europe), an initial group of eight smaller fiscally conservative countries, which have insisted on more national responsibility to solve economic problems in the eurozone.
The Hanseatic League? Really? National responsibility? Horrors! Fie the outrage!
Yes, really... and it's that name that invites my high octane speculation today, for that league obviously included the port cities of - here it comes - northern Germany. So what do I suspect? What's my speculation? With Mad Madam Merkel's government near collapse, there is every possibility that German businessmen and state and local politicians are also quietly (very quietly) in contact with the "new Hanseatic League". We've already seen the "revolt of the ministers" with Herr Seehofer openly defying his own chancellor, and coordinating ministerial policy with Austria and Italy.
In short, that "new Hanseatic League" looks a lot like that "restructuring" of the EU around a "northern zone" headed by Germany, and a "southern zone"... and like the old Hanseatic league, the new one is saying no to more centralization in Brussels.
And that puts the pressure on France. And that in turn means M. Macron's government is far weaker than it appears, for no matter which way he jumps - north with Germany or south with Italy and Spain - he's going to upset someone, and if he sticks to the current course, people are already upset, and his plan will no go through. And if he returns to the "unthinkable", i.e., a policy that is good for France, no one will believe him. (And look, who's that smiling up there in the Pas de Calais? Why, it's Marine le Pen. Bon chance M. Macron. Je ne voudrais vraiment pas être à votre place.)
So, sorry M. Macron, you won't be receiving this years Richelieu Prize. In fact, you're not even on the list, because so many others now are. (And, being part French myself, I had so hoped that someone from France would be the first winner.)
See you on the flip side...
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