End of the American Dream
Are you ready for "The United States Of Europe"? The integration of Europe is about to go to another level. As the European debt crisis deepens, there are cries all over the EU for full economic integration in Europe. On Wednesday, French President Nicolas Sarkozy and German Chancellor Angela Merkel sent a letter to European Council President Herman Van Rompuy which stated that they want a new "economic government" for Europe to be formed. According to the letter, Sarkozy and Merkel want the leaders of the eurozone countries to "elect" a president for the new "economic government". The idea would be that the president would hold twice-yearly summits to address the debt problems that Europe is facing right now. But many pro-EU critics are already howling that Sarkozy and Merkel have not gone nearly far enough. A whole lot of "experts" in Europe are proclaiming that without full economic integration and the creation of "eurobonds", Europe is doomed. Jennifer McKeown, an economist for Capital Economics, put it this way when asked what would happen if eurobonds are not created fairly soon: "The likely outcome is the eurozone ceases to exist".
This is often how huge changes occur in our world today. First a huge problem is created, then there is a negative reaction and then a solution is presented to us. Right now in Europe, the problem is the sovereign debt crisis. We are being told that the only way that the eurozone can survive is if all of the countries agree to much deeper economic integration.
In an article for Seeking Alpha, Cliff Wachtel broke down the choices facing the people of Europe in the following manner....
- The continued existence of the EZ in its current form in exchange for vastly limited sovereignty. In particular, with limited financial autonomy, with some kind of centralized budget approval and or spending veto power over individual states.
- Continued full sovereignty in exchange for a dissolved or radically altered EZ, probably one contracted down to member states with similar needs and reliable fiscal management.
While some are applauding the possibility of increased integration in the eurozone, others are warning about the potential consequences.
For example, a Daily Mail article entitled "Rise of the Fourth Reich, how Germany is using the financial crisis to conquer Europe" contained the following assessment of what deeper economic integration for Europe would mean....
This would entail a loss of sovereignty not seen in those countries since many were under the jackboot of the Third Reich 70 years ago. For be in no doubt what fiscal union means: it is one economic policy, one taxation system, one social security system, one debt, one economy, one finance minister. And all of the above would be German.
Nigel Farage was also deeply critical of the new proposal by Sarkozy and Merkel....
Bit by bit, eurozone members are losing their sovereignty as the European superstate is created. Nothing in these proposals will calm the markets. I am also prepared to bet that the European political elite will not ask the permission of their peoples via a referendum to make this happen.But Sarkozy and Merkel seem unconcerned about the critics. In fact, they have announced plans to have a common corporate tax rate by 2013 and to coordinate work on their national budgets.
So if the leadership of the German and French governments both want deeper economic integration for Europe, will anyone else in the eurozone be strong enough to resist it?
EU Commission President Jose Manuel Barroso is already calling the proposals put forth by Sarkozy and Merkel "an important political contribution by the leaders of the two largest euro area economies to this debate and the on-going work."
Countries such as Greece, Portugal, Italy and Spain are already deeply financially dependent on Germany. Either they will have to leave the eurozone (which would be a financial disaster for them) or they will have to go along with what Germany and France want. (Read more)