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Monday, June 13, 2011

Another broadside from Frankfurt

No, we're not talking about the ECB, but the Frankfurter Allgemeine Zeitung. Following the stinging attack from its Vienna editor last week on the current direction of the EU, it was today the turn of the paper's Economics Editor, Rainer Hank, to launch his own broadside.

With the eurozone bail-outs his main target, Mr Hank notes that,
"The EU could just let Greece crash because in paragraph 125 of the EU treaty it says: 'The Union shall not be liable for or assume the commitments of central governments' (…) It will never come that far because, one year ago, European politicians founded the 'euro rescue club' which has had plenty to do ever since. It started with €110 bn for Greece, continued with billions more for Portugal and Ireland and now we are back to Greece again even though the IMF, the ECB and the EU have predicted Greece’s bankruptcy in official statements."
He argues that,
"No doubt: Europe’s rescue started with a breach of law. And, as with Adam and Eve’s breach of law in paradise, one sin leads to many others."
...which is all too true.

He then goes on to make the very crucial point that the bail-outs are pretty much against the ECB's and the IMF's rules as well - an argument that plenty of German economists will readily subscribe to.

He goes on:
"The result of European solidarity is disappointing: Millions of euros and dollars are gone, Greece is still not rescued and Europe is severely damaged... Where you find losers (democracy, the constitutional state and public support) you will also find winners. These are the centralists.”
For you German speakers, we strongly recommend reading the whole article - there's plenty of thought-provoking stuff in there.

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