Might the EU collapse?

[Manedwolf]

Germany, after Ireland, is breaking EU rules by doing this. Italy and France, with the problems with lots of illegal immigrants and a welfare state, are dragging down any nations with growth industries.

Might the whole thing fall apart, the Euro go away, everyone go back to their own currencies as Brussels is told to go pound sand?

I hope so.

Every country for itself as European unity collapses in an attack of jitters
Germany became the latest EU member to put its national interest first by announcing its own guarantee for bank deposits
Roger Boyes

Germany shattered any semblance of European unity on the global credit crisis last night by announcing that it was ready to guarantee €568 billion of personal savings in domestic accounts.

The move – which came as Berlin announced a new rescue package for an ailing mortgage bank – is sure to anger France, which, holding the European Union presidency, tried to create the illusion of a common front at a weekend summit in Paris. Instead, the message coming loud and clear from Berlin is that it is every man for himself. Or as President Nicolas Sarkozy would prefer not to say:sauve qui peut.

The massive liquidity crisis in the banking system has already nudged the Irish Republic and Greece into unilateral – and probably illegal under EU law – action to guarantee the deposits in national banks. Faced with a choice between the possible collapse of their banking systems and violating EU competition rules, the two countries opted for what they saw as the lesser evil. Now Germany, which at the weekend rejected French plans for an EU lifeboat fund, has taken the decisive protective step, and it is said to be plain that other European states will have to follow suit.

Early today the Danish Government guaranteed all bank deposits in Denmark as part of a deal with banks to set up a liquidation fund. There had been a ceiling on the guarantee.

Yesterday Peer Steinbrück, the German Finance Minister, said of his own country’s move: “This is an important signal to calm the situation and head off disproportionate reactions, and which would make our crisis management or crisis prevention even more difficult.”

Berlin insiders say that Angela Merkel, the German Chancellor, did not make a spur-of-the-moment decision but had been pondering the move since the Hypo Real Estate bank first ran into serious trouble. The Munich-based group is the second-largest commercial property lender in Germany and it seemed set to go down ten days ago, hit by the problems of its Irish subsidiary Depfa. Then the Government came up with €35 billion of liquidity to be provided by a consort-ium of banks and the Bundesbank, while banks and the Government would stump up €35 billion of credit guarantees. The alternative was to see the bank go down and suck the real economy into the maelstrom.

The new deal announced last night gives Hypo Real estate an additional €15 billion credit on top of the €35 billion. Of the extra credit €14 billion of that extra credit will be underwritten to 60 per cent by the commercial banks and 40 per cent by the Government. The hope is that this will be sufficient to head off a run on the bank.

But even before she went to the Paris summit to argue against a “Euro-tarp” – a troubled asset relief programme – or bailout plan, Mrs Merkel knew that matters were unravelling at home. The original rescue plan for Hypo Real Estate was clinched in a phone call eight days ago between her and Josef Ackermann, head of Deutsche Bank.

She persuaded him to tell Germany’s bankers to up their contribution to the rescue from €7 billion to €8.5 billion. She was determined that the Government should not shoulder all of the burden. But then Mr Ackermann reported back – the banks were willing to cough up only €3 billion for the rescue. Hypo Real Estate made matters worse by announcing that it had got its figures wrong – it could need as much as €100 billion by the end of next year and €20 billion by the end of the coming week.

Since then – more specifically since an allnight session of the Bundesbank on Thursday – she has known that she has to come out on behalf of the savers, the taxpayers and even more important the voters. Germany faces a general election next year and they will tip out any Government that is seen to be throwing their money at sinking banks or bungling its handling of the economy.

“We won’t allow the crisis in a single institution to become a crisis for the whole system,” the Chancellor said. The Germans will abolish the current limit guaranteeing 90 per cent of all bank deposits up to €20,000 per account – essentially the same measure taken by the Irish that triggered dismay from its partners, especially the British. The €20,000 sum is the lowest possible guarantee under EU law; other countries have higher limits.

The scope of the guarantee is huge. “It covers all savings deposits and private giro accounts, a total value of €568 billion,” Torsten Albig, spokesman for the Finance Minister, said.

The primary task of the Government is to stop a financial meltdown that destroys all consumer confidence in the economy. “People are asking: what is going to happen to my savings?” says Rüdiger Ditz, economics commentator of Der Spiegel. “Is an investment secure? And what is going to happen to us when there is no backbone to the system any more and the money just evaporates?” It is difficult to deal with the crisis using conventional political instruments, he says.

“It is about the loss of confidence of ordinary people, the fear of fear itself,” he says, “and nothing is more irritating than the massive capital flight of the Germans to supposedly safe havens such as Ireland.”

The underpinnings of Chancellor Merkel’s decision emerged in an interview with the Interior Minister, Wolfgang Schäuble. History had taught Germany, he said, that a sustained economic crisis created political havoc.

“We learnt from the worldwide economic crisis of the 1920s and 1930s that an economic crisis can result in an incredible threat for all of society,” he said. “The consequence of that depression was Adolf Hitler.” Only one thing trumps German anger at the perceived abuse of taxpayers’ money: the fear that the 1930s will return.

http://www.timesonline.co.uk/tol/news/world/europe/article4888286.ece

[MicroBalrog]

Italy and France, with the problems with lots of illegal immigrants and a welfare state

How is this different from, say, Germany?

Might the whole thing fall apart, the Euro go away, everyone go back to their own currencies as Brussels is told to go pound sand?

Couldn't have happened to a nicer group of people.

[2swap]

Can't the Einlagensicherungssfond guarantee for the private savings? It already is established. No need to bail out people who absolutely fail at business.

[HankB]

. . . French plans for an EU lifeboat fund . . .

I would guess that the French made a few calculations and determined that the potential benefits to France would exceed their costs, if the whole EU were pooling resources for this "lifeboat fund."

[Manedwolf]

. . . French plans for an EU lifeboat fund . . .

I would guess that the French made a few calculations and determined that the potential benefits to France would exceed their costs, if the whole EU were pooling resources for this "lifeboat fund."

Yes. I don't blame Germany at all for saying "Nein!"

That's equivalent to someone with a tin cup walking up to a group of well-dressed businessmen and suggesting that they all pool their funds.

[K Frame]

I've said for years that when push comes to shove, individual nations are going to act in their own best interests and NOT in the "interests" of the European Union, even if those actions are "against the rules" and that is going to be the biggest impediment to the EU's long-term survival.

[roo_ster]

Faced with a choice between the possible collapse of their banking systems and violating EU competition rules, the two countries opted for what they saw as the lesser evil.

Violating EU rules is not a "lesser evil" or any sort of evil, IMO.  I consider it a "good first step."

[TommyGunn]

IMHO the EU was doomed to collapse from the start.  A disaparate as America is, we have more in common as a nation than does europe.  I don't know if this will cause it or not, it may just be another straw on that camal's back.
Definantly an omen though ..... ..... ..... .... ... ..   ..    .            .                            .

[Silver Bullet]

Yes. I don't blame Germany at all for saying "Nein!"

That's equivalent to someone with a tin cup walking up to a group of well-dressed businessmen and suggesting that they all pool their funds.

Or California requesting its seven billion dollar bailout from the federal government.  I suspect France and California have a lot in common.

[Manedwolf]

Yes. I don't blame Germany at all for saying "Nein!"

That's equivalent to someone with a tin cup walking up to a group of well-dressed businessmen and suggesting that they all pool their funds.

Or California requesting its seven billion dollar bailout from the federal government.  I suspect France and California have a lot in common.

CA has been spending money like water for Extreme Green cult stuff and to subsidize illegal aliens in sanctuary cities.

I would say "no", and let them CUT THE DAMN SPENDING.

[Tallpine]

I suspect France and California have a lot in common.

Like their whines ?   

[MicroBalrog]

I suspect France and California have a lot in common.

Like their whines ?   

And their socialism.

[Perd Hapley]

The EU can't collapse.  I have it on very good authority that the EU will be the power behind the anti-Christ.   

[ilbob]

It won't take much for the EU to crack as anything other than a customs union. The smarter people in the EU have figured out just how much membership is costing them, especially when the more wealthy nations have to subsidize the poorer ones.

The politicians are not beholden to the EU bureaucracy as much as they are to their own voters.

I would not be at all surprised to see at least some EU countries start to violate some of the EU dictates on immigration and guest workers as well, when the voters start demanding it. What is going on in Austria is just the start.

[Laurent du Var]

There is a lot of truth in the previous posts.
First of all the EU doesn't exist that long and is just in its baby shoes and
only dealing economically with each different country so far.
There is no united Europe, especially in a military way.

Most decisions  are still made on a national basis, and it is not surprising that countries with a weak infrastructure are thriving to get in, while other countries
try to stay out as much as they can;

Germany was financially always way stronger and more conservative than the French, and it is no surprise that if you run a tight ship you don't want to go under with a weak fleet. Also the Germans are quite good with private savings through out all the different income levels. As a Bank you throw around crazy money and the next day you'll have your customers emptying their accounts and you can close your counters for good.

In France because of irresponsable politicians, the immigrants and the lazy we never made a "Wirtschaftswunder" but barely got by.
Which makes it difficult in time of crisis, but guess what - the conservatives,
the real ones are there and alive not necessarily in Paris on the rive gauche but
in the countryside where hunting will put meat on the table while the lowlifes burn their neighbours cars in the banlieus.

They are talking now about a minimum 18% of personal funds to be able to apply for real estate loans as if that would help us when the lowlifes squat for free in their ugly concrete towers.  


 

[Werewolf]

I've said for years that when push comes to shove, individual nations are going to act in their own best interests and NOT in the "interests" of the European Union, even if those actions are "against the rules" and that is going to be the biggest impediment to the EU's long-term survival.

Just another example of how politicians are pathologically incapable of learning from history. Confederations, especially loose ones like the EU have never held together.

Hell the US is proof positive of that. How long did the articles of Confederation last after the Revolutionary War before the powers that be decided they just weren't working because each state had too much autonomy?

[Perd Hapley]

The way I heard it, Werewolf, the EU was always incrementally consolidating.  It started as a Common Market with trade agreements, then became the European Union, then they went to a single currency, and so on.  I thought the trend they were on was toward centralization, instead of mere confederacy. 

[Werewolf]

The way I heard it, Werewolf, the EU was always incrementally consolidating.  It started as a Common Market with trade agreements, then became the European Union, then they went to a single currency, and so on.  I thought the trend they were on was toward centralization, instead of mere confederacy. 

Maybe...

But right now even at their most cooperative the best the EU could claim would be loose confederation.

Is their ultimate goal to achieve a United States of Europe type status? Beats me. Seems unlikely they could ever ultimately realize that goal. Ethnic divisions are too many and cultural norms for each people too strong for me believing that a US of E is possible.

[Manedwolf]

Well, you've got actual growth markets like Ireland (software development, of all things, plus Boston Sci is based there), Austria that's doing alright, Estonia as an economic rising star, some others, saddled with the likes of....England, in its multicultural welfare state hell, France likewise. Germany, with guaranteed employment problems sinking its economy as well. Spain, whose only flash of activity since they lost their armada was to blow themselves up with Franco. And Italy, which is...Italy. The enterprising countries are being dragged down by the deadbeats.

No wonder some sorts want to pull the plug. :)

[MechAg94]

The EU can't collapse.  I have it on very good authority that the EU will be the power behind the anti-Christ.   

The "EU" is not mentioned in the Bible and at all and there is no reason why what is predicted won't simply come about at the time those events take place without much lead time.  Just my 2 cents.

[Regolith]

IMHO the EU was doomed to collapse from the start.  A disaparate as America is, we have more in common as a nation than does europe.  I don't know if this will cause it or not, it may just be another straw on that camal's back.
Definantly an omen though ..... ..... ..... .... ... ..   ..    .            .                            .

Seems to me like the EU is a lot like the Articles of Confederation: Too weak a central government to solidify the individual members into a cohesive political and economic entity. My guess is that the EU is doomed to one of three fates.  It  could fail completely as its member states take back their full sovereignty; stick around but be completely ineffectual like the UN; or it could do what the United States did and decide a stronger central government is the answer.  The last one is unlikely, so my guess is either it will become like the UN or it will fail completely.

[Perd Hapley]

The EU can't collapse.  I have it on very good authority that the EU will be the power behind the anti-Christ.   

The "EU" is not mentioned in the Bible and at all...

First of all, your sarcasm meter requires immediate recalibration. 

Secondly, OF COURSE it's in the Bible.     Or is it the Catholic Church they're talking about?  Or, wait, maybe it's the...

I have a book by this British journalist,



who happens to be related to my parents' neighbors.  And that's about the only thing I've said that you should take as fact.     He gave a talk at my parents' church one day, telling us all about how the end was near. 

[txgho1911]

Fistfull has the answer!
Where is that list of politicos who voted yea?

[lee n. field]

I have it on very good authority that the EU will be the power behind the anti-Christ.   smiley

Getting dispensationalists to rethink their Incredible Morphing Endtimes Model wouldn't be the least of the benefits of an EU crackup.

[Perd Hapley]

 

I'm pretty sure that's a tiny-minority view-point, although I suppose it is much more common in the EU itself.  I shouldn't wonder that a lot of American dispensationalists don't know what an EU is.   

Personally, I believe that the Anti-Christ will arise not from a political structure, but from her long-running television show.  Tom Cruise will not be jumping on the couch when she comes into her glory, and puts him in his place.