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The end of a civilised Europe? Germany enforces a new gold standard

Arguably the so-called deal that has been forced down the throats of the Greek people represents the worst of all worlds. It imposes even more draconian terms than were on offer even a week or two ago, with very little conceded in terms of debt relief, but with such added conditions of austerity as will make it nigh impossible for the Greek economy to achieve the growth necessary to pay down the indebtedness which had reached 175% of GDP. This is not a creative solution of EU solidarity which is the constant refrain of European rhetoric, but a brutal punitive assault which all but turns Greece into an EU economic protectorate, including a requirement to place the country’s most valuable publicly owned assets into a €50bn privatisation fund controlled by the EU. This is the end of Keynesian economics in Europe and its replacement by capitulation terms reminiscent of those imposed on Germany by the Versailles Treaty after the first world war.

Yet it is now Germany enforcing on another state such intolerable conditions as paved the way a century ago for their final denouement in the second world war. If these are the conditions for maintaining the euro intact, it cannot survive long-term. Yet what gives this drama its Faustian aura is that it is Germany, the new rigid hegemony of the modern Gold Standard, which is now exercising its anti-democratic suzerainty – the very country that begged the other European powers for debt relief at the London conference in 1953 and was granted remittance of half its debts, and indeed the same country that in the last decade broke the 3% over-spend limit on public expenditure which was subject to deterrent financial penalties under the EU Financial Stability Mechanism, but ignored the rules and never paid up.

What gives the German attitude a peculiar nastiness is that they were determined to punish Tsipras for calling his referendum by hardening their conditions for a deal even further still. This was the day when European democracy was drowned by corporate power (the banks using the politicians as their foil): no concessions to the popular will, but instead gratuitously rubbing their nose in their own helplessness – a culmination which surely one day wreak its own tragic conclusions.

The imposition of quasi-automatic spending cuts if Greece cannot cut enough to balance the books, plus the requirement to raise €50bn through privatisations – terms reminiscent of the structural development programmes imposed by the IMF on struggling Third World economies – are simply a recipe for continued decline, a hole that Greece cannot possibly dig itself out of. This is not the end of the story, though it is the end of a civilised Europe.

8 Comments

  1. swatantra says:

    I’m getting the distinct feeling that MM is a euroskeptik, in which case he is in the minority; and the uneasy feeling that MM is generating Germanophobia.

  2. Arsene Elbow says:

    MM should read a few German newspapers this morning. The German people are up in arms about this deal, it may not get past the National Parliaments

  3. P Spence says:

    In 1953, western Europe was fearful of communism which still held much attraction to the masses. That explains why the German capitalist state was treated so kindly. Greece does not today have a viable alternative to counter the Troika except a form of social suicide. Polayni in The Great Transformation describes what happens when money and people are treated as commodities.

  4. David Pavett says:

    I have no idea what MM means by

    Yet what gives this drama its Faustian aura is that it is Germany, the new rigid hegemony of the modern Gold Standard …

    I know that Michael Meacher never descends to answering questions from the blogging hoi polloi but can anyine explsin this? What is “the modern gold standard”?

    1. swatantra says:

      MM is Michael Meacher, not Mrs Merkel.
      And I also haven’t a clue what the ‘modern gold standard’ means either.

  5. Barry Ewart says:

    The Eurozone economy in the analogy of a patients is not well.
    And some of the bigger countries have taken their own self-prescription drugs (quantitative easing) to give them short term relief to put off the problems (but have refused these to Greece).
    The problem is that the 19thC Neo-Liberal Doctors only know one thing – how to bleed the (smaller) patients.
    But we realy need to cure the patient by writing off the debts of the struggling countries then have state-led public investment (and yes more democratic public ownership by country).
    I support working class and progressive middle class people in every EC country (and recognise we need to work on the general middle class and rural middle class – generally won by the Right).
    And as I have mentioned the Right Wing Govt in Germany is mainly being sustained by engineering exports to the likes of China but for the working class and progressive middle clas in Germany it has been years of wage suppression, and poverty is on the increase.
    But the Right Wing German Govt may be about to get a short back and sides if China cuts these orders because of its stock market problems.
    Meanwhile back in Greece the tragedy for Syriza is that they were mainly standing alone with a few moderate centre-left Govts (such as France & Italy) offering a bit of support but from within a Neo-Liberal framework.
    It may be easy to criticise Syriza but people need to put themselves in their shoes first, perhaps at least they may be able to mitigate some of the effects of the 19thC Neo-Liberal political imbeciles policies and search at least for some progressive space before hopefully the 21st Century Democratic Socialist Cavalry comes along with support and international solidarity.

  6. Syzygy says:

    The ‘gold standard’ comes from when the value of a currency was directly linked to amounts of ‘gold’. This meant that no more money could be created by government/central bank than the amount of gold held by that nation. The money available was fixed and limited.

    Michael Meacher means that ‘Germany, the new rigid hegemony of the modern Gold Standard’ is not prepared to either cancel Greece’s debt, or allow the ECB to fund a fiscal stimulus or Keynesian rescue package, because they are operating as if the Euro was linked to a Gold standard.

    In sovereign nations like the UK, who issue their own fiat currency, it is not possible to run out of money or be unable to pay debts (think of 375bn of QE). However in Greece, they use a foreign currency, the euro and can be bankrupted. Of course the rules preventing the ECB from acting like the Bank of England are self-imposed by the architects of the EU.

    1. J.P. Craig-Weston says:

      Thank you for the clarification, although I’m familiar with the gold standard historically, I’ll confess to having been somewhat confused by the reference to it in this context; a good clear explanation.

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