The continuing economic crisis has revealed both the inadequacies and the limits of the process of neoliberal European integration. It is an integration centered on financial liberalization and a monetary union, which is itself enveloped by a mere replica of the German Bundesbank under the title European Central Bank. It is a recession-bias process that accentuates intra- and inter-member-state inequalities and asymmetries, adds to unemployment, and spreads the web of poverty to the lower social classes. It has been more an avalanche of capital against labour than an honest endeavor to promptly resolve the crisis. Continue reading
Though little remarked on, there is a very striking difference between the ruthless approach adopted by the European Central Bank (ECB) to indebted sovereign States compared to its treatment of banks. When Portuguese banks declared they would not any longer purchase bonds if Lisbon did not seek a bailout, the Prime Minister was forced to succumb, only to be told a week later that the banks had had ‘clear instructions’ from the ECB to turn off the tap.
In other words, the ECB in effect brought down the Portuguese government. When the ECB stepped in with a massive bond-buying programme when yields in Italy reached dangerously high levels, it made clear the price: still further austerity and labour market de-regulation.
Draghi has finally won his battle with the Bundesbank to prevent the likes of Italy and Spain being bankrupted or driven out of the euro by winning the power at yesterday’s ECB meeting to buy up their bonds in unlimited amounts. That’s what the markets have been waiting for for ages.
But there is a catch. Before the ECB will act, a country must have put in place its structural adjustment programme offering ‘strict and effective’ conditions before the buying up of the bonds of the distressed countries can begin. But then what would happen if the ECB used its firepower to bring down the interest rates of these countries, but then the government found the conditions it had signed up to were too difficult to implement because of popular resistance? Continue reading
The take-up by the eurozone banks of €489bn from the European Central Bank (ECB) ought to be good news as a sign that the ECB is now at last, having refused to do so in 2011, ensuring eurozone banks can fund themselves adequately next year. The ECB believes they will need €720bn of loans in the first quarter of 2012. Continue reading