Europe Gets its Fiscal Integration Package

Who knew the Europeans really missed the Stanley Cup playoffs that much? For those that don’t like hockey, in the playoffs, games go until someone finally wins. And it doesn’t matter how long it takes.

They can be grueling affairs with games going into triple and quadruple overtime, with players playing the equivalent of more than two full games without any rest. So, the recent European summit where the Coronavirus rescue package went into triple overtime, with an agreement reached on a ‘rescue’ package after five days of negotiations versus the planned two days must have felt like a game 7 for the architects of it.

Because absent this agreement, the future of the European Union would have been in serious doubt.

But, that said, the main difference between this summit and a Stanley Cup playoff game is that the outcome was known beforehand. This was simply an exercise in endurance to ensure the ‘right’ outcome.

Because from the moment this summit started the fundamental structure of the package which mattered the most, grants and loans to member states issued through the European Commission, had already been agreed upon in principle.

All they did for the next five days was haggle over price.

Those grants and loans create the predicate on which the fiscal integration of Europe will be built.

The final version of the package varied from the original proposal promoted by German Chancellor Angela Merkel and French President Emmanuel Macron in a couple of important ways. But those changes were nothing more than face saving measures granted to the so-called “Frugal Four” countries – Austria, The Netherlands, Sweden and Denmark – to allow their leaders to go back and say, “We resisted and won some much needed concessions,” while caving the entire time, purposefully missing the net, as it were.

In other words, this was politics as usual.

Via Zerohedge, Erik-Jan van Harn of Rabobank gave us the best rundown of what those changes were. While the devil is normally in the details, I don’t think it is here. The devil is right in front, grants and loans totaling €750 billion but only €390 billion in grants rather than the original €500 billion, in a total package worth just over €1.07 trillion.

It’s not like Europe has this money, which means the European Commission, led by globalist puppets like Ursula Von der Leyen and Charles Michel, will have the ability to tax and redistribute wealth like a real government body.

At the same time the Visegrads, led by Poland and Hungary, needed appeasing on matters of national sovereignty, allowing for some restraints on how disbursement will be handled and ratified. The rule of law questions were separated to their satisfaction, as it now rests with the European Council, made up of the heads of state of the EU27, who require unanimity.

But again, these are all rearguards, almost Pyrrhic victories and it tells you how weak the negotiating hand of the opposition was that that is all they won when Merkel and Macron got nearly everything they wanted.

Because the European Union, in its current form, cannot survive. It needs a currency, the euro, properly structured if it is to survive and the EU to continue. Otherwise the mess that it is now, continues in perpetuity until Brexit is replicated by others like Italy and Denmark.

The acceptance of grants and loans administered by the European Commission by the council is the first major step towards fiscal integration. And ultimately, that was the blackmail in front of the Frugal Four and the Visegrads.

Hungary is too small to resist western Europe and the Poles too Russophobic to shift policy east.

Now the commission has taxing authority. It now has debt issuance authority to disburse funds. This is why the euro rallied on the news and why the markets are reacting like Europe’s problems are solved and the U.S.’s just beginning.

This is, of course, patent nonsense. Not a euro of these funds will reach the countries most severely affected by COVID-19 and the subsequent gutting of the world economy until 2022. By then the people the funds are supposed to help will be well beyond it.

So, this summit was never about helping the people of Europe recover.

And a lot can and will happen between now and then.

This is all about the long-term and setting the precedent to completely remake the finances of the European Union further eroding national sovereignty under the auspice of helping the people impoverished by their ruinous policies in the first place.

Remember that just a few months ago Merkel was on her last legs politically, the European Council meeting in February to discuss the upcoming budget talks ended with leaders so angry at her that it was good she’d quarantined herself.

Now she’s the Queen of Europe again, all thanks to a virus which has completely upended western society as the people with the most to gain from it, embattled politicians like Merkel, advocating the most draconian measures on their people.

The episode reminds me of the quote by the great Harry Browne, former Libertarian presidential candidate and author, who said that government was only adept at breaking your legs and then giving you a crutch and saying without it you wouldn’t be able to walk.

It also reminds me of another major difference between politics and the Stanley Cup playoffs. The players play the game for the love of it, their pride and future as well as the tradition of it. They can’t win it all without everyone pulling for each other. It is one of the great spectacles of human perseverance I can think of.

What Merkel and company have planned for the future of Europe, which they have taken the first steps to secure, will unfortunately be another, but not because the people wanted it but because she demanded it.

By Tom Luongo
Source: Strategic Culture

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