THE FATE OF EUROPE

British Prime Minister, David Cameron lectured Europe, more particularly Greece ,on what is the proper neoliberal economic way to follow, but the Greek voters who are suffering from the politics of austerity are not likely to listen.

With some historical irony it seems that Irish voters will make the decisive decision. On 31 May Irish voters, alone out of the members of the EU,  will vote on the treaty that introduced the politics of austerity. If they vote against, all of the EU will abandon the arrangement.

The result would then be, independent of the next Greek election, but encouraged by the elections to date, the neoliberal experiment would have failed.

Immanuel Wallenstein asks:

What will happen then? The key is what happens in German political life. Angela Merkel, like any good political leader, tries to see which way the wind is blowing. Her language is therefore already beginning to evolve. She may even secretly welcome the outside pressure to do what, from Germany’s own narrow point of view, is the sensible thing, and shore up purchasing power (for German goods, among other things) in the rest of the European Union.

If Germany moves in that direction, the euro and the European Union will survive, and continue to be a major (if chastened) actor on the geopolitical scene. Worldwide, the recentering of Europe as a whole will however not encrust a status quo but rather speed up the geopolitical realignments that are inevitable. Nonetheless, German recentering may help Europe to resist better the coming tsunami of the collapse of sovereign funds and of the dollar as reserve currency.

The entire world is swimming in very choppy waters. Germany may soon join the list of states that are beginning to understand how to navigate amidst chaos. Inflexible governments are their own worst enemy.

I wonder why the Germans adopted the politics of austerity in the first place, and speculate it may have something to do with the financial burden of incorporating the former East Germany.

Prior to the outcome of the French Election, Paul Krugman explains the German psychology. Economics, he says, is not a morality play:

Related articles

• Norman Birnbaum, With Hollande in power, Can Germany’s Social Democrats force Merkel to abandon austerity? (The Nation). The background to the European crisis is described:
  

  Last year the German government of Chancellor Angela Merkel—composed of Christian Democrats, who are divided on the holy status of the market, and market-devoted Free Democrats—persuaded twenty-five of twenty-seven members of the European Union to accept a major alteration in the EU’s fiscal Stability and Growth Pact of 1997. The original pact had required the member states to balance their budgets, inscribing in the governance of the EU the intellectual wet dream that obsesses our own Republicans: a constitutional prohibition on expansionary economic policies, no matter what the situation. What is new in the pact are severe penalties for ignoring its central provisions (no government expenditure that pushes deficits beyond 3 percent of gross national product, and no national debt accumulation greater than 60 percent of GNP). France and Germany had ignored those limits in the past, but Merkel and former French President Nicolas Sarkozy agreed to a joint performance as apostles of economic virtue.

  The measure is as intellectually preposterous as it is politically and economically self-defeating. Unemployment in Germany is lower, and tax revenues higher, than in most of the rest of the EU. There are many reasons for that, including long-term collaboration of state, capital and the trade unions. But Germany’s economic health has also depended on a European market for German capital goods. If the other European nations cannot stimulate their economies, Germany will lose customers. The Chinese demand for Audis, BMWs and Mercedes is not inexhaustible.

  German success is being paid for by the declining standard of living of the German working class. Many are working part time or temporarily, and in any case are being underpaid as social benefits and expenditures (including education and health) are cut. That has led to a revival of support for the Social Democrats and their allies, the Greens. In Germany’s largest state, North Rhine–Westphalia (which includes the large cities of Cologne and Düsseldorf and the industrial Ruhr Valley), a Social Democratic–Green coalition government just increased its majority dramatically. As a result of recent state elections, Merkel has lost her majority in the second German legislative chamber, in which states are directly represented. There will be national elections in 2013, and already the victorious NRW governor, Hannelore Kraft, is being talked about as a candidate for chancellor.

  Meanwhile, Merkel and her subdued if not battered party have another electoral victor to deal with: the new president of France, François Hollande. The German chancellor does not have a very impressive record of electoral prognostication. . .

• Greekonomics (theglobalmail.org)
• ‘Merkel and Hollande will do anything to save euro’ (rt.com)
• EU leaders set for showdown on fate of euro as crisis deepens (guardian.co.uk)
• New Republic: How Merkel Learned To Love Power (wnyc.org)
• First stop for new French president Hollande: Germany (csmonitor.com)
• Burman: In 2012 as in 1912, Europe still centre of world’s fate (thestar.com)
• Fate of euro at stake in top-level meetings (smh.com.au)
• Germany and China: Too Close for Some (rendezvous.blogs.nytimes.com)
• François Hollande faces a baptism of fire in Berlin (guardian.co.uk)
• Euro at Risk of Survival (theepochtimes.com)
• EU insists on austerity for Greece (express.co.uk)
• Greece: Before And After (zerohedge.com)
• IT’S OFFICIAL: Greece’s Fate Could Be Decided On June 17 (businessinsider.com)
• The #1 Question That Greeks Will Be Asking In The Next Elections (businessinsider.com)
• ‘Merkel and Hollande will do anything to save euro’ (EndtheLie.com)
• The Greek crisis will fast expose Hollande (todayonline.com)
• Time To Admit Defeat – Greece Can No Longer Delay Euro Zone Exit (freeinternetpress.com)
• EU insists on Greek austerity plans (thisislondon.co.uk)
• National News: EU insists on austerity for Greece (coventrytelegraph.net)
• Rundle: Greece is now the cutting edge of the world (crikey.com.au)
• Euro could now survive Greek exit, says Europe minister (thetimes.co.uk)
• French stick: New France president blasts UK for treating Europe “like a cash till” (mirror.co.uk)
• Greece braces for a run on the banks (thetimes.co.uk)
• Lightning jump-starts Franco-German motor (bbc.co.uk)
• G8 Summit: President Obama To Press Chancellor Merkel On Euro-Zone Growth Package (freeinternetpress.com)
• New French leader fires a broadside at Britain: You only care about the City of London, says President Hollande (americankabuki.blogspot.com)
• For an Economic Recovery in Europe (lewrockwell.com)