The ECB has made a deal with Germany
Mario Draghi, the new head of the ECB, has made a deal with Germany that allows the central bank to open the monetary faucet if Germany gets its desired fiscal union.
This development reinforces the POV that the Germans are playing the EuroZone crisis to their advantage, but now the EuroZone crisis is a chance for Germany to take this strategy to another level.
Mr. Tony Corn makes this point in an very interesting article titled Toward a Gentler, Kinder German Reich?
Some excerpts, as follows;
For the 3rd time in less than 20 yrs, Germany is trying to cram down the throat of Europe a federal political union which, in the eyes of too many European observers, resembles a gentler, kinder Anschluss.
While Europeans were able to push back against the 1st a attempts, the 2-yr long financial crisis has created within Europe a German unipolar moment and provided the kind of leverage that had eluded Germany earlier. With the German Chancellor as a de facto EU Chancellor, German elites are leveraging the crisis by playing a game of Chicken in order to make their federal vision prevail.
Demographically and economically, Germany is 33% larger than either Britain or France. In the past 10 yrs, this predominance has been reflected in EU institutions, both quantitatively, Germany has the largest representation in the EU parliament, and qualitatively, the European Central Bank is a clone of the Bundesbank.
But that is really not good enough for Berlin, who has deliberately let the crisis move from the periphery; Greece and Portugal to the center, Italy and France, in order to extract the maximum of concessions from the rest of Europe.
Germany's ideal, if unstated, goal?
A constitutionalization of the EU treaties, which would irreversibly institutionalize the current correlation of forces, and allow German hegemony in the 27-member European Union to approximate Prussian hegemony in the 27-member Bismarckian Reich.
German elites have become so fixated on this goal that they are now talking about changing the German constitution itself in the event the German Constitutional Court decides to get in the way of the New European Order.
From a socio-political standpoint, to be sure, this would-be Merkelian Reich would have none of the negative features associated with the autocratic Bismarckian Reich.
In all likelihood, the new Reich would be a benign, metro-sexual, post-modern one that would not be any less democratic than the technocratic European Union of today. And from a monetary-fiscal standpoint, one could argue that a Merkelian Reich would probably represent a significant improvement over existing hybrid arrangements.
What we do not yet know is if a Merkelian Reich would lead to better monetary policy given the major differences in the European economies.
The EuroZone is not an optimal currency area and Germany has consistently shown itself to care more about domestic monetary conditions than European monetary conditions.
Nevertheless, if this is the path the European Union is headed then creating such a fiscal union is a step in the right direction toward making the EuroZone a functional currency union.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.