A Guest post by Patrice Ayme

Part One ended saying:

The euro, long in planning by some European institutions, was introduced minimally, namely without the governmental apparatus generally associated to a currency. This is the way Europeans have found to progress peacefully towards greater harmony: do what is necessary, and nothing more than that, and do it with total consensus.

Everybody knew that a currency without a government to create and anchor it had never happened before, and was unlikely to endure.

Part Two continues

That fit the European federalists just right, and could not have escaped the understanding of Paris and Berlin. As it turned out, the PIIGS’ crisis is putting back Paris and Berlin, the historical engine of Europe, back on top, and this, for an excellent reason.

“PIIGS” stand for Portugal Ireland Iceland Greece Spain. All of them ran bubble economies, partially propelled by taxes from the richest European countries (including France and Germany). It became ridiculous as, for example, Ireland was getting European subsidies while the Irish were already way richer than those subsidizing them. (OK Iceland is not in the EU, yet, but it begged to enter the Eurozone, and it has disappeared the savings of countless Brits and Dutch, which means it has some outstanding business with the rest of Europe, that it will have to sort out, after executing a few more whales, guilty as charged.)

Some acknowledge the convenience of a common European currency and easier border transits, while remaining obsessed by what they view as gigantic differences between European countries. Those quaint nationalists and parochial types obsess that core differences between countries are so strong and deep-rooted that any form of real European union is a ridiculous concept. This is triply erroneous.

First because Europeans are very much alike, when compared to other earth’s denizens. Anybody who has long lived outside of Europe and its ex-colonies (USA, Australia, Russia, etc.) knows this. I myself long lived in black Africa, and Europeans, Americans, Russians, etc. felt all the same. This is a fortiori true inside the European Union.

Second, to revere nationalism is to worship at the foot of the idea of imagined and magnified differences that caused activities such as the 500 year war between England and France, an unfathomable stupidity between cousins that was long a Franco-French civil war. The estrangement between Germans and Western Franks (roughly 945 CE to 1945 CE) was another ridiculous, and ultimately murderous attitude imposed from above (in this case, the Western Franks, based in Paris stopped bothering to send east the candidate emperor, as they were supposed to, because apparently Germany bored them to death.)

Third, and most importantly, the European Union already exists. French passports have “Union Europeenne” written on top (with “Republique Francaise” below). European law primes national law, such is a basic foundation of the European constitution (still a work in progress, but the foundations are here to stay).

The obsession with worshipping nationalistic ridicule was recently concentrated in Great Britain. Britain opted out of the European social contract (without much difference anyway, because Britain is extremely socialist, more than France in some important ways, and much more efficiently).

Britain could not join the creation of the euro: it had been booted out of the European Exchange Mechanism by the billionaire Soros, an ignominious submission which cost the UK 3.3 billion pounds (and brought more than a billion dollars in the plutocrat’s coffers). Britain is also hanging half out of the Shengen (border-less) zone (to which even Iceland, Suisse, and Norway belong to!)

The reason for this British aloofness to the rest of Europe was not glorious. Far from it. British financiers were anxious to present themselves as an American Trojan Horse on the shore of Europe to persuade fellow plutocrats to come over, and have a party. Asking them to pay no taxes helped (while putting London’s real estate into the stratosphere). Now that the financiers have caused great ruin in Great Britain, their mighty roar has turned to despicable yelping, while they get taxed into submission (with higher tax margins, and a special Dutch-British-French tax on financial traders).

More deeply felt still is the psychological difference between England, the most populous part of a large island, and France, part of the world’s largest continent, historically the core of the first unification of Europe, under the Franks.

In more than a millennium, England was invaded by foreign powers just twice (and the second “invasion”, by the Dutch does not really count). France was invaded by everybody all the time. In particular the “100 years war” (so called, instead of the more correct “500 years war”) happened on French territory. So the collective memory of Britain is that Europe, as a war theater, is rather an occasion for glory, and growth (because most of the time England grew from conflict, ending demographically as large as France, although she started very creative, but relatively tiny).

For France war has come to mean a threat of extinction. Ever since the Huns came to be cut down to size, countless invaders have tried their luck in France, ravaging the country. So building Europe as a giant France all around, has become not just strategic, but survivalist. Any move helping to build a France-compatible Europe, is viewed, in France, as excellent (except by the completely obsolete “Front National”, whose trade it is to denounce anything not national).

Anti-European partisans were delighted to see the Greek deficit crisis as the tip of the fundamental issue that Europeans are aliens to each other, and European citizenship means nothing, and soon the tanks will roll, and the USA will triumph again… Rome intervened more than once in Greece, and then stayed, and send the legions to crush what the plutocrats in the Senate viewed as socialism and excessive democracy. Both came back to Greece only thanks to the European Union, more than 21 centuries later (and not thanks to the USA, which were content with the mild fascist regime in Greece).

Many famous economists, in particular, infeodated as they are to Wall Street and the world plutocracy, to embellish their pathetic little lives, were delighted to proclaim the end of Europe, and the euro. They know nothing. Should they want to learn something important, they could start to reset their mood with this proverb from the desert: “Dogs yelp, the caravan moves on.”Instead of yelping like dogs, they should try to think like men, that is, with the big picture.

Europe is an imperial democratic machine which mostly started with a French desire for peace, tranquility, pursuit of happiness and cheese, and, please, no more wars. To achieve all these, a giant France all around, has long been viewed as a must (French kings in the Middle Ages multiplied military forays and long occupations of Italy, meanwhile the Normans freed the Mezzogiorno, Sicily and Malta from the Saracens).

After 1945, a deeply chastened, mentally de-Nazified Germany recognized that the French (that is the republican and democratic) way of doing politics was incomparably better than the fascist one. Everybody, even the dumbest of the ex-Nazis, could observe that the union with France was so unavoidable, that even Hitler had to resign himself to it.

How to build Europe? Maybe that is the wrong question. The correct question is: why was a united Europe replaced by squabbling potentates?

Indeed, Europe did exist before, twice. Or at least huge unified pieces of it. The Romans had united Britain with Gaul, a good piece of Germany, and the Mediterranean countries, all the way to the Arabo-Persian gulf. That was the first unification of (part of) Europe. Britain was in it for no less than five centuries.

That first European unification ended as Roman rule decomposed into the plutocratic rule of Catholic bishops. The legions were withdrawn from Britannia, as Rome, riddled by rotting plutocracy, ran out of money and brains. Within 150 years, the Anglo-Saxons were invading, and the British army had to flee to Roman Armorica, which became… Brittany (a vassal of the Franks).

The second unification occurred when the Franks conquered most of Western Europe, minus a lot of Iberia (held by Islamists who the Franks failed to extirpate from Iberia, as they preferred to subdue Germany, Poland, Hungary, etc., and make a unified whole with it). The full conquest of Europe, by the Franks, including Britannia, took at least six centuries, and was a crafty mix of brute military force, and haughty philosophical supremacy of love incarnated by the sword (with Jesus dangling naked from his cross to remind the heathens of their proximal fate, should they dare resist, be it only with their paltry minds).

Why did the second European unification fail? It did not fail militarily, or in disorder, as Rome did. Well, it petered out, under the divisiveness that the plutocrats who led it gained to foster (those plutocrats called themselves “aristocrats”, as if they were the best!) Plutocracy and theocracy conspired to prevent the rise of a united democracy (in theory, and sometimes in practice, the kings of the Franks were elected!). The rise of powerful states of law in England and France put back the Pope on his knees, where he belonged, and curbed the power of independent plutocrats, but at the cost of increased nationalism (as the concept of people, populus, Volk regained the ascendency over plutocracy it had lost after the demise of the “Populus” side of the Roman republic, around the time of Caesar’s assassination).

In any case the divisiveness started with plutocracy. This is why the present European Union, and its diverse nations, are very wary of plutocracy (part of the reason for EU social democracy). More recently, it does not escape Europeans that the crowd of military aristocrats who ambushed Europe with World War One was tight with the German imperial plutocracy (a theme dear to Hitler, but even Hitler was not wrong 100% of the time!)

A lack of awareness of the extent of the extreme toxicity of plutocracy for civilization is also why Paul Krugman, Simon Johnson, and a few writers at the Financial Times have missed the big picture about the Greek crisis (which is only that the Greeks pay twice for some interest). Most famous economists, at some early point in their career, are paid to be friends to the plutocrats, exciting them just so, and the truth could only elude them later (Krugman and Summers advised Reagan, in official capacity, at the White House, as soon as they came out of high school, or so).

Verily, there is a Greek crisis, but as far as the deepest thinkers in Europe are concerned, the Greek crisis is a golden opportunity to foster the European Union and its basic strategy. European leaders will not tell you this, though, because they talk softly, and carry a big stick. And nobody serious in Washington or Beijing can have missed the message. Here are some of its pieces, causally ordered:

1) Before the Greek “crisis”, the euro was WAY too high. This was hurting European industry, and especially that of France, Germany, and their immediate satellites. At the same time, it was a life line for the exuberant Chinese economy, and the sinking American one. Although the USA is apparently determined to mimic the Titanic, the USA still has 25% of the world’s industrial base, and its only serious competitor is Europe (OK, Europe does not make cars that will not stop, as Toyota does, but it’s the only technology which eludes the EU).

The euro reached a dismal 1.60 relative to the US dollar. But the euro was made to equate just ONE dollar (by making long term comparisons with the Franc). A company such as Airbus has its expenses in euros, and most of its profits in dollars… The euro, at 1.60, was a serious brake on European industry. Germany went from being the world’s biggest exporter, to second best, as China pegged its currency to the dollar (depriving the USA from some of its devaluation advantage).

2) Europe decided, long ago, one could even say decades ago, to save fuel, and to save energy, and fight pollution. (Hitler attacked Poland in part because he wanted Polish oil.) Petroleum was the fuel of choice, having the highest energy density, in the twentieth century. The USA had plenty, Europe, very little. So Europe had to save. Meanwhile the plutocrats of the USA could use the plentiful American oil to extend their evil influence (so they gave enormous quantities of oil to Hitler to conquer various countries, ingratiating themselves to their fellow fascists of governmental type, and making tidy profits; Congress slapped a little fine on Texaco.)

As it became obvious that the entire biosphere was at risk of becoming moribund from human carbon dioxide activity, the European Union, following the Scandinavian and French lead, axed its entire strategy towards ever greater efficiency. But this effort depended upon the entire planet cooperating. At the Copenhagen 2009 conference, China and the USA made a dismal theatrical play with each other, ignoring Europe, spiting the biosphere’s future, and turning European ecologists green with fury. But many, not to say all, European leaders, have deep ecological convictions.

The Sino-American circus at Copenhagen was a huge threat for all of Europe’s strategy, for the European way of life, and it smacked, in European minds, with the sort of shortsighted hubris Europe has known in the past, which ended with tremendous world wars. After huge strategic commitment towards a sustainable future, the EU did not feel like following the lead to war and destruction provided by China and the USA. Something needed to be done. Smart European leaders could only conclude that it was time to strike back. How? Europe had a weapon: the euro (and its poodle, the pound).

If the euro was going back down to one US dollar, Europe would be affected very little: so great is European efficiency nowadays that the fact that most of the price of oil is in dollars would hit the EU not that much. On the other fist, though, the wobbling American economy would get completely smashed. Bringing the euro down a lot would bring the USA, for sure, in a double dip recession. Not a good prospect for Obama, Pelosi, and their democrats. and a calamity for the average American, considering that the economy of the USA is not equipped with automatic stabilizers (as that of the EU, Britain included, is).

3) Thus European banks suddenly discovered the Greek problem, and made a big deal of it. Imagine: the Greek deficit was even larger than the USA deficit! Think of that! Banks liked it, all the more since a socialist government had just come in to clean the mess in Greece. Greek bonds’ interest bounded up… to 6% (a perfectly normal interest rate, let’s point out in passing…)

Even after scaring the crows with the alleged Greek corpse, the euro was still way too high. President Sarkozy and Kanzler Merkel, rightly, wanted it down some more, hence their little sing-song, Germany playing bad cop, France playing good European.

4) There is a need for stronger economic leadership in Europe, with independent economic and financial authorities. It does not exist in the present constitutional set-up. So France and Germany reconstituted their Great 2,000 years Reich, and goose stepped Europe into shape. They met the day before the EU summit, and solved the Greek problem. It was logical to use the IMF; not only is it led by a very experienced Frenchman, but all EU countries belong to the IMF (which rescued Turkey’s banks in 2001, and now they are fine).

This was a return to the same old same old: the Franco-German engine got Europe started by 1948. The other countries were not coerced into joining them, but they had no choice: France and Germany (especially with Benelux sandwiched in between) form an economic superpower by themselves (French GDP alone is much higher than Russian GDP…)

To make Europe, in the past, one used to send an army. Now one sends a problem. Then diligent Europeans solve the problem with a high solution, not a low blow. This method of solving problems was actually inaugurated during the occupation of France by the Nazis (not that the lowest of low blows were not used simultaneously: hundreds of thousands of innocent French civilians were assassinated by the Nazis, including 75,000 Jews). To their dismay, the Nazis had to collaborate with the French, and many liked it so much, they organized the coup against Hitler, and de-Nazified in other ways (refusing to obey Nazi orders).

European federalists always wanted elements of an economic government for Europe. But they needed problems that these elements of European economic government would solve. Greece is such a problem. Thank you, oh Trojan Horse!

5) The euro quickly lost half of its overvaluation relative to the do-do, threatening the recovery of the economy of the USA. The Obama administration, the US Congress, and Krugman and company, seem to have got the message, and suddenly, on second thought, found the Chinese plutocratic ally not so pretty anymore. Even Google went along with the new order.

All this is good. This is an excellent crisis. Europe has never been stronger. And it is good that Europe is stronger, because Europe has made terrible mistakes, in the past, and learned a lot from them. Not everything, but a lot. And Europe learned much more than many other countries seem to have mustered.

It is better when greater wisdom has greater strength. Wisdom without strength bequeaths the ruin of civilization

Postscript: Another simultaneous crisis, fraught with greater implications, is the delay by France of the adoption of the carbon tax proposed by Sarkozy and his PM Fillon. There too, the solution is the high exit, not the low blow. And there again, the solution is European, not national.

Maybe I should explain the concept of low blow a bit more. Europeans used competitive devaluations of their currencies against each other in the past. Krugman initially claimed that it was the solution to the Spanish economic problem (20% unemployment!). If Spain had a peseta again, it could have devalued, and eaten the lunch of its neighbors, said Krugman, basically, not really understanding what he was saying. France is the neighbor. So Krugman advised Spain to declare war on France, basically. OK, economic war, but still, war. This is the sort of low blow solution, which has been practiced extensively in Europe for centuries. Europeans know all about them, because, differently from Americans, they learn enough history to not goose-step in their elders’ errors. Most often, big wars have started for small economic reasons.

Rejecting the self interested American advice to practice divisiveness and devaluation treachery, Spain, long ago, opted for a different path. Instead of fighting France, Spain wisely prefers to build a state of the art plane with France, the A 400 M. France and Spain are also busy fighting ETA terrorists, building common high speed rail, etc. United We Stand: if that works for the USA, why would not it work for Europe? United We Stand, Divided We Collapse: the lesson of 1,000 years of European history.

The French Constitutional Court found the carbon tax voted by the French National Assembly unconstitutional, because of its violation of the equality clause (too many derogations). The carbon tax was thus blocked, and became very unpopular in France. A lack of popularity confirmed by a rout in regional elections. So Sarkozy decided that it was useless for France to go it alone, and that it would persuade the entire EU first, to set up a Europe wide carbon tax. Sarkozy will point out to the rest of the EU that the carbon tax could be used to reinforce the European worldwide economic and ecological strategy… by punishing the countries which cheat on carbon pollution. Worldwide. And this means the USA too, should the USA not pursue an anti carbon strategy too.

By Patrice Ayme

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