So here we are again. A peripheral European economy is falling apart, because of its hugely overextended banks. The powers-that-be, being the European Commission’s EMU directorate-general, the European Central Bank, and the German ministry of finance, intervene. This time, rather than letting the government deal with the banks, destroy its credit, and then lend the government money on terms that basically preclude any prospect of recovery – and don’t ask me, ask Deutsche Bank and Edward Hugh about the impact of youth unemployment on long-run productivity – they’ve decided to bill the banks’ depositors under the bail-in directive, and to hit the insured depositors below €100,000 although they didn’t have to, and then anyway impose a structural-adjustment programme of the order of 5.75% of GDP in case the horse sings this time – don’t ask me, ask the IMF. Everyone’s now standing by for Monday and whatever may come.
But isn’t this a bit, you know, 2008? If there was any point to the policy of the European powers-that-be, surely it was that this stuff was meant to be over? Instead, we are landed with a sort of permanent state of emergency. Why isn’t anybody sorry? Why isn’t anybody responsible?
Instead, what do we get from the elite?
Attempts at ideological policing. A cocktail of whataboutery and racist dogwhistle – I’m sorry, Professor Sachs, you’re smart enough and ugly enough to know just what is meant by welfare in current US politics. The British prime minister flat-out lying about what his own pet pro-austerity committee says. And I call it that advisedly. We’ve had Olli Rehn’s spokesman descending into playground bullying. We’ve had British chancellor George Osborne telling himself recovery is but a Friedman unit away. We’ve had that American private-equity guy complaining that French workers work three hours a day, when he put them on short-time working at three hours a day. We’ve had Hans-Werner Sinn suddenly discovering intra-eurozone trade imbalances after all these years. Someone has invented a political party to demand that Germany leaves the Euro because it’s not been austeritarian enough.
Clearly, the powers-that-be are as bankrupt as the Cypriot Bank of Horsemeat, and they must go. Paul Krugman is entirely right that the whole story is foully reminiscent of Iraq. The great flabby mess of elite consensus rolled downhill, not so much William Cobbett’s Thing as 1950s B-movies’ Epic Blob, absorbing every punch that could be thrown at it.
So what’s with the most prominent representative of this feeling in Europe, Beppe Grillo? Well, when he’s not looking after his network of offshore companies, or rather, letting his secretary and wife look after them, at least in name, he’s demanding the elimination of trade unionists – that’s a must read piece, by the way. You’ll need to put up with slightly tiresome left-wing-art-collective stylings and I was quite pleased to identify “that lot who called themselves Luther Blissett because he was black, like” before finding out they are indeed the collective author, but it’s damning. Further, even UKIP manage to make sense in flashes.
And after the usual painful negotiations and baboon threat-displays, the intergovernmental leaders managed to agree a budget that zeroed-out EU investment in broadband infrastructure. Obviously! (I agree I’m talking my book professionally there, but you’ll struggle to find anyone who doesn’t think it will do at least some good.)
Clearly, the old motto can be adapted. Tous les mêmes. Tous pourris. Même moi!
But it’s not as if nothing can be done. We still have the economic policy team at the Commission we had in February, 2010. We still have the same Commission President we had in 2004. Evidently, the European public is entirely satisfied and the same broad strokes of policy from the property-boom years are OK. No. Whoops, I took a crazy pill.
So, if you want new methods you usually need new men. The European Parliament has, to its credit, knocked back the budget. Now, it must stand up to its responsibility and knock back the Commission. Amazingly enough, we still can’t just bin Rehn, it’s all or nothing. But it’s been done before, over issues that were far, far less important in their consequences. This quote is a classic:
“It was becoming increasingly difficult to find anyone who had the slightest sense of responsibility.”