Campaign for an Independent Britain

Leader of the PVV, Geert Wilders, will file a suit against the state of the Netherlands to get the permanent emergency fund for the euro ESM off the table. He wants judges to block the ‘unlawful act’.

Wilders revealed that in the suit he will be represented by Bram Moszkowicz. Moszkowicz also defended Wilders, when he stood accused for inciting hatred, group offence and discrimination.

Wednesday Second Chamber rejected a proposal by the PVV to postpone ratification of the ESM until after the elections. Of the MPs 41 voted for and 99 against.

The leader of the PVV thinks the voter should express his opinion before the Netherlands transfers power to Brussels.

The PVV-leader is against the establishment of the permanent emergency fund, aimed at supporting eurozone countries in trouble. He thinks the Netherlands will give up sovereignty to the fund. Earlier the Chamber of Auditors expressed its worries about a democratic deficit.

Care-taker PM Mark Rutte (VVD) disagrees that the Netherlands give up sovereignty to the emergency fund. He called Wilders proposal unwise. The Netherlands should make its position clear, according to the PM. ‘It seems to me very important to do it now and give a trust-building signal.’

VVD, CDA, PvdA, GroenLinks, D66 and the Christen Unie do not want to postpone introduction of the ESM. The fund is foreseen to enter into force in July and will have at least 500 billion euro at its disposal. This may increase later.

Good for Wilders to take this step. Maybe some good will come of it. And we must now conclude, sadly, that VVD, CDA, PvdA, GroenLinks, D66 and the ChristenUnie, all of them, are treasonous bastards who think nothing of selling us all out into debt servitude.

The ESM vote is planned for May 22nd (which is contrary to a tweet of yours truly last night). Apparently today and tomorrow are debate sessions only. One in which the six treasonous little parties mentioned above will undoubtedly congratulate each-other on this magnificent display of shafting their respective voters, and their children and their children’s children, for a pipe-dream that is crumbling even as they sit to ‘debate’.

But they all should heed a warning: The Dutch will remember these years of betrayal to Brussels. This will not be forgotten.

Legal proceedings have been initiated by Thomas Pringle T.D., Independent Irish Member of Parliament for Donegal South-West, challenging the Irish Government on fundamental aspects of the European Stability Mechanism (ESM)
Treaty and the Stability, Coordination and Governance in the Economic and Monetary Union (Fiscal Compact) Treaty

Pringle stated that he is "of the opinion that both treaties raise serious legal difficulties both at the level of EU treaty law and Irish Constitutional law.”

Stating “my primary democratic concern as both a citizen and as an elected public representative is the integrity of the Irish Constitution and the EU treaties which now form such an important part of our constitutional framework. I believe that the matters that I seek the clarification and assistance of the Court on are of crucial importance not only for the citizens of this country but for the future of the EU.”

Of special concern to him are the implications under the terms of the ESM Treaty of a new permanent €700 billion bailout fund called the European Stability Mechanism to be set up with power to call on Ireland (at a time of that institution’s choosing) to make capital contributions of up to €11,145,400,00 in various forms of capital.

"In this country’s case, this is the equivalent to approximately one-third of Government Tax Revenue for 2011. This figure can be increased at the sole behest of the ESM at any time in the future and with no limit set in the treaty as to what may be sought from Member States in the future.

"In effect this Stability Mechanism can direct the State to raise sovereign debt, give the money so raised to it and can then decide, where, when, whether and how it is to be spent. Therefore Ireland will not have power to control decisions regarding the use of funds raised by it."

Implications - What if a majority of voters in the May referendum on the Fiscal Compact Treaty vote in favour of imposing permanent austerity rules on the country in order to get access to a proposed permanent Eurozone loan fund only to discover that the treaty to establish that fund is illegal under EU law and unconstitutional in Ireland and may never in fact come into force?

Pringle said "On the 9th March last I wrote to Irish Taoiseach Mr Enda Kenny, the Minister for Finance and the Minister for Foreign Affairs detailing some of these very serious concerns. To date I have received no reply to this correspondence beyond the usual standard acknowledgement of receipt of the communication. I have now been left with no other option but to take this course of action.”

Summary of the Case

"I am asking the Court to examine the legality of the amendment of Article 136 of the Treaty on the Functioning of the European Union (TFEU) before any further action is taken by Government to approve that amendment. That amendment is being adopted under a so-called 'simplified revision procedure' of the EU treaties which I believe is legally wrong. The changes being proposed are so fundamental that they should go through the 'ordinary treaty revision procedure' to ensure proper democratic scrutiny. They also require the approval of the Irish people.

"I am also asking the Court to consider whether the ESM Treaty is in breach of existing EU treaty principles which have been approved by the Irish people in previous referendums and which are now therefore part of our law.

"In addition I am asking the Court to decide whether the State can ratify the Treaty Establishing the European Stability Mechanism without first having the approval of the people in a referendum.

"The Treaty on Stability, Coordination and Governance in the Economic and
Monetary Union signed on 2nd March 2012 is intertwined with the ESM Treaty. They each depend on the other.

"If I am right in my belief that the ESM Treaty is unlawful, then there is in my opinion a question over the validity of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union."

Timing & Positioning Q & A

Pringle states that he "appreciates and welcomes the Irish Government’s
decision to submit the issue of the Fiscal Treaty to the people by way of
referendum", but he "has concerns that due to the intense pressures on
Government at this time, the need to put the amendment to the EU treaties and the ESM Treaty to a referendum may not yet have been fully scrutinised. In order to assist in that scrutiny, he is seeking particular judicial review in these proceedings.”

The Danish government, which counts the Danish Social-Liberal Party, the Social Democrats and the Socialist People's Party, has proposed that Denmark should accede to the new Euro Treaty (the EU Financial Pact). Treaty supporters characterizes it as a "fiscal pact" that does not affect Denmark's Euro Opt-Out. The argument goes that Denmark remains outside the eurozone. And therefore it is not necessary to call a referendum on the new treaty ...

But the draft Treaty is entitled "Treaty on Stability, Coordination and Governance in the Economic and Monetary Union" and it is about significant tightening of the requirements as defined and set by the Euro rules of the game for the economic and financial policies to be conducted in the participating EU countries.

The People's Movement against the EU and a wide range of political organizations in Denmark demand that the treaty be considered by the Danish people through the process of a referendum even though government lawyers have endorsed it, as requested by their employer. The requirement for a referendum is backed by a broad majority of the population.

The treaty was signed by Prime Minister Helle Thorning-Schmidt in Brussels on 2 March, and there are many indications that the government is determined to have the Treaty ratified in Folketinget, the Danish parliament, as soon as possible during the Danish EU Presidency. But the People's Movement is quite clear in its voice: the organization's position is that the treaty should be submitted to referendum. Therefore the People's Movement have started collecting signatures of ordinary Danes to back the claim for a vote on the treaty.

Back the claim for a referendum

The People's Movement against EU calls for a referendum on Denmark's accession to the Euro Treaty because it undermines democracy. The organization also stresses that the new euro-treaty is contrary to the euro Opt-Out that a large majority of people in Denmark support and which was confirmed by a majority of the population by two referendums (1993 and 2000).

The Euro Treaty does not solve problems

The People's Movement also calls for a referendum because the Euro Treaty does not solve the problems that the EU's common currency has caused and because the Treaty does not give the involved EU countries real opportunities to resolve the current crisis on their own. Instead of the treaty countries should be helped to leave the euro zone and be allowed the opportunity of defining and conducting an economic and financial crisis policy similar to that which Iceland, the first victim of the international financial crisis, decided to adopt. In Iceland, they decided to devalue the crown, the national currency, and introduced a rigorous practice of currency control, which has stimulated growth and created a climate of general optimism. Had Iceland been a eurozone member country within the EU, none of these options would have been feasible.
Britain, which also has a euro Opt-Out, has said no to the Euro Treaty, and so could Denmark.

Attack on democracy

The Euro Treaty is an attack on Danish democracy, and it considerably limits the economic opportunities of the Folketinget and shrinks the Parliament's space of manoeuvring. Thus, it has frequently been argued that if Denmark joins the Treaty, the effect will be that a future government could not implement a kick-start in order to improve the national economy and create jobs - a measure similar to what the government is doing right now.
It is also emphasised that if Denmark says yes to the Euro Treaty, we are bound by it in the foreseeable future. Even if the situation should arise that in a future parliamentary session there will be a large majority to cut our connection to Euro Treaty, this would not be an option. Reason alone, the population should be asked whether it supports this extension of EU power.

Three good reasons for a referendum

The People's Movement against the EU believes that compliance with the Danish Constitution requires a referendum on the Euro Treaty. The argument goes like this:
Firstly, the Euro Treaty implies the preparation and adoption of a "permanent" budgetary act and preferably at the constitutional level. But should Denmark pass a law that Parliament is not allowed to democratically reconsider and change again, it would require a constitutional amendment, and a change like this would entail general elections.
Second, the Budget Act would bind future elected members of the Parliament to pursue a distinct (ideologically biased) economic policy, which also violates the Constitution, under which the elected representatives are solely bound by their personal conviction. Also, Denmark will be fined if we - without stepping out of the treaty - abolish the Budget Act. That, says the People's Movement, is synonymous with surrendering sovereignty.
Thirdly, the Treaty of the Euro is contrary to the Danish euro Opt-Out. As confirmed by the referenda in both 1993 and 2000, this Opt-Out arrangement implies a clear refusal that Denmark could be fined if we have a deficit above 3 percent. Reinforcing this budgetary rule on the deficit upper limit on the part of EU and establishing the possibility of fines accordingly necessarily requires a new referendum.

Referendum required

The People's Movement calls on the average Dane to demand a referendum on the new Euro Treaty as well. And this can be done by supporting the petition by the People's Movement against the EU has started in articulating and boosting the requirement for a referendum. At present, thousands of Danes have already signed up, and the requirement is widely supported in the political landscape: from the party Liberal Alliance to the Conservative Party's youth section. It is possible to visit the People's Movement's website and give one's signature electronically, but interested individuals can also sign lists (paper), administered by People's Movement activists as they carry out their street actions. In addition, people have the opportunity to complete and submit a coupon on the back of a campaign flyer.

The signatures campaign for a referendum on the Euro Treaty (Financial Pact) was started as a cross-political-spectrum initiative on 30 January this year. In this area, the People's Movement against the EU cooperates with a number of prominent individuals and other organizations. The petition is supported by a large number of persons including well-known writers, actors, entertainers and stand-up comedians, a film producer, regional council members, MPs, municipal councillors, Søren Søndergaard, MEP for the People's Movement against the EU, along with some prominent academics, a lawyer of repute and trade unionists.

The People's Movement against the EU has been on the street several times in Copenhagen and Aarhus and in quite a few Danish towns to gather signatures. On the ninth February activists from the People's Movement met to conduct a spectacular initiative/happening to articulate the requirement for treaty referendum. The happening/demo was implemented prior to the Parliamentary European Committee hearing on the Euro Treaty on 9 February. As part of the action, which took place in front of the Danish parliament building (Christiansborg), activists defying the icy cold weather unfolded and showed a 50 meter long banner with a text that concisely expressed the requirement for a referendum: "Treaty Vote - yes please".
http://folkebevaegelsen.dk/spip.php?article4428 [photo showing the demo in front of Christiansborg, the Danish Parliament]

Visible on Facebook
Nationwide petitions in the street were also timed with and conducted in connection with EU government leaders travelling to Brussels to attend the summit where the new Euro Treaty - also called the Fiscal Pact - was to be signed. But the People's Movement also publicises and agitates for its petition on its Facebook page. Here, visitors are briefed regularly on the activities and results/milestones achieved in connection with the ongoing signature campaign.

According to the timetable on the 11 April the Government will present a resolution for ratifying the euro treaty. On 26 April parliament members are expected to do the first processing of the proposal, which will then be sent on to a committee for further processing. And the second and final treatment in Parliament is scheduled for 31 May. The government is - as the People's Movement was expecting it - in the rushing mood and very busy getting ratification in place. Therefore, the People's Movement is busy creating maximum pressure on the politicians in government and parliament to get them to listen to the majority of the population who want the Treaty submitted to a referendum. It is agreed that the petition for referendum and accompanying campaigning activities will continue up to and including 21st May. People's Movement's petition against the Financial Treaty got a flying start. In the weeks leading up to its signing in Brussels early March, members of the People's Movement succeeded in collecting over 15,000 signatures. Add to this the many thousands signatures that have been collected by organizations affiliated with the People's Movement. Street collecting activists report many positive experiences that reflect the support of a referendum in the population. To illustrate this, a team of activists tell of how one woman even came running up to them to sign. Activists had been interviewed directly on TV2News, one of the popular national channels, and the woman sat watching this in her apartment nearby. When she recognized the place she hurried to run down to write under. We can certainly call this interactivity! But many signatures were also generated via the Internet or have been received in the mail. Actually, the People's Movement national secretary was able to follow how local committees were moving from town to town or district to district in distributing leaflets with signature forms to households by looking at the addresses of the completed forms, which daily came in the mail in large piles.

Still hopeful

Recently, the stream of signatures subsided a bit off. After that the Financial Treaty has been signed many apparently think that the race is run. Is the match not already effectively lost, says the question from many. But nothing could be more wrong. The fight has only just started, underlines MEP Søren Søndergaard from the People's Movement. In his observations, he notes further that the Danish government's motion to ratify the Fiscal Treaty will only be tabled in parliament on 11 April. According to the plan, the initial treatment by the Folketinget is scheduled for Thursday 26 april and the final vote scheduled for Thursday 31 May. So, he concludes, we still have some weeks to reinforce the requirement for a referendum.

And during that period quite a few things could happen to the Financial Treaty. For this treaty will definitely not just be ratified without opposition. As you know, two EU countries (UK and Czech Republic), already announced that they do not want to accede to the Treaty. In Ireland, the government - much against its will - has been forced to hold a referendum, which will probably take place in May or June. But there are a number of countries facing elections, whose outcome may affect the countries' commitment to the Fiscal Treaty. This applies, for example, to Greece, which is expected to hold an election in late April. And it applies to France, where presidential elections to be conducted over two rounds are scheduled for Sunday 22 April and Sunday 6th May respectively.

On the whole, there is growing criticism of the financial Treaty among the Socialists/Social Democrats in the EU. This is because the Treaty, the Financial Pact, in a one-sided manner puts emphasis on cuts and savings, while investment in jobs is completely absent. A critique shared by the European league of trade unions, which from day one has called to reject the Finance Treaty.

Prime Minister Helle Thorning Schmidt and the Danish government's enthusiasm for fiscal Treaty is therefore far from a general reflection of the attitudes to the Treaty in the EU countries. And if the ratification process just starts to crack in one country the crumbling effect can quickly spread. A little tuft has previously passed a great read! Therefore, also in Denmark we need to really fire up the fight against financial Treaty. What counts here is not least to mobilise to make a great impact in connection with the upcoming "Change Now" demonstration in Copenhagen on 29 March. And it's about collecting signatures against Financial treaty until late May.

Other Danish euro-critical parties

Other Danish political parties campaigning against the euro pact include the Red-Green Alliance, Liberal Alliance and Danish People's Party. Danish People's Party (right populist) has launched a nationwide campaign with posters on billboards, on gables and railway stations with a campaign poster visualising the message by showing a gloved hand with the EU's yellow stars on a blue ribbon, which brutally curls along the Danish flag. The message reads: Ask the people.
Referendum on Euro Pact now!

See: http://www.danskfolkeparti.dk/ep_2012.asp

Unfortunately, the overall media picture in Denmark appears a little problematic when it comes to the agitation for a referendum on the Euro Treaty. Most newspapers are pro-EU and supports Danish accession to the Financial Pact of the EU. And without holding a referendum. One of the dailies, Information (to some extent comparable to The Independent) is among the very few newspapers that have analysed and reported about the EU financial pact issues and perspectives and the related discussion. Lately, the newspaper adopted a more critical stance in relation to the Financial Treaty and its implications, especially because of the democratic deficit and lack of public debate on this vital issue. In an editorial, one of the paper's journalists critically comments on the Pact and Prime Minister Helle Thorning Schmidt: Denmark acts as the most virtuous among euro-area countries. As Prime Minister Helle Thorning Schmidt observed, before she put her signature on the fiscal pact: We would like to live up to the new discipline that must be in Europe. Our small country piously knuckles and makes no claim to the other euro countries. On the other hand, a lot of demands are to be met by ourselves. With the Budget Act, which the government is to prepare and implement, not only state spending but also the expenditure of municipalities and regions will be exposed to tight Financial Pact discipline - even with the panel of national economic financial advisors as zealous guardians. The journalist dwells on the paradox that Denmark is not a eurozone member country in that as much as two referendums have confirmed the Danish euro Opt-Out.

Great interest in EU debating

One of the editorial staff of the above daily, Rune Lykkeberg, is very concerned about the democratic deficit that the process towards the Euro Pact and its adoption entails. Lykkeberg has written several comments about the Euro Pact and the EU and has, in critical EU debate meeting contexts, conducted interviews with EU expert Professor Uffe Østergaard and former Minister and member of the Danish parliament for the Conservative Party, Per Stig Møller. Another meeting will take place in Aarhus on 25 april with political science professor and expert Palle Svensson. The meetings take place under the heading "The crisis, democracy and the future of the EU" and are organized by the organization Democracy in Europe (DEO), which has also directed its focus towards the EU Financial Pact and the democratic deficit is seen from a Danish perspective. There is no doubt that the Euro Pact and politicians' deliberate efforts to prepare for Denmark joining the Treaty without a referendum has led many Danes out of their chairs. Interest in EU debates has therefore increased markedly over recent months. People flock to the discussion meetings. The People's Movement against the EU will provide its clear contribution to keep this interest maintained. At the same time work continues to exert pressure on government and politicians to get a referendum on the Treaty.

The People’s Movement is a cross-political organisation. The organisation has as its goal that Denmark withdraws from the EU. The organisation works for democracy, sustainable development and international cooperation. The People’s Movement has been represented in the European Parliament since 1979 - today the Organisation's MEP in Brussels and Strasbourg is Søren Søndergaard.

By YanisVaroufakis of Hellenes Online

Over the past two years, the economic crisis that has engulfed Greece has also thrust me in front of the microphones and note pads of the myriad journalists who descended upon Athens to report on the unfolding drama. In this sense, I have not only been witnessing the evolution of Greece’s (and the eurozone’s) meltdown but also the struggle of the world’s media to make sense of it. In this article I summarise what I think are three important lessons to be drawn from this experience on behalf of journalists attempting to strike the difficult balance between (a) the need to produce stories that resonate with their editors, readers, audiences, viewers and (b) the almost infinite complexity of the underlying story. The three lessons that I want to focus on I shall refer to, respectively, as the error of generalisation, the fallacy of aggregation, and the perils of compartmentalisation.

The error of generalisation

The Crash of 1929, and the subsequent Great Depression, ought to have taught us an important lesson: that a cascade of both private and public bankruptcies (which begins with the collapse of the big banks, then spreads to the public debt of the weaker nations and, later, infects the real economy with the virus of recession) ends up not only threatening the common currency of the era (the Gold Standard in 1929, the euro today) but also engendering a breakdown of the vision of shared prosperity. In the absence of some supra-national Leviathan (like the one Keynes proposed in 1944) to “keep us all in awe”, and thus maintain cross border cooperation in the aftermath of a crisis, a Hobbesian war of “all against all” looms.

The war of words starts the moment we utter sentences beginning with “The Greeks do this” or “The Germans think that”. In 1929, that war of words, the ‘blame game’ if you want, led to another type of war which, paradoxically, killed millions and the crisis itself. One might have hoped that, this time around, we will have learnt our lesson. For while the armoured brigades have not moved (and will hopefully remain in their barracks), the war of words is now alive and well in Germany and in Greece, in the Netherlands and in Spain, in Austria and in Ireland.

Our very own generation’s 1929, the Credit Crunch of 2008 and the subsequent Great Recession, has occasioned much talk in Europe about The Germans, The Greeks, The British even (especially after David Cameron decided to break ranks with the European Union on the issue of the recent Treaty changes). Our collective task, and in particular that of enlightened journalists, is to shout from the rooftops that there is no such thing as The Greeks or The Germans or, for that matter, The Brits. We are all individuals, as Brian famously struggled to convince his self appointed disciples. And we have more diversity among our people, both in terms of views and character, than we have differences across our nations.

So, when reporting from the frontlines of the economic collapse, journalists have a duty to highlight the breadth of opinion within Greece, within Germany, within Britain, rather than gloss over that diversity opting instead for the comforting, yet potentially destructive, familiarity of national stereotypes. Maintaining a healthy resistance to generalisation is not only the journalist’s humanist duty but, also, a prerequisite for accurate reporting of the crisis’ causes.

Take, once again, the case of Greece. Journalists need metaphors with which to help their audience get a handle on an economic collapse, its causes and nature. One such allegory that has been employed extensively in order to narrate the eurozone’s drama is Aesop’s fable of the Ant and the Grasshopper. The Germanic Ant is pitted against the Greek Grasshopper in the context of a morality tale that combines northern industry, southern sloth and some flimsy economic analysis of the monetary dislocation that follows.

The trouble with metaphors of this sort is that they are almost irresistible. So, journalists hard pressed to produce a story that resonates nicely with their constituency’s prejudices end up slavishly reproducing the metaphor’s logic; e.g. Germans are portrayed as hard workers that must bail out the spendthrift Greeks, just like the ants etc. etc. It is as if, the moment the metaphor was chosen, the story had already been written up with no serious thought given to its analytic value.

Now, I am all for metaphors. There is nothing like them for conveying complex stories to a readership, or an audience, that allocates a severely limited amount of time to them. Nevertheless, it is incumbent upon journalists to use the metaphor to approach reality, as opposed to being ‘used’ by their own metaphor in order, effectively, to distort reality. To succeed in this task, journalists must bend their chosen metaphor to the demands of truth-telling. Resisting the lure of generalisation is essential.

In the case examined here, of Greece and Germany, the fact is that the ants and the grasshoppers are distributed across the division separating surplus from deficit eurozone nations. Once we recognise that both Germany and Greece, indeed the whole of the eurozone, contain neglected ants and over-pampered grasshoppers, we suddenly have the makings of a more nuanced story. One that allows us to ask probing questions about the way in which both Germany’s and Greece’s hard working ants feel disgruntled and shortchanged by the Greek and German grasshoppers which, during the ‘good’ times lived parasitically off them while now, during the ‘lean years’, once more, they are again demanding, from the ants, bail out money and higher taxes.

In short, metaphors are crucial for storytelling and analytical purposes. But we must hone them in a manner that helps, rather than hinders, our grasp of the underlying causes. And this means escaping the error of generalisation.

The Fallacy of Aggregation

When visiting a country in economic meltdown (Greece being a useful case in point) it is important to come equipped with a simple, yet counter-intuitive, insight: Recipes for tackling debt do not add up! By this I mean that journalists must always interrogate their instinctual views on the causes of the crisis that they are covering and, in particular, of what ‘common sense’ dictates as the remedy.

For example, what recipe does common sense recommend for getting out of financial trouble as a person, a family, a firm? The answer surely is to lower your expenses in order to rein in the red ink on your balance sheet. And to work harder and more intelligently. However, when this recipe is taken to a higher level of aggregation, it simply does not add up. To see this, suppose that, in a bid to reduce our individual and collective debt during a crisis (what financial economists refer to as deleveraging), each one of us follows this same recipe and at the same time. The result, I submit to you, may be quite the opposite of that intended. Indeed, aggregate real debt may rise!

To see why these individual recipes do not add up to a collectively efficacious strategy, consider the great difference between your family (or firm) and the economy at large. In the case of your family, if your income has declined, and you are facing a shortfall at the end of each month, cutting down on expenses is a sensible course of action for one simple reason: Your income is independent of your expenses. For instance, if you do not eat out tonight (and, instead, cook at home), your income has not suffered and, as you have reduced your expenses, your balance is healthier.

In sharp contrast, an aggregate economy’s income is not independent of its expenditure. Indeed, the two are one and the same thing! (The nation’s aggregate income equals exactly its aggregate expenditure.) To see why this matters, suppose that the whole country is tightening its proverbial belt, with families and firms ‘deleveraging’ at once. Private expenditure will be, naturally, falling (in aggregate). Now if, on top of that, the government also reduces its expenditure (in an effort to shrink its deficits), then the sum of private and public expenditure will decline. But what is that sum equal to? The answer is: National income! As national income shrinks, the state’s tax revenue falls, families have less money to pay down debt, and the nation’s overall capacity to repay its debts diminishes. Thus, we all fall collectively into the trap of ‘common sense’; of the fallacy of aggregation; of mistakenly thinking that a recipe which is good for families and firms must be good for an indebted country in aggregate.

For many months, since the eruption of the Greek debt saga, I was struggling to put this simple point across to the many journalists that I met. It was hard work. The fallacy of aggregation was deeply entrenched in their minds. When asking me questions about Greece’s ‘bail out’ loans, and the importance of the austerity conditions that were attached to these loans, my claim that the whole idea was flawed did not resonate with them. However hard I tried to explain the flawed logic, the journalists seemed wedded to the idea that when a country like Greece has a large deficit, and a huge debt, a substantial reduction in government spending, and a hike in taxation, must be the answer.

Months later, when the government spending cut backs and the tax rises caused the recession to deepen and the debt-to-national income ratio to balloon, I noticed that the mood amongst journalists changed. Alas, in the meantime, they had authored piece upon piece that misinformed their readers and misled their audiences.

With this in mind, and as the crisis continues to weave its poisonous web across countries and sectors, I hope that journalists will weave into their reporting a modicum of doubt that economic ‘recipes’ add up the way that ‘conventional wisdom’ has it.

The perils of compartmentalisation

During my ‘tenure’ as frequent interlocutor of the international press corps ‘flying by’ Athens, I noticed an interesting division of labour. Reporters and television or radio crews would fall in three more or less distinct categories: The hard news crew, the background briefing mission and, less frequently, the human interest angle.

The hard news folks’ approach was of the ‘hardnosed’, quick off the mark, no nonsense type. They wanted the ‘facts’ and the figures, the insider information, the instant prediction of what-the-government-would-do or the how-the-market-would-move kind of response. The background briefing lot were more relaxed, operated under longer deadlines and, thus, had the time and space to ask similar questions but in a manner that allowed us, the interviewees, more room to unravel some narrative on the background and the unseen aspects of the story. Lastly, journalists working on human interest pieces had no time for the ‘causes’ of the economic crises, next to no interest for the underlying tectonic plates whose movements caused ruptures in the social economy. What they sought out was tales of woe, images of suffering, sounds of desperation; the raw materials that would allow them to piece together some short piece that would, I suspect, play the role of balancing out the harshness of the facts and figures in some preceding report by one of the other crews.

This compartmentalisation of the storyline of an economic meltdown into three distinct types of report causes two failures: First, it weakens the journalist’s own analytical capacity to make sense of the crisis. Secondly, it diminishes the value of each of its parts. Let me explain both allegations in the context of the eurozone debacle. Any tale of the trials and tribulations of, say, a Greek family that lacks an analytical connection between their suffering and the anguish of an equivalent German family (whose living standards have been falling less but for much longer) will surely fail to account (as well as it might have) for both: (a) the depth of ill feeling that Greek and German families experience and (b) the crisis’ causes. Put simply, when the hardnosed analysis is kept separate from the human interest angle, then the analysis turns ‘soft-nosed’ and the human interest story swaps humanism for melodrama.

Epilogue

Language and its love affair with metaphor often lures us into the trap of generalising that which is best left un-generalised. Our tongue is prone to talking about a ‘foreign’ people as if capable of having a single character whose moral defects can explain their plight; as if, for instance, Margaret Thatcher and Harold Pinter were collapsible into one character whose failing might explain Britain’s economic woes. Then, as if that were not enough, our mind gives the resulting misunderstanding another twirl by moving in the opposite direction, confusing the particular with the general, e.g. assuming that what is prudent for one family must be prudent for an economy. Lastly, following a long standing error in the Western mindset, we are convinced that economic and financial ‘facts’ are sentiment-free zones.

These three failures come natural to us when we fly into a country that has suddenly melted down for the purposes of preparing, within tight constraints, a piece of journalism on what is happening, why it happened and how it feels to be caught up in it. They must be resisted. My argument has been that journalists will throw much more useful light on an economic crisis unfolding in a foreign land if they manage to avoid the error of generalisation, the fallacy of aggregation, and the perils of compartmentalisation.

If the europhile Independent is sure that the euro cannot survive in its present form, it is likely to be right.

http://www.independent.co.uk/news/world/europe/the-experts-view-on-the-euros-future-it-doesnt-have-one-6298180.html

A new report from independent think-tank Civitas reveals that the European Union is damaging Britain's economic recovery and sapping job growth. The report, entitled “Time to Say No”, shows that a break with the EU need not represent a drastic break with Europe itself. Instead, it will permit a pragmatic reform of trade and immigration relations. Existing international institutions can achieve this without the current burdens of bureaucracy in the EU. It will also revive democracy at home.

The report, written by Ian Milne, who was a guest speaker earlier this year at the annual conference of the Campaign for an Independent Britain, argues that the UK must rejoin the 95% of the global population that remain in countries outside the EU, such as the British Commonwealth nations. These countries have far better prospects for growth in the 21st century than many of the tired economies of mainland Europe, says Mr Milne.

“The EU is in long-term structural demographic and economic decline,” writes Mr Milne. “It also costs a fortune to belong to. UK withdrawal would result in the British people rejoining the 95 per cent of the world's population who live in self-governing states and successfully trade with each other-and with the EU-multilaterally.” 

The Civitas report sets out a timetable for an orderly withdrawal from the EU. It begins in June 2014, following a national referendum on EU membership. After receiving the mandate to return to full sovereignty, the British Government would gradually reduce its contributions to the EU budget over a 24-month period. Milne proposes the temporary creation of a Ministry of EU Transitional Arrangements (META) to manage the process from beginning to end, ensuring that government departments are equipped to take over EU functions.

From June 2014, disputes between the European Court of Justice and British law would be mediated using an international dispute settlement procedure. At the end of the withdrawal process in 2016, British laws based on EU regulations would remain in place but could be repealed at the will of Parliament.

By June 2016, the UK would:
• cease all involvement in the Common Agricultural and Fisheries Policies;
• regain control of immigration policy and be able to secure its borders on its own terms;
• cease to be regulated by EU trading regulations but continue trading with the EU-26 using rules already set down in World Trade Organisation and United Nations agreements and other relevant treaties.

Mr Milne sets out a number of alternative arrangements that would allow Britain to continue to co-operate in trade with the EU but on a more equal footing. They include:

The Norwegian option, under which Britain would remain a member of the European Economic Area (EEA), which provides for an internal European market but does require adherence to some labour laws, consumer protection and health and safety legislation. Crucially, EEA members make a substantially smaller contribution to European organisations than full EU members. Norway is the 7th most prosperous country per head in the world.

The Swiss option. Switzerland is a member of EFTA but remains outside both the EEA and the EU. By making only bi-lateral trade agreements, it retains full control over all regulations covered by Swiss-EU FTAs, which can be cancelled at any time. Britain could do the same. This is not an inferior trading relationship but merely one that avoids giving excessive powers to Brussels. Switzerland is the 17th most prosperous country per head (the UK ranks 37th).

Unilateral Free Trade and renewed focus on the Commonwealth. The Civitas report explains there is nothing holding Britain back from establishing an ordinary and productive trading relationship with the EU without an explicit treaty. “On withdrawal,” writes Mr Milne, “the EU would continue to trade with the UK. EU-26's biggest single customer worldwide is the EU-26 sells far more to the UK than it imports from the UK. Under Articles 3, 8 and 50 of the Lisbon Treaty, the EU is constitutionally obliged to negotiate 'free and fair trade' with non-EU countries.”

A looser framework would allow Britain to take the forward-looking approach of establishing closer trade relationships with the Commonwealth, which constitutes a market nine times greater than that of Continental EU.

As a result, says Mr Milne, there is nothing to fear, but a lot to gain, from re-establishing British sovereignty over the United Kingdom.

by Edward Spalton and John Harrison

The EU always was a project which depended on forward momentum and an appearance of inevitability. Professor Tim Congdon likened this to the belief held by Marxists in the scientific nature of their theory and the historical inevitability of its fulfilment. With the wheel falling off the euro currency and the manifest incompetence of the EU's leaders to deal with it, even true believers are now having doubts about the EU equivalents of those Five Year Plans and bogus statistics of tractor production which destroyed the credibility of the Soviet Union.

The euro is now on life support and there are two possible outcomes. If the life support of IMF, British and other loans is insufficient and the patient dies, then the EU, in its present form, dies with it. Frau Merkel says so and she is in a position to know.

If the euro lives, then within three years the 17 eurozone countries as a caucus will be able to dictate the policy of the whole EU to the 10 states which still retain their own currencies. Mr. Cameron and Mr. Osborne have been urging the eurozone states to form themselves into a common, united, economic government.

Mr. Cameron, having already ceded powers of control over the financial sector to the EU, appears to have woken up to the dangers of this rather late in the day – particularly with regard to the interests of the City of London. The EU is proposing an expanded Tobin tax on financial transactions. Taxing the bankers will be popular but, of course, the tax will end up being paid by the bankers' clients. They will pass it on, rather like the oil companies do with fuel duty and VAT.
It will not “soak the rich” who will simply move their financial transactions out of its reach. It will hit the smaller savers with money invested in unit trusts, managed funds and pension funds.

Up to now such funds, if well-managed, have provided some shelter from the worst effects of inflation, especially for occupational pensioners in the private sector. If every transaction and share swap is taxed, then that ability is much reduced. It will have a similar type of effect on private pensions as Mr. Brown's £5 billion per annum tax raid had in earlier years. Like that expropriation, it will be initially “painless” because the deductions will start small, not appear on anybody's payslip and will have their effect over years.

If the euro recovers, then regardless of opt outs and derogations, eurozone countries will shortly have the necessary weight to impose this tax which is particularly directed at London where the huge majority of Europe's financial transactions takes place. From the sudden invention of the Common Fisheries Policy onwards, Britain's relationship with the EU has been one of repeated surrenders. A British government committed to staying within the EU would have no choice but to accept it eventually. Those investors who could would simply desert London for cheaper dealing on untaxed exchanges.

Mr Cameron is pledging large amounts of Britain's credit to the eurozone through the IMF, presumably in the hope of reviving the euro. He says so and I think we may believe him. The only conclusion to be drawn is that EU control and taxation of the City of London is the outcome he expects and accepts. His complaints and bluster against the EU's continual attacks on the City can only be of the “In Europe but not run by Europe” variety with which we have long been acquainted.

So there are two possible outcomes in general outline:

• The euro collapses and the EU with it, leading to a wholesale liberation of EU states including the United Kingdom. With the acquis communautaire and EU institutions irretrievably discredited and irrelevant, a genuine renegotiation of trade arrangements between states would be possible, provided we have a government willing to play for our side.
• The euro survives and national interest will compel UK withdrawal from the eurozone-dominated EU unless the government in power is just as prepared and determined to sacrifice the City of London, as Mr. Heath's government was with the fishermen.

Whilst people may loathe bankers and financiers as much as they do politicians it is likely that public pressure, backed by well-funded information from the City, would not permit that abject surrender. Yet the direction of Mr. Cameron's present policy of pledging more and more of our credit to prop up the ailing euro seems geared to just that end - even as he protests his intention to defend the City. Putting very serious money on the line for a project whilst protesting against its inevitable outcome (if successful) is not a credible stance.

“OWN RESOURCES”
The EU has long aimed to acquire rights of tax raising without the need to go through the parliamentary processes for contributions from member states. This is called “own resources” and already exists to some extent in customs duties on goods entering the EU from Third Countries. These are collected by HM Revenue and Customs which retains a collection fee for expenses but passes on a fixed proportion to the EU automatically. With the reduction of customs tariffs world wide as a result of WTO agreements, to which the EU is signatory, this is not as fruitful a source of funding as it once was.

Two other EU revenue raising proposals are being given serious consideration
• A “carbon tax” on emissions from factory chimneys with the supposed benefit of “saving the planet” from climate change. The EU already dictates much of environmental policy, including targets of carbon dioxide which member states are allowed to emit. The EU also operates a notoriously corrupt carbon trading scheme.

• A tax on financial transactions at a low percentage (0.1% and upwards is mooted). This is expanded from the original idea of the Tobin tax which applied only to spot currency deals. Some 70% of the EU's financial transactions take place in London. The tax is advocated as a brake on the “greed” of financiers and on the volatility of markets. In practice it would simply be an added dealing cost which would be passed on to buyers of shares, bonds and currencies. It would also discriminate against currency transfers between eurozone and non eurozone countries within the EU, giving credible extra financial pressure for joining the euro.

It is noteworthy that two Liberal Democrat euro-fanatics are ministers with responsibilities in this field – Chris Huhne who is Minister for Energy and Climate Change and Danny Alexander who is Chief Secretary to the Treasury.

The attempted creation of a single economic government amongst eurozone members with the active support of HM Government and the impending change in EU voting procedures in three years time, which will give that eurozone group permanent outright control of all major EU decisions, provide the backdrop against which the independence struggle and any referendum campaign will take place.

The Monetary Mess

By locking incompatible economies onto the same currency, the existence of the euro is making worse a mess which already existed.
It began in the Seventies at about the time Britain joined the EEC and was triggered by President Nixon's decision to take the US dollar off the gold standard. Under the Bretton Woods system which stabilised the post war currency system, the major currencies were pegged within a small range of variation to the dollar, which was pegged to gold. Every so often, adjustments were made. Britain had to devalue on several occasions because of balance of payments difficulties.

Some people will remember Prime Minister Harold Wilson assuring us that this did not mean that “the pound in our pocket” had been devalued! When the dollar came off the gold standard it was decided that currency exchange rates would “float” and go up and down against each other according to market circumstances. In fact, this represented another devaluation for sterling. Criticising the change from the opposition benches, Mr Wilson remarked “..and the pound floated - like a brick!”. He always had a good turn of phrase.

Freed from the restrictions of the Bretton Woods system, British and other governments relaxed controls on credit, allowing the banks to become the de facto issuers of currency.

The independently owned banks used to have the right to issue bank notes. The government realised that printing bank notes can lead to inflation so it passed the Bank Charter Act of 1844 which prohibited* them from that and gave the sole power to the Bank of England to issue bank notes.

That worked fine until the advent of computers when banks became empowered to issue currency again. The liquidity ratios allowed them to lend £8 for every £1 they held in deposits. So if you deposited £1 in your account they could lend me £8. I could then pay that to you to buy your vastly inflated produce and you pay it into your account. They have now got another £8 on which they can lend me £64 and so it goes on. This is how the banks have built up bigger assets/liabilities than the countries in which they are domiciled.

Governments have been happy to turn a blind eye to this ballooning catastrophe because – guess who borrows the most money? Got it in one! The governments themselves! That is why Gordon Brown was so desperate to get the banks lending again in 2008.

But shouldn't this vast increase in money supply have increased inflation over the last twenty years? Of course it should have, but the monetary effect was negated by the massive importation of cheap goods from the Far East. In other words China postponed the impending doom approaching the Western world.

Back to banks. What happens when the loans they made go sour? Well, first point, due to a change in accounting regulations they only have to report bad debts when insolvency proceedings commence – unlike the rest of us who have to write off as soon as we suspect the debt is bad. So the banks can and do keep bad debts off their balance sheets by throwing good money after bad. Ultimate, of course, those companies go under. As the average lending ratios are now 33:1 instead of the 8:1 I mentioned earlier, it only required bad debts of 3% of their total assets to wipe out their capital entirely, and most banks are in that situation.

So what happens then? First, the loss is sustained by the bank's shareholders, then they borrow on the inter-bank market and lastly the government's unwritten guarantee comes into play to protect the nation's savers as ours did with Northern Rock, Royal Bank of Scotland et al. There you have a situation where the banks got into trouble because they had lent too much, largely to governments, and under Gordon Brown's “Save the World” strategy, the governments took all the debt back onto their own balance sheets.

Now you have the problem where the sovereign states are buckling under the amount of debt they are carrying. So the solution is for the European Central Bank to create £2,000 billion of extra cash to bail out the governments.

But wait a minute! Who are the unwritten guarantors these new £2,000 billion of debts? Well, actually they are those very same sovereign governments which are insolvent anyway.

It will probably have the same effect as throwing a tanker load of petrol onto a fire to try to dowse it. Stand well back, if you can!

As a Dutch colleague remarked recently, it is likely that most of us will become considerably poorer as a result of this massive, immoral mismanagement. The question is whether we will be poorer serfs within the European Union which entrenches the system beyond democratic reform in perpetuity, or poorer free men in our own countries with a chance of fighting our way back.