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The EU continues to plan the future, and learn nothing from the past

While we can all pontificate until the cows come home about the long and short term causes of eurozone cracks, very few of the folks who come to this site would hold with the average economist’s mantra, “If at first it doesn’t work, ignore the results and try it again”. From Marx through to Friedman, the disastrous evidence of this triumph of polemic over experience is there for all to see. But no group of people stays stuck halfway up the learning curve quite like those in charge of the European Union.

One thing over 95% of commentators would accept immediately is that passing laws ‘banning the future’ turned a Greek debt crisis into a eurozone disaster. That is to say, had the eurozone architects not closed the euro exit for all time, the fact is that Greece would’ve left (or been thrown out) some time around September 2010. Italy would never even have been targeted. Iberia and Ireland would still have been a mess; but the Irish have 75% dug themselves out of it, and with no other bailout commitments on the horizon, the EU could’ve controlled things in Spain and Portugal without recourse to Zen bazookas and endless summit meetings. Above all, ‘contagion’ would not be a credible concept. And it is the fear of infection has driven the market’s neurosis in relation to bond-holding since Day One.

As I posted last night, Chancellor Merkel is now driving 17 disparate cultures into a more secure prison. This one will not only have no exits: it will have conning towers and 24/7 tunnel patrols. All hubris-fuelled legislators wish, in the end, to control the future. It cannot be controlled because it is unknown. Nobody in charge is learning this lesson.

Now the Belgian poet van Rompuy (shown above after taking one too many of his Hyde potions) illustrates the bureaucrat’s ability to take the politician’s dream of the future, and turn it into one of those virtual worlds where sad people on the internet can go…showing all the fire stations and the roads, and counting the policemen on duty. This is how the chocolate calculator laid out the Camp Rules this morning:

• Each eurozone member’s budget deficit should be below 3% of GDP and national debt under 60%
• A “golden rule” should be enshrined into national legislation to guarantee a balanced budget in the medium-term
• The eurozone bailout fund to be given a banking licence to borrow directly from the European Central Bank
• The European Commission to have the power to impose austerity measures automatically on countries which require bailouts

Here, from a man whose country is falling apart after his spell in charge there, comes a set of ‘guidelines’ applying to 17 different economies of varying size, bias, content and culture. It is a one-eyed monetarist argument in favour of eternally settled science. And, to complete the analogy, it leaves all of the eurozoners as absolute prisoners with no means of escape. If ever there was a recipe for revolution down the road, this is it.

Van Rompuy calls this a ‘fast-track’ economic pact whose speed will impress the markets. But the main gist of his fifth-rate paper is to ignore the People and their legislators. All this, he claims, can be achieved without Treaty Change. (Treaty Change now being code for ‘Britain’).

Well, as with most things Rompuyesque, it’s legal nonsense. Even he acknowledges that to create a formal guarantor via joint bonds would require major changes to both the EU Treaty and the Bundesrepublik constitution. And never having had a proper job in his life, he still doesn’t entirely get that, without a written guarantor at the end of the line, the markets will never be satisfied. Appeasement, you see Herman, only ever increases the appetite of the Monster.

The other increasingly mind-numbing element of this saga ad nauseam is, of course, the ever-building technical complexity being piles on by endless committees, compromises and concessions. This too is the inevitable by-product of every large and unwieldy authoritarian State ever devised. Stephanie Flanders at the BBCNews site has penned an interesting piece on this. It’s well worth a read.

Paying off Sovereign Debt using liberal democracy as the collateral

Haircut Absolution – you read it first at The Slog

Stuff going on while the Mighty mince about