by system
failure
The UK
withdrawal process from the EU has officially started with the letter
sent by the British PM, Theresa May, to the European Council
president, Donald Tusk. It has been estimated
already (rather reasonably), that the two-year period until the final
completion of Brexit is quite a short time, which means that much
more time will be needed for all the issues to be resolved between
the two parts.
As the
developments in Europe and globally change rapidly, we can think at
least two cataclysmic events that may occur before the final
“divorce” between the UK and the EU, that may overshadow Brexit,
and lead Europe to an even more uncertain path compared to the one
that has already entered.
Frexit
The most
immediate, big event, is the oncoming French presidential election,
which will determine to a great extent the fate of the eurozone and perhaps the European Union.
All the
recent polls show a tight battle between Marine Le Pen and Emmanuel
Macron. They will be probably the two candidates that will make it to
the final round. According to the newstatesman
, “Marine Le Pen, the anti-EU leader of the populist National
Front, is gaining ground. For the first time, the far-right could win
France – no one can predict the outcome of this election.”
In case that
the far-right will take over France, we should expect rapid
developments towards the breakup of the European Union. Le Pen
promised
that she will take France out of the European Union and
even NATO. While the UK was anyway a "distant player"
inside the EU, France resides in the hard-core of the Union being
also member of the eurozone. The Germans have bet heavily on the
cooperation with France and invested for years on the Franco-German
axis, in order to dominate progressively and silently in the
continent through the monetary union.
As described
in previous article, while Brexit may be even convenient for
Germany's plans to establish permanently its domination in Europe, a
possible Frexit may lead to the opposite results: “Currently,
the French political establishment follows Germany to the letter.
That's because both the German and the French political establishment
serve the big European capital through the neoliberal doctrine. It
had become quite obvious especially when they sacrificed Greece to
save the German and the French banks. However, things are changing
rapidly in Europe. It seems that the political parties, i.e. the
Social Democrats and the Popular RIght, that dominated the European
political scene for, at least the last forty years, are collapsing.
Therefore, things
can go wrong for Germany also with the potential rise of Marine Le
Pen in power. Recall that, recently, Le
Pen stated that
she will take France out not only from NATO, but also from the EU.”
The
loss of France will leave a huge gap between the north and the south
of the EU. France was playing the connective factor (even
superficially) between the hard-core and the periphery of the
eurozone. A possible Frexit will accelerate the instability inside
the eurozone and the EU, leading to an ugly breakup of the Union quite
faster than the final Brexit. Under such a big disaster, Brexit may
even seem to be pointless.
The
breakup of the eurozone
Eurocrats
are trying to hide the big problems of eurozone instead of dealing
straight with them. As their first priority is to retain a failed
neoliberal model of austerity, deregulation and privatization at the
expense of the European people, they pretend that there is no need
for a different path. And this illusion continues despite the
additional problems from the refugee crisis, as well as the rapid
rise of the nationalists and the far-right throughout Europe.
There
are at least three dangerous situations that may lead to the breakup
of the eurozone, even before the final Brexit.
The
first one has to do with the Italian banking system which seems that
is facing huge problems and is being kept in life thanks to Draghi
and his large liquidity injections through the ECB. Italy has to deal
also with a big national debt. However, the policies dictated by
Brussels and Berlin continue to suffocate the European south. They
prefer to retain the recipe of destruction instead of changing these
policies towards real growth that could boost the economy. Through
cash injections, they pretend that the Italian problem is about to be
fixed, yet the danger of a sudden banking burst of the Italian
banking system could blow up the whole eurozone, any moment.
The
second one involves the banking mega-monster called Deutsche Bank.
The largest bank in Germany, is significantly exposed, holding
dubious financial products known as "derivatives", worth 67
trillion euros, in 2015. This amount is similar to the GDP of the
entire world and 20 times greater than the GDP of Germany. Any
comparison with the situation of the bank Lehman Brothers in 2008
would not be irrelevant. Just when Lehman Brothers went bankrupt, had
available derivatives of only 31.5 trillion. The crisis of 2008
confirmed the concise definition of derivatives as proposed by the
American tycoon Warren Buffet: "financial weapons of mass
destruction."
While
Angela
Merkel sacrificed Greece
to save Deutsche Bank and the other Franco-German banks, this time
has no excuses. She has run out of scapegoats in case that the German
banking monster will need another huge bailout to avoid collapse.
Yet,
Merkel may not have to deal with the mess that she and her minister
of finance have created. As they may lose in the oncoming German
election, they will deliver the Deutsche Bank huge timebomb to the
hands of the next government.
The
third dangerous situation that may blow up eurozone, is the refueling
of the Grexit discussion. It seems that Greece's creditors have stuck
in a dead-end situation because they have absolutely nothing positive
to exhibit concerning the Greek "program". Greece is
sinking deeper in debt, unemployment remains in unprecedented high
levels, and there are no signs of recovery in the close future.
The
Greek society is literally exhausted from the brutal austerity
imposed by the neoliberal priesthood and the possibility of Grexit
starts to mature in the minds of Greeks. Creditors seem to ignore the
danger of the situation and ask for more brutal measures, believing
that the Greeks will "obey" forever. Yet, more and more
Greeks start to find Grexit as a solution, not as a disaster, as they
already experience the disaster inside the monetary prison of the common
currency.
According
to some
recent information,
a secret ECB study estimated that Grexit would cost more than 1.5
trillion euros! Greece's creditors play with fire and in the case of
an uncontrolled Grexit, the financial Tsunami will make Brexit
irrelevant.
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