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Friday, 23 September 2011

Crisis and Perspective

Without moving from my desk in 114 Batovce I can look down the village green past the baker's shop and the news kiosk to the church, surrounded by red tiled roofs; and beyond to the hills that mark the northern limit of the Danube Plain. In a short walk I can see the manifold evidence of an improved standard of life in the EU, NATO and [latterly] the eurozone: we have improved roads, restored buildings, an up-to-date supermarket and a useful general store that occupies the old Co-op premises. The veg man still sets up his stall three times a week, good local wine is between two and three euros a bottle and a half-litre of excellent beer in the pub costs less than one euro. We have an excellent local administration, led by a sensitive and intelligent Mayor. Economic growth is strong; and while unemployment is rising jobs are still being created in modern factories in the major cities.
Slovakia was emerging from the mire of communism - and still outside the European Union - when lying became institutionalised among the EU insiders; most obviously in the late 'eighties in the matter of the ERM [exchange rate mechanism], the scheme under which the currencies of member states were meant to 'converge' as a first step towards creating a common currency. If the exchange rate of any member currency moved to more than 2.5% above or below the average value of all the member currencies, the central bank and the government of that country had to take the necessary measures to bring the exchange rate back into conformity with the rules. There was a huge amount of fudging of figures: so although the range between the most divergent country above the average and the most divergent below the average was supposed to be a maximum of 5%, much higher diversion was tacitly tolerated. Not even that fudge could accommodate Italy, so the Italians were allowed a special range up to 7.5%: making the 'official' maximum divergeance between the lira and the currency furthest from it in strength 10%. Britain was a Johnny-come-lately into the system, tried to keep the rules with gold-plated rigidity, almost bankrupted the Bank of England in the process, and withdrew in ignomony in 1992.
The core EU countries then proceeded to create the common currency, the euro, on the understanding that the 'weaker bretheren' might not always be efficient in action or honest in their reporting of it. Member governments retained their power over taxation and spending policy, which they were supposed to exercise in accordance with the 'Growth and Stability Pact' so that the economic policies of the eurozone might converge and make the currency viable. Among the first to breach the Pact were France and Germany; and thereafter hypocrisy was institutionalised alongside making false returns and empty promises.
New members continued to join the euro, presumably hoping that there was enough validity in what was said in support of the system by the leaders of the major EU member states; and Slovakia was admitted on January 1, 2009.
Now the Slovaks have become pretty well aware of the rotten state of the EU. They presented the lowest turnout of any member state in the latest European Parliament election, and their parliament has hesitated to agree to any bail-out for profligate medacious south Europeans: they may still decide to stop any drain of their resources into the black hole created by the debts of the 'pigs' [Portugal, Ireland, Greece and Spain]. They are probably prepared to surrender more economic sovereignty to a strong and honestly-run eurozone [one national magasine a couple of weeks ago had a front cover asking 'IS THIS THE END OF SLOVAKIA?' as a sovereign state]; but that is a far cry from continuing to accept the pack of lies on which the currency was originally floated.
David Cameron is free to demand 'action' from the euro-states: but following the news from a village in one of the healthier member economies one becames aware of the seriousness of the issues that have to be resolved before the longer term future of the euro can be defined. On the same day [22/9/11], Cameron told the United Nations that they had a duty to oppose oppressive regimes that attacked their own people; and failed to mention Zimbabwe. That is the same sort of selective blindness as that which enabled European politicians and Brussels eurorats to con seventeen nations into accepting the euro: so, as usual, we have the pot describing the kettle as smoke-tarmished.

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