Council and Congress

One of the most important aspects of the present economic crisis, though it has had little media coverage, is that the most-troubled countries are 'parliamentary democracies'. The resolution of the crisis will   be as important in terms of politics as it will be in the economy: and it will be harder to resolve in some countries because the workings of their democracies may generate stalemate that will be extremely difficult to dissolve.

The German Chancellor has become much more constrained by Bundestag reluctance to opening the coffers to the rest of Europe than she would have been in the first half of this year. The obvious fury of many millions of Germans at the mere idea of keeping the Greeks on their fantasy feather-bed will surely be reflected in the voting in the elections early next-year, so deputies seeking re-election have clamped down on the government. German democracy has limited the options for a resolution of the Euro crisis.

In Britain a more complex situation is being illustrated today by a parliamentary vote on the question as to whether or not there should be a Referendum on Britain's future membership of the European Union. The politics of this matter are clear: a Sunday Times opinion poll published on 23 October showed that about two-thirds of the electors in the sample would have favoured the Referendum, which was called for by a Petition of more than 100,000 people. If Britain were a 'real' democracy the way forward would be clear. But Britain is not such a democracy. Britain is governed by the Privy Council, of which most voters have no knowledge at all. After each General Election the Sovereign invites the party leader who is most likely to command a majority of votes in the House of Commons to become Prime Minister: and a member of the Privy Council if he or she is not a member already [which would be most unlikely as it has not happened since the improbable emergence of Labour as the leading party in the Commons in the early 1920s]. The Prime Minister then invites colleagues to become members of his/her Cabinet, which is a Committee of Privy Councillors: so any chosen members who are not sworn of the Council are quickly admitted. Any Cabinet is bound by all the decisions and commitments of its predecessors, however far apart the political stance of successive Cabinets may be.

For reasons that are not disclosed to the electorate at large, the Council is determined to suppress any real debate on Britain's membership of the EU. It may be the consequence of a major pledge to the USA: it is clearly not driven by the Monarch herself, whose preference for Commonwealth links has been unequivocal for the whole of her reign. Whatever the cause of the ban, it is very firm. Privy Councillors Clegg and Milliband {Ed] have joined Councillor Cameron in insisting that their Members of Parliament must ignore the manifest preference of the electorate and vote against the idea of a Referendum. Cameron has even descended to the old rogue's argument of 'unripe time' to escape the fact that he has made his career by indicating a general Euroscepticism. Other conspicuous issues are also placed beyond democratic resolution: 'human rights' legislation, immigration, energy policy and capital punishment are prominent among them. This pattern of suppression has seemed to be the constitutional norm for so long that the dominance of the Privy Council seems unshakable: but an economic collapse could suddenly precipitate the end of the charade. Councillor Cameron could just have allowed a minority of Tory MPs quietly to enjoy their day, with no urgent threat to membership of the EU: foolhardily, he has drawn attention to the sham of democracy.

In the USA, where the Constitution reigns supreme, the division of powers between the Executive, Legislative and Judicial wings of the Federation is seen as essential to the functioning of their democracy. Such a system requires effective articulation between the Congress and the White House, and between the two Houses of the Congress. That is now failing, and may freeze into rigid incompatibility. As unemployment remains stubbornly high, and massive state spending.appears not to be stimulating the economy sufficiently to change the situation, the basic economic policy pursued by the Obama Administration is increasingly incredible. The hugely expensive but functionally questionable Medical Care system that the Democrats have introduced is increasing costs on employers and on taxes. The level of vituperation between increasingly-radical tendencies in both Democrat and Republican parties is reaching historically exceptional levels. The Democrats face a huge dilemma as to whether or not to support Obama for a second term, or look for a candidate who might better achieve a national consensus. The risk of loosing the black vote may well secure Obama's selection: but however much money Obama might raise for his campaign his overall failure to galvanise the country must count against him. The Republicans' problem in finding any satisfactory candidate has been painfully obvious: but that does not affect the fact that around half the electorate is open to persuasion that the Republicans cannot be as disastrous as Obama has proved over the past four years. There is all to play for in the 2012 General Election: in that sense, democracy will triumph. But in the important area of achieving functionality of Government in concert with Congress, there is no clear indication that either of the eventually-selected candidates will be able to succeed sufficiently to create a new economic environment in the USA.

It is too soon to pronounce the end of democracy: but the threat of dissolution is palpable.

Three Days To Go

On Sunday last the US Treasury Secretary said that the leaders of the Eurozone - France and Germany - had 'six days to save the world'. That leaves today, Thursday and Friday before the European Summit meeting convenes.

Chancellor Merkel has said that they are approaching a solution 'millimetre by millimetre' with no hurry to move towards the reputed French ambition to draw upon Germany's assets and strong reputation in an effectively unlimited bail-out fund for the whole of the Eurozone, including Greece. Mrs Merkel knows that her electorate are furious at the extent to which their assets have already been committed for the resuscitation of the common currency; and the significant Turkish minority are not reluctant to stress the idle and exploitative reputation of the Greeks. Merkel's government would face an electoral massacre next year if she risks ruining all that has been achieved since the foundation of the Federal Republic in order to rescue olive farmers who have been subsidised by the Common Agricultural Policy for implausibly-large numbers of trees whose 'existence' the overpaid bureaucrats vouched-for during their ten-hours of weekly attendance in the office between coffee time and lunch. It does not matter how far this is an unfair caricature of Greece: it is the embedded image that rests in sufficient truth to be sustainable.

Nobody can tell whether or not a domino effect would happen if Greece was simply shoved out of the Eurozone and given modest assistance from the IMF and the EU to soften the landing that would nevertheless be very hard indeed. With Greece out, would global speculators put so much 'pressure' on Portugese, Spanish or Italian state finances that they might also be pushed out, one by one? The apprehension that this could be so is a major factor in the consideration of options that have to be made by the European  leaders this weekend: the negative prospect of a serial unravelling of the Eurozone, the European Union and the 'European Dream' is strongly canvassed.

But there is an alternative vision that should quickly get more exposure. This begins with the fact that the Greeks have been vastly more untruthful and self-indulgent than Italians, Portuguese or Spaniards. Those three far-from-spotless countries have adopted stringency programmes that must be pursued rigorously, and possibly extended as the rest of Europe's governments also cut their 'systemic' public indebtedness while they all take specific short-term measures to stimulate sufficient economic impetus to break the depressive trend that at present is threatening to descend into another Great Depression. Dumping Greece would give the three most exposed countries the necessary shock to ensure that they really implement the undertakings that they have given. The more hardship the Greeks experience outside the eurozone, the more evidence there would be to encourage their Mediterranean neighbours to stick with the discipline that will be necessary to consolidate the bodged and ill-founded common currency into a valid international medium of exchange. The expulsion of Greece can mark the rebirth of the Euro. That is a desirable objective: a thoroughly good thing.

But if Greece is 'rescued' and fails to meet the almost-certainly unattainable targets that will be necessary to remain in the eurozone, there will be a huge temptation in Italy and Spain to soft-pedal on their austerity programmes: then the dominoes will begin to fall and the Euro will either collapse altogether or become the local currency for a hard core of Germany, Austria and the 'northern' Eurozone states whom the Germans trust.

In summary, if the Greeks are evicted, the Euro can have a future. If Greece is 'rescued', the chances of its survival are massively reduced.