No 18/19 8 May 2012 CurrentCurrent Concerns Concerns «ESM Dossier » Page I The “European Stability Mechanism” (ESM) as a new Enabling Act for the suffocation of European states The “European Freetrade Association” (EFTA) would be the necessary and reasonable alternative by Dr phil. René Roca

The “European Freetrade Association” an Coal and Steel Community”, had put And still the OEEC had started with the (EFTA) was founded by 7 Western Eu- the six founding states on the wrong, i.e. will to lead Europe back to the democratic ropean countries including Switzerland supranational, track. Some “High Com- path by the “rule of law”, out of the ruins in 1960. Today the EFTA is left with mission”, endorsed and directed by the left by the second world war. This had only 4 remaining members, namely Ice- USA, had started to claim important ele- only been possible thanks to a foundation land, Norway, Switzerland and Liech- ments of national states’ sovereign rights. based on natural law and the intention to tenstein. In the aftermath of the second Today the EU is a “state union” held to- strengthen social market economy in a de- World War, the European states had in- gether by various treaties. With the Lisbon central, federal society. A global determi- itially aimed for a solid and sustainable treaty the EU elite had recently imposed nation had emanated from this focusation foundation of their economic development a kind of “constitution” on the member of forces to leave all totalitarian ideas in with a big free­trade zone built around states, without discussion or voting of the Europe behind once and for all, with the the “Organization for European Eco- affected cirizens, and this treaty is now UN charter and the declaration of human nomic Co-operation” (OEEC). However to be amended by the “European Stabil- rights. the USA spoiled these European efforts. ity Mechanism” (ESM). That will finish Developing this agenda further, the Their view of Europe on their geostrate- off the last remains of financial and budg- EFTA tried to continue the OEEC concept gic chessboard was that of some depend- et sovereignty. Supposedly the EU intends of co-operation and peaceful reconstruc- ent “pawns” with vasal status. With this to solve their crisis that way, but the re- tion. From the beginning it refrained from vision in mind the Frenchman Robert sult is even deeper poverty and misery in being anything else than just an econom- Schumann laid the cornerstone of today’s unheard-of dimensions. The often hailed ically focussed freetrade zone and aimed European Union in parallel to the OEEC “European House”, built on sand from the at getting rid of trade barriers among their and later the EFTA, with US support and start, will be brought down by the ESM Jean Monnet as a background collabora- altogether, since even the last pillars of de- tor. Their very first treaty, the “Europe- mocracy and rule of law will crumble. continued on page II

Wouldn’t the EFTA be the better solution? Euro area in 2020 – Prospects for the period after the crisis by Willy Wimmer

Seen from a global point of view the pros- France with its centralized structures ly the attempted international influence on pects for the euro and the tensions in the traditionally considers itself an antipode Russian natural resources. euro area represent a “crisis within the to the Anglo-Saxon model of capitalism The significance of the PR China in in- crisis”. The euro crisis is a competition for (“shareholder value”), making it a main- ternational politics increases (for example economic systems and political spheres of stay of the continental European model. in the conflicts with Syria or Iran). China influence that has already been observed On the other hand, the French presiden- observes the rivalry between the systems for some time. The following general con- tial election campaign reveals very differ- in the West in order to control its own ditions are important: ent positions with respect to Germany and capitalism. The most important question Germany’s future political role is un- the euro. Therefore it is still an open ques- is how the cohesion in society can be se- certain; the publicly discussed possi- tion whether the position of Europe, and cured, given the increasingly unequal dis- bilities range from “soft hegemon” to thus the euro, will be supported in future tribution of income. Currently this is only a far-reaching integration into a united by the Paris and Berlin alliance. possible because almost all groups of so- Europe (“Germany, as we know it by In the USA the factional dispute also ciety profit from the strong growth. Any now, will have disappeared within the becomes evident in the presidential cam- growth rate of the GDP below 6.5 or 7% next 20 years”). The question which paign. Traditionally, the Republicans rep- a year would put 16 to 17 million jobs at economic model will prevail – the mere- resent the pure Anglo-Saxon model of risk, with corresponding threats to inter- ly Anglo-Saxon-dominated (“sharehold- capitalism, while Democrats increasingly nal stability. er value”) or the continental European take social elements in consideration and In view of these general conditions, the social market economy – is still to be get closer to Europe on the political level. question whether we will still have the answered. However, in a social market The latter are always confronted with the euro currency in 2020 cannot be answered economy model, the more centralized, accusation of wanting to introduce a kind with certainty. There is a clear continental state-capitalist variant French pattern of European Socialism and compromise European, especially German and French, and the decentralized federal orientation American interests. interest to secure the euro as a brace for of Germany face each other. The averted Russia clearly answered the question a politically and economically united Eu- attempt of taking over municipal water of who should exercise control over their rope. Governments will therefore do eve- utilities by foreign (state) companies is own resources – Russia or the internation- rything possible to overcome the crises in a positive example that social market al markets – in the course of the Khodork- the weak member countries through ap- economy organized in a decentralized ovsky processes: Russia itself. The process propriate aids – almost at any cost. • way will prevail. was intended to push back unequivocal- (Translation Current Concerns) No 18/19 8 May 2012 CurrentCurrent Concerns Concerns «ESM Dossier » Page II The Goldmen In praise of the conspiracy theory: Wolfgang Streeck gets to grips with the capital whisperers by Jens Bisky, Süddeutsche Zeitung

What is meant by self-regulating finan- became his successor as Treasury Secre- ingstone.com, informs in detail about the cial markets? Obviously, these are mar- tary. The deregulation they both propelled history of Goldman Sachs.) kets regulated by Goldman Sachs itself, was one of the preconditions of the finan- Conspiracy theories are seen as ungen- the sociologist Wolfgang Streeck said on cial crisis in 2008. In the crisis year Sum- tlemanly. However, there are conspiracies, Monday evening in a brilliant lecture. At mers, formerly president of Harvard Uni- Streeck says. If we want to understand the the Berliner Schaubühne he – the director versity, did not only earn money at a hedge crisis, we have to acknowledge both the of the Max Planck Institute for Social Re- fund but also $ 2.7 million through con- “cumulative presence” of the “Goldmen” search – had a debate with his colleague tracts with JP Morgan Chase, Citigroup, in American politics and meanwhile on a Heinz Bude from the Hamburg Institute Merrill Lynch and other banking compa- global level and the absurd fact that regu- for Social Research on “dual power in nies. Summers was paid $ 135,000 for an larly those who have driven the car against capitalism”. Apart from opinionated at- appearance at Goldman Sachs. What was the wall are called as paramedics. We have titudes and moralism the German crisis he paid for? A wonderful friendship? Or to speak of the experts’ power techniques. debate predominantly summons up ghost was it, Streeck asked, “anticipatory cor- What is their expert knowledge? It terms; Streeck, however, found a form of ruption”, disguised as a consultancy? is based first in mystification by scien- sociologically enlightened crisis narration Larry Summers became director of tification. Economy is almost exclusive- that allows seeing things more clearly, in- the National Economic Council under ly treated mathematically, but if it be- stead of giving up given the complexity of Obama, whose election campaign had comes critical technocrats talk about the the world. been generously supported by Goldman markets like psychotherapists talk about Streeck started by saying that demo- Sachs. Shortly before Treasury Secretary needy children: Then the markets are cratic debtor nations had to serve two mas- Henry Paulson, CEO until 2006 at – right “shy”, “anxious”, tend to panic. Streeck ters, the citizens and the “markets”. How- – Goldman Sachs, had let go bankrupt does not deny the experts’ intelligence, ever, who says what the “markets” want? Lehman Brothers, the largest competitor but their knowledge is often nothing but There are finance technocrats that ensure of the investment bank; however, he saved alleged. The decisive factors are equal- that the creditors do not have to believe in the insurance giant AIG with taxpayers’ ly networks, strategies for placement the states proving to be good debtors and money because billions were at stake there of important people and a willingness everything is done that the next generation eventually – for Goldman Sachs. to systematically sail close to the wind. can pay for what has long been spent. In You repeatedly encounter them: Mario When it comes to skimmed value instead Greece and Italy “confidants of the mar- Draghi, now at the head of the ECB, of added value, the knowledge of good kets” have already made it to the top of was previously European head of Gold- old statecraft plays a crucial role. In- the government. man Sachs, the company that has ena- trigue competence is as important as fi- And we are back again at Goldman bled Greece to join the monetary union nancial engineering knowledge. The ex- Sachs, the New York investment banking through giving instructions in creative perts represent a special closeness to the and securities trading company, which has accounting. At that time Loukas Papadi- “markets” whose wishes they translate succeeded over the years to conquer polit- mos was their partner at the Greek Cen- into constraints. They are “capital-whis- ical top positions and fill with employees tral Bank. A quick look to Italy: In his perers” which successfully besiege the and friends of the company. Just to men- function as EU Commissioner for Com- western democracies. In the weaker, re- tion a few names: Robert Rubin, for 26 petition, Mario Monti has strongly helped bellion-romantic final section of his lec- years at Goldman Sachs, was made Treas- to crush the public banking sector in Ger- ture Streeck said that outrage, “unrea- ury Secretary of the Clinton administra- many. Later this man whom the markets sonable perseverance”, the refusal to be tion and in this role he arranged the liber- trust, advised Goldman Sachs. (The Roll- despised and skimmed, in short: Occu- ation of markets from restrictive rules. He ing-Stone article “The Great American was assisted by Larry Summers, who also Bubble Machine”, available at www.roll- continued on page III

”The European …” petencies. Accordingly, the institutional with these principles, without the ambition continued from page I structure of the EFTA is very simple and to develop into an EU-like entity according cost-effective as compared with the EU. to the “Monnet method”. member states without implementing any The EFTA council and member states The EFTA still exists and now has to power politics. emphasize to pursue only objectives of convince certain EU states to join them All member states are equally represent- economic policies, without jeopardizing in order to eventually create the big Eu- ed with one vote in the steering commit- their national sovereignty. That is why no ropean Freetrade zone in the 21st centu- tee, the EFTA council based in Geneva, to single state competencies ever had to be ry at last. Together with the Council of this day; decisions have to be made with transferred to a common body. The EFTA Europe, the EFTA could potentially pro- unanimous consent which means that dis- countries agreed on a stepwise reduction of vide the preconditions for a new Euro- cussions have to continue until a good so- customs on their industrial products. They pean social contract. Especially in to- lution for all is on the table. This principle stressed that agricultural products were ex- day’s social and economic crisis, the implies the ability to appreciate other posi- empt from this trade liberalization. Any EFTA would turn into a source of hope tions and to reach a fair compromise. The common agricultural policy would have vi- that way, for the people of an independ- EFTA convention does not entail the cre- olated the basic structure of a loose associ- ent Europe being able to live together in ation of any supranational bodies or com- ation. So far the EFTA has fared very well peace and freedom. • No 18/19 8 May 2012 CurrentCurrent Concerns Concerns «ESM Dossier » Page III

The European Stabilization Mechanism, or how Goldman Sachs captured Europe by Ellen Brown*

The Goldman Sachs coup that failed in eign debt. All is sacrificed to the demands Question: 700 billion is just the begin- America has nearly succeeded in Europe of the creditors, because where else can ning? The ESM can stock up the fund as – a permanent, irrevocable, unchallenge- the money be had to float the crippling much as it wants to, any time it wants to? able bailout for the banks underwritten by debts of the Eurozone governments? And we would then be required under Ar- the taxpayers. There is another alternative to debt slav- ticle 9 to irrevocably and unconditional- ery to the banks. But first, a closer look at ly pay up?” In September 2008, Henry Paulson, for- the nefarious underbelly of the ESM and Article 27, lines 2-3: “The ESM, its mer CEO of Goldman Sachs, managed Goldman’s silent takeover of the ECB ... property, funding, and assets […] shall to extort a $ 700 billion bank bailout from enjoy immunity from every form of judi- Congress. But to pull it off, he had to fall The Dark Side of the ESM cial process . […]” on his knees and threaten the collapse of The ESM is a permanent rescue facility Question: So the ESM program can sue the entire global financial system and the slated to replace the temporary Europe- us, but we can’t challenge it in court?” imposition of martial law; and the bailout an Financial Stability Facility EFSF and Article 27, line 4: “The property, fund- was a one-time affair. Paulson’s plea for European Financial Stabilization Mecha- ing and assets of the ESM shall […] be a permanent bailout fund – the Troubled nism EFSM as soon as Member States rep- immune from search, requisition, confis- Asset Relief Program or TARP – was op- resenting 90% of the capital commitments cation, expropriation, or any other form posed by Congress and ultimately rejected. have ratified it, something that is expected of seizure, taking or foreclosure by exec- By December 2011, European Central to happen in July 2012. A December 2011 utive, judicial, administrative or legisla- Bank president Mario Draghi, former vice youtube video titled “The shocking truth tive action. president of Goldman Sachs Europe, was of the pending EU collapse!”, originally Question: […] [T]his means that nei- able to approve a 500 billion Euro bailout posted in German, gives such a revealing ther our governments, nor our legislatures, for European banks without asking any- look at the ESM that it is worth quoting nor any of our democratic laws have any one’s permission. And in January 2012, a here at length. It states: effect on the ESM organization? That’s a permanent rescue funding program called “The EU is planning a new treaty pretty powerful treaty!” the European Stability Mechanism (ESM) called the European Stability Mecha- Article 30: “Governors, alternate Gov- was passed in the dead of night with bare- nism, or ESM: a treaty of debt. […] The ernors, Directors, alternate Directors, the ly even a mention in the press. The ESM authorized capital stock shall be 700 bil- Managing Director and staff members imposes an open-ended debt on EU mem- lion euros. Question: why 700 billion?” shall be immune from legal process with ber governments, putting taxpayers on the [Probable answer: it simply mimicked respect to acts performed by them […] hook for whatever the ESM’s Eurocrat the $ 700 billion the US Congress bought and shall enjoy inviolability in respect of overseers demand. into in 2008.] their official papers and documents.” The bankers’ coup has triumphed in Eu- Article 9: “[…] ESM Members here- Question: So anyone involved in the rope seemingly without a fight. The ESM by irrevocably and unconditionally un- ESM is off the hook? They can’t be held is cheered by Eurozone governments, their dertake to pay on demand any capital call accountable for anything? […] The trea- creditors, and “the market” alike, because made on them . . . within seven days of re- ty establishes a new intergovernmental it means investors will keep buying sover- ceipt of such demand.” […] If the ESM organization to which we are required to needs money, we have seven days to pay. transfer unlimited assets within seven days * Ellen Brown is an attorney and president of the […] But what does “irrevocably and un- if it so requests, an organization that can Public Banking Institute, http://PublicBank- conditionally” mean? What if we have a sue us but is immune from all forms of ingInstitute.org. In “Web of Debt”, her latest new parliament, one that does not want to prosecution and whose managers enjoy of eleven books, she shows how a private cartel transfer money to the ESM? the same immunity. There are no inde- has usurped the power to create money from the people themselves, and how we, the people, can Article 10: “The Board of Governors pendent reviewers and no existing laws get it back. Her websites are http://WebofDebt. may decide to change the authorized cap- com and http://EllenBrown.com. ital and amend Article 8 ... accordingly. continued on page IV

”The Goldmen” workarounds in this conflict were toler- ten years by Mr Draghi”, Streeck replied. continued from page II ation of inflation, acceptance of unem- Politically, this is no answer, only a threat, py could help. The experts were terribly ployment and of public debt, the dereg- just as the experts always threaten with the afraid of the “irrationality of the masses”. ulation of private credits. Now Streeck worst. In an essay for Lettre Internation- sees the “democratic capitalism” in dan- The question remains whether Occu- al (Issue 95, winter 2011) Streeck clas- ger if the states act as “debt collection py or less romantically minded are able to sified the current financial and debt cri- agencies on behalf of an oligarchy of formulate political or union claims beyond sis within the “endemic conflict between global investors”. the criticism of the system. That we do not capitalist markets and democratic poli- Have we not all been entangled as want to see Goldman Sachs people in pub- tics”. In the postwar decades growth en- “friends of the middle class”, Heinz Bude lic offices for a long time would be one of abled a balance between social rights on asked, and are we not all interested in the those. • the one side and “marginal productivity functioning of financial markets, with our Source: © Süddeutsche Zeitung, 18.4.2012 according to the valuation of the market” pensions, assets and future investments? – on the other. Among others, temporary “You will be expropriated within the next (Translation Current Concerns) No 18/19 8 May 2012 CurrentCurrent Concerns Concerns «ESM Dossier » Page IV ”The European Stabalization …” Greece and other debtor nations. Thorpe Goldman Sachs and the financial techno- continued from page III proposes the obvious solution: crats have taken over the European ship. Why not lend the money to the Greek Democracy has gone out the window, all apply? Governments cannot take action government directly? Or to the Portu- in the name of keeping the central bank against it? Europe’s national budgets in guese government, currently having to independent from the “abuses” of govern- the hands of one single unelected intergov- borrow money at 11.9%? Or the Hungar- ment. Yet the government is the people – ernmental organization? Is that the future ian government, currently paying 8.53%? or it should be. A democratically elected of Europe? Is that the new EU – a Europe Or the Irish government, currently paying government represents the people. Euro- devoid of sovereign democracies?” 8.51%? Or the Italian government, who peans are being hoodwinked into relin- are having to pay 7.06%? quishing their cherished democracy to a The Goldman squid captures the ECB The stock objection to that alternative is rogue band of financial pirates, and the Last November, without fanfare and barely that Article 123 of the Lisbon Treaty pre- rest of the world is not far behind. noticed in the press, former Goldman exec vents the ECB from lending to govern- Rather than ratifying the draconian Mario Draghi replaced Jean-Claude Tri- ments. But Thorpe reasons: ESM treaty, Europeans would be bet- chet as head of the ECB. Draghi wasted no ter advised to reverse article 123 of the “My understanding is that Arti- time doing for the banks what the ECB has Lisbon treaty. Then the ECB could issue cle 123 is there to prevent elect- refused to do for its member governments credit directly to its member govern- ed governments from abusing Cen- – lavish money on them at very cheap rates. ments. Alternatively, Eurozone govern- tral Banks by ordering them to print French blogger Simon Thorpe1 reports: ments could re-establish their economic money to finance excessive spend- sovereignty by reviving their publicly- “On the 21st of December, the ECB ing. That, we are told, is why the owned central banks and using them to ‘lent’ 489 billion euros to Europe- ECB has to be independent from issue the credit of the nation for the ben- an Banks at the extremely generous governments. OK. But what we efit of the nation, effectively interest- rate of just 1% over 3 years. I say have now is a million times worse. free. This is not a new idea but has been ‘lent’, but in reality, they just ran the The ECB is now completely in the used historically to very good effect, e.g. printing presses. The ECB doesn’t hands of the banking sector. ‘We in Australia through the Commonwealth have the money to lend. It’s Quanti- want half a billion of really cheap Bank of Australia and in Canada through tative Easing again.” money!!’ they say. OK, no problem. Mario is here to fix that. And no the Bank of Canada. The money was gobbled up virtually in- need to consult anyone. By the time Today the issuance of money and cred- stantaneously by a total of 523 banks. It’s the ECB makes the announcement, it has become the private right of vam- complete madness. The ECB hopes that the the money has already disappeared. pire rentiers, who are using it to squeeze banks will do something useful with it – like the lifeblood out of economies. This right lending the money to the Greeks, who are At least if the ECB was working needs to be returned to sovereign govern- currently paying 18% to the bond markets under the supervision of elected ments. Credit should be a public utility, to get money. But there are absolutely no governments, we would have some dispensed and managed for the benefit of strings attached. If the banks decide to pay influence when we elect those gov- the people. • bonuses with the money, that’s fine. Or they ernments. But the bunch that now might just shift all the money to tax havens. has their grubby hands on the in- 1 http://simonthorpesideas.blogspot.com At 18% interest, debt doubles in just struments of power are now totally Source: www.globalresearch.ca/PrintArticle. four years. It is this onerous interest bur- out of control. php?articleId=30403 den, not the debt itself, that is crippling © Copyright Ellen Brown, Web of Debt, 2012

It must be possible that banks go bankrupt by Frank Schäffler and Norbert F. Tofall

The present, politically intended exemp- tor and financial sector and the payment for all other companies should apply to tion of liability for banks contradicts all transactions would collapse if a system banks, as well. Third: The state takes on free-enterprise principles established relevant bank would have to announce in- a guarantee for the private savings de- under the rule of law. The below present- solvency. Our western companies are fear- posits at the insolvent bank and for the ed framework for the liquidation of over- fully taken in by this panic because we credits for companies of the real econo- indebted banks with maintenance of pay- have given up the custom of thinking in my, which this insolvent bank has grant- ment transactions would re-establish the ordered terms. Nevertheless, the extortion ed. Payment obligations of the insolvent market order. potential of the banks can be weakened if bank to other banks that do not concern the overall interest of maintenance of the the accounts of the customers of the other By the decision of the G-20 from Novem- payment transactions is separated from bank but go directly to the other bank, ber 2008 not to let any systemically rel- the problem of bank insolvency. however, are not guaranteed. Fourth: An evant bank perish and by the wrong act- insolvency administrator takes on the ing of the central banks and governments Maintaining payment transactions management of the insolvent commercial our over-indebted major banks have got First: The decision of the G-20, not to let bank and makes sure that all payments a potential for blackmail in their hands any systemically relevant bank perish, for which a state guarantee is given are which has led to an exemption of liabil- must be revised. Second: The govern- carried out properly. The refinancing of ity for banks. This exemption of liabili- ments answer the banks’ threat to sub- these payments takes place via the cen- ty for banks contradicts all free-enterprise mit an application of insolvency at court, tral bank as at present. principles founded under the rule of law. with: “Please, go ahead!” A market The extortion potential of the banks con- economy without an insolvency judge is sists of the threat that the banking sec- no market economy. The same law valid continued on page V No 18/19 8 May 2012 CurrentCurrent Concerns Concerns «ESM Dossier » Page V The planned constitutional coup in May ESM – Austria’s path to collective suicide by Dr Friedrich Romig * Scheduled for May 2012 our govern- liament and the sovereignty of our state of other states or to stand bail for them. ment plans the great constitutional coup in financial and budget affairs. In order to The idea of a “debt union” was as ab- (“Putsch”). The parliament is to be com- support of insolvent states we as citizens surd as a “famine in Bavaria” in the nine- pelled to say yes and amen to the € 700 are deprived for generations from the funds ties for all governments and even for Mr billion-plus monster called “European that we need urgently to make ends at least Euro Claude Juncker. This was fixed ad- Stability Mechanism” and then keeps its half-way meet and to preserve our social amantly and unequivocally in the con- mouth shut forever. The government wants networks from rupture, to maintain our in- tract’s “no-bailout” clause (now Article to literally “incapacitate” Parliament. The frastructure and to give our young people 125 TFEU). “A Member State shall not ESM is a giant mega bank which takes up the education, they need for their survival. be liable for or assume the commitments the never reimbursable debts of insolvent … of another Member State”. In addition, countries (PIIGS) and then makes the rich What is the intention? it was expressly forbidden that the Euro- countries (D, NL, FI, AT) and their citizens The single purpose of the coup is the debt pean Central Bank (ECB) would start its service them. It is up to the finance minis- relief of weak euro countries at the ex- money printing machines to finance pub- ters, who act as a “governors” of the new mega bad bank ESM, to decide in Brus- “... deprived for generations from the funds that we need ur- sels about vast sums of money which are to be raised and about where the money gently to make ends at least half-way meet and to preserve sis to go. The gag contract signed by Fed- eral Chancellor Faymann on February 2nd our social networks from rupture, to maintain our infrastruc- which is pending for ratification in May is ture and to give our young people the education, they need a totalitarian attack on the constitutional right and the primacy of the national Par- for their survival.” * The author taught political economics at Vienna, Graz and Aachen. He was a member of the pense of the strong ones and their citi- lic debt. Now what the ECB is doing is ex- Europe-Commission of the Austrian Bish- zens. Now it is planned to do exactly what actly that! ops’ Conference. His latest book “Der Sinn was explicitly excluded when the euro In May 2010, European Heads of State der Geschichte” (Regin-Verlag, Kiel 2011; The was introduced. Never would the Ger- in cooperation with the ECB broke this Meaning of History) dwells on the serious con- sequences of the development from the Euro- mans or Austrians have agreed to the in- very contract in a cloak-and-dagger oper- pean Union towards the “United States of troduction of the euro, if they had been Europe”. told that they would have to pay the debts continued on page VI

”It must be possible …” not destroyed by a bank’s insolvency. In Even a domino effect positively to be val- continued from page IV this case it is not important whether one ued could result which makes other states The payment transactions will be main- holds a 10-euro banknote in one’s hand – on grounds of the international interre- tained in compliance with these four basic or whether one has lodged these 10 euros lation of our financial management – take elements. In case of insolvency of a bank with a bank. over this scenario for controlled liquida- the computers are not turned off and the tion from over-indebted banks with main- people are not dismissed simultaneous- Positive effects of the liquidations tenance of payment transactions. Further- ly in this bank. By an application of in- more, the unsecured payment obligations solvency of a bank the juridical liquida- In this scenario it is excluded that the state between the banks and large parts of the tion of this bank is initiated. The payment covers all payment obligations of the insol- money and credits created out of Nothing transactions do not collapse by an appli- vent bank. Of course this deliberate restric- from former interbank transactions would cation of insolvency of a bank if one does tion of the acquisition of payment obliga- be sent back to Nothing. This means that not allow collapsing it and changes the tions of an insolvent bank A can lead to the ‘rubbish’ assets, which feed the Bad Banks credit system law accordingly. A storm- fact that a bank B also must declare insol- at the moment, would be destroyed. ing of banks will not happen if the state vency. For bank B too, the four mentioned Afterwards the juridically liquidat- takes on the mentioned guarantee for cer- basic elements of a bank liquidation sce- ed, formerly over-indebted banks could tain payments and if the described scenar- nario come to apply so that the payments be sold. We could liquidate the snowball io is understandably spread in public by can be effected from accounts of the cus- system controlling us of the over-indebt- the mass media so that the people must not tomers of bank B to other banks and that ed reserve banking subsystem and create be afraid of an application of insolvency loans granted by bank B to the real econo- a new monetary order, which corresponds of Deutsche Bank, the UBS or the Hypo my are secured furthermore and are not re- to free-enterprise principles founded Real Estate. In our unsecured state paper voked. The payment transactions will not under the rule of law, without risking a money system a 10-euro banknote is noth- collapse by the insolvency of bank B but breakdown of the whole payment trans- ing else but a state guarantee and, there- be maintained by an insolvency admin- actions. Because that way the extortion fore, does not differ from savings depos- istrator in a controlled manner. Since of potential of the banks is weakened and its if state property rights are granted for course also a bank C and additional banks a regulatory policy would be possible in them. Therefore, from a withdrawal of the could get in difficulties by the insolven- Europe again. • savings deposits no saver has an advantage cies of the banks A and B, it might happen With friendly permission of the author. First publi- compared to cash. It is vital that the pay- that the whole over-indebted reserve bank- cation Neue Zürcher Zeitung, 25 April 2012. ment transactions are maintained and that ing subsystem would have to be liquidated, the saver is informed that his savings are without collapse of payment transactions. (Translation Current Concerns) No 18/19 8 May 2012 CurrentCurrent Concerns Concerns «ESM Dossier » Page VI

”The planned constitutional coup in May” – buy or sell government bonds on the nal principles of the European Monetary continued from page V secondary market (Art. 18), Union (EMU) upside down, is the real – fund banks (Art. 15), scandal. The ESM is not even European ation. A unique event: The leaders, who – grant credit lines and drawing rights to Union law, but it is based on a separate in- swore to the Constitution, broke the law euro zone countries (14), ternational agreement, which calls a stock and did what every citizen would be pun- – issue euro bonds (Art. 21), holding corporation (“a special purpose ished for. This was the end of the rule of – fix interest rates (Art. 20). vehicle”, i.e. an SPV) under Luxembourg law in Europe. Since this violation of law – The ESM can borrow without limit and company law into life. a series of illegitimate “emergency meas- leverage (Art. 21). But because the “Constitution” of the ures” were decided in about 10 sum- – At any time the list of transactions can EU, the so-called “Lisbon Treaty” (TEU mit meetings, which pushed paying euro be extended or modified (Art. 19). and TFEU), is of higher rank, internation- member states even deeper into the debt This monstrous transfer of powers even al treaties by and between the EU mem- quagmire alongside with the “shedded” brings the devoted EU advocate Alexan- bers must not oppose the EU Constitution. debtors states, into which they now sink der van der Bellen from the Green Party to Therefore, a constitutional amendment is deeper and deeper and lose their freedom. breathe fire and brimstone as written in “Der necessary. This, supposedly “insignifi- Because, there is no freedom without the Standard”, dated March 30th 2012: “Only be- cant change in the constitution” is done rule of law. cause the heads of government call for it, is through an amendment to Article 136 not that members of parliament need to fol- TFEU (Treaty on the Functioning of the The coup by means low like sheep. Is parliament nothing but a EU), which cancels the bail-out ban. The of a new “Enabling Act” time consuming talking shop? Is it now con- amendment reads as follows: With the ESM contract, virtually un- sidered cheap populism, if members of par- “The Member States whose currency is controllable, political and financial liament object to authoritarian structures?” the Euro may establish a stability mecha- power will be transferred onto a small His questions are justified, because the nism that is activated when it is essential group of people, consisting of the Fi- ESM-law (it has no name yet) is comparable to maintain the stability of the Euro cur- nance Ministers of the Euro Member only to Hitlers “Enabling Act” in 1933. This rency zone as a whole.” States, the so-called “Board of Gover- was justified in the Reichstag (23 March Accompanied is this creation by a “sta- nors” (Article 5). 1933) claiming “it is not sufficient for the in- bility mechanism” via a “fiscal pact” that The “governors” are allowed to raise tended purpose to ask the Reichstag for per- calls States to more fiscal discipline. How- the sum of 700 billion euro ESM author- mission on a case per case basis.” ever, as early as at the signing on March ized capital at their discretion at any time Finance Minister Ms Fekter wants to 21st, 2012 this fiscal pact turned out to be without limitation (Art. 8, Para. 2: Art. 10, “inform” a committee of the Austrian Par- a placebo and was already broken. Spain Para. 1). liament which, at best, will have “accom- announced that it would not adhere to the They are empowered to requisition the panying control”, nothing more. To get specific obligations. The fiscal pact is ex- not yet fully paid capital. Contractor states the okay of the governing parties, she be- pected by experts to suffer the same fate have to meet these requisition demands lieves, will be a quick affair. And she is as the “stability pact” with the famous within 7 days. probably right in this. Separation of pow- “Maastricht Criteria” (3% deficit, 60% They can allow the ESM to take up un- ers is abolished, the executive has put leg- of GDP debt boundary). This former pact limited credit (= Euro Bonds!) to finance islature under its control. In many cases the was also broken as early as at its intro- weak countries and their banks (Art. 21). members of parliament are not even read- duction and later on, approximately more The management of the ESM can exe- ing the laws which they decide upon, their than sixty times. It is not worthwhile to cute transactions with anyone without any understanding of complex financial trans- scrutinze the new “fiscal pact” more close- restriction. These managers as well as the actions is limited. They do not realize that ly as it only serves members of parliament governors enjoy immunity from prosecu- the forthcoming constitutional coup will as an excuse for their illegitimate and un- tion, even if they risk or misappropriate deprive Parliament from its budget law, scrupulous consent to the ESM. Quite funds (Art. 35). the right to represent citizens on tax mat- apart from this, Stephan Schulmeister The governors, management and em- ters by their consent. After all, at least FPÖ doubts the questionable usefulness of the ployees have the right to silence and the and BZÖ will reject the gag contract while Fiscal Pact with good reason: If the fiscal duty to secrecy. They cannot be hold ac- the Green Party is going to agree. They are pact is implemented as planned, the rescu- countable by anyone outside of the ESM. already negotiating with the government as ing of states will be prevented while those They decide on their own revisors (Art. van der Bellen tells us and the outcome of states allegedly “rescued” by ESM sup- 26 – 30). In addition, they decide on their the negotiations between this party of hyp- port will be forced into depression, drag- own salary and compensation. Both are ocrites and government is already certain. ging all other states along with them. exempt from state taxes and fees. The regulation to establishing the ESM is Laws do not apply to the ESM, neither The coup is the real scandal to be done by the “simplified treaty amend- existing ones nor future ones. No court The coup by an inconspicuous change of can prosecute the ESM or access his prop- the constitution, which will turn all origi- continued on page VII erty. Conversely, the ESM has the right to file a suit against anyone (Art. 32). IMF’s share of the bail out parachute (liability Euro countries!) euro 250 billion The ESM does not need any banking Guarantees for aid from the EU budget (EFSM) euro 60 billion license for its banking business, nor is Guarantees from the EFSF (predecessor of the ESM) euro 780 billion he under any financial supervision (Art. First Rescue package for Greece (bilaterally, including the IMF) euro 109 billion 32, para 9). The ESM can undertake vir- Private debt of Greece (for the most part the state has to pay indirectly in euro 110 billion tually all banking financial transactions the form of gifts to cover bank interest rate differences and by lower tax (Art. 14–21): revenues to) ECB purchases of government bonds of the PIIGS (which will never be re- euro 220 billion – It can give loans to euro zone countries paid!) (Art. 16), Target 2 liabilities of the PIIGS (will never be paid back! euro 650 billion – It can buy bonds issued by euro zone Planned capital increase in the IMF through EMU countries euro 50 billion countries (Art. 17), No 18/19 8 May 2012 CurrentCurrent Concerns Concerns «ESM Dossier » Page VII ”The planned constitutional coup in May” al of the ESM, we as Austrians participate to the conclusion that even an immedi- continued from page VI practically involved in a “society with un- ate exit will be much cheaper for the limited liability,” without the possibility to Dutch than a continuation in the mone- ment procedures” in accordance with Arti- opt out and thus we “have become vul- tary union until 2015 or beyond. Even if cle 48, paragraph 6, EUV (EU Treaty). The nerable to blackmail” (Prof Hans-Werner the payments made and remaining pay- only purpose of this “simplified procedure” Sinn). We are thus on the certain “path to ment obligations would be fully depreci- is the elimination of the parliaments and disaster” (Prof Max Otte). Ever since the ated, the value of the exit would be high- the prevention of referendums in countries first, still modest participations in the use- er than the costs. The study once and for where this is necessary for the ratification less parachutes, we were unable to defend all invalidated the claim that the Dutch of international treaties and their alterations. ourselves against the constant “increases” were “profiting” from joining the mone- As the ESM-contract turns the whole Eu- and “extensions” of those programs. Now, tary union. In reality, the joining was as- ro-construct upside down, this is a change payments and liability for us Austrians sociated with significant loss of prosper- of the constitution in its entirety which in amount to more than 50 billion Euros! ity, from the beginning onwards. Slower Austria requires a mandatory referendum. growth in GDP and real income per cap- To avoid just this, the amendment is What the wealthy Euro members are ita, growth in precarious jobs, higher simply declared being “insignificant” – already paying and liable for budget deficits, higher unemployment while it is truly a subversive, revolutionary For what and to which extent we Austri- rates, higher depreciation on current ac- addendum – and thus subject to the simpli- ans are liable and what we have to pay – count surpluses, higher inflation, and loss fied procedure! By this trick the Austrian nobody knows. Ms Fekter recently men- of competitiveness compared to countries parliament can dispose of the bail-out ban tioned a total of 40 billion Euros (“Der like Switzerland and Sweden show sig- with just a 2/3-majority. Standard”, 1 April 2012) but then she forgot nificant disadvantages of a membership Under the Lisbon Treaty and its “non- about the interest rates and the already oc- in the monetary union. For the Dutch, an assistance clause” a bail-out is unmistak- curred defaults, not least caused by specula- immediate exit from the euro zone would ably forbidden: tions of domestic banks. Several banks have be advantageous. There is no risk for an “A Member State shall not be liable for to make write-downs on their investments exuberant rise in the exchange rate of its or assume the commitments of central gov- abroad which reduces tax revenues. This tax domestic currency (Dutch guilders). ernments, regional, local or other public shortfall in turn must be covered by the cit- Without doubt, the results of this thor- authorities, other bodies governed by pub- izens of Austria through raised payments. ough study can be transferred to Austria lic law, or public undertakings of another The already out of-control inflation adds to to a very large extent. It holds for Austria, Member State, without prejudice to mutu- these increased taxes and has the effect of a as well that the quickest possible exit from al financial guarantees for the joint execu- “cold expropriation” of property and real in- the monetary union, the non-participation tion of a specific project.” (Art. 125 TFEU) come. ECB and central banks have opened in the ESM and the return to its own cur- By removing this center piece, mod- the monetary floodgates; new blisters are on rency is by far the best option. eled on the German example of a “Stabili- the horizon, they will burst sooner or later But this creates an obligation for all ty Union”, the European Monetary Union and lead to further burdens. members of the parliament, journalists, becomes a debt, liability and transfer A partial list of largely uncontested pay- opinion-leaders and citizens concerned for union. A more fundamental constitutional ment and liability amounts for the whole the good of the country and future gener- provision, by which the original principles of the Euro zone has the following posi- ations that they have to stand up with all of the EMU will be completely changed, tions: their might and heart against this coup at- is hardly conceivable. This could be com- In the enormous amount of euro 2.3 tril- tempt. If we can not prevent this planned pared with the annexation of Austria by lion (see table) older participations in the coup, the ESM mega bad bank is to lay the German Reich in 1938. Then, too, the capital of the IMF or the ECB are not down on us like an octopus with its tenta- state of Austria ceased to exist. Before the listed, which of course will never be re- cles, sucking the last drop of blood from elections to the national parliament, Fay- paid. Also, the losses of the ECB from our veins before we finally sink in the debt mann, now State Chancellor pledged his the depreciation of bad debt and collater- swamp. • word that he would put any fundamental als provided to banks can not be quanti- change of the Lisbon treaties to referen- fied as of today. Over the past few years (Translation Current Concerns) dum. Now he is trying to escape this com- the ECB has increased its balance sheet mitment with “dirty tricks” and will break with the help of their money printing ma- his word. chines to around 3 trillion Euros, which is a triplication! And this in the presence In the debt quagmire for all eternity of a stagnant economic output! For a long The ESM contract contains no resolution time, the ECB now falls short of taking and exit clauses. It commits all future care of its primary task: ensuring price generations of our country for ever, to as- stability. sume and pay for the debts of other coun- Austria is involved in these huge sums tries, at the expense of our own prosperi- with about 3%. How high the resulting ty. Liability is unlimited, namely we have risk will become can hardly be estimated assumed liability to take over the shares today. We are stuck in a debt quagmire up in the ESM of those countries that receive to our necks. aid from the ESM or of those countries who do not fulfill their contractual obliga- The exit can be accomplished! tions. If all so-called “PIIGS” (Portugal, Nevertheless, the exit is feasible. The Ireland, Italy, Greece, and Spain) ask for study prepared by the British independ- aid, then our liability and payments can ent-of-banks research institute, “Lom- double or triple. In addition, IMF loans are bard Street Research” carried out for the repaid with priority, so that the risk of lia- Dutch, “Netherlands and the Euro” (on bility rises considerably. After the approv- the Internet easily accessible!) comes No 18/19 8 May 2012 CurrentCurrent Concerns Concerns «ESM Dossier » Page VIII European peoples themselves are taking control of their financial destiny … by Rachel Donadio, Giugliano, Italy

While Europe’s financial overlords debate ‘‘Giugliano is still the capital. It has the has economic interests in the area,’’ said the wisdom of spurring growth by letting best professionals.’’ Raffaele Cantone, a judge in the Consti- the European Central Bank print more Quite a number of them, as it turns tutional Court who has conducted wide- money, some enterprising sorts in this out. When the police rolled up some of reaching investigations into the Camorra. semi-urban sprawl northwest of Naples the counterfeiting operations around Gi- To the untrained eye, the counter- are taking matters into their own hands, ugliano as well as in the more southerly feit euros made by groups active in this flooding Europe with counterfeit euros. Calabria region in January 2009, they ar- area, what the authorities call the ‘‘Napo- While the Campania region of southern rested 109 people, reported another 165 li group,’’ are reasonably convincing. But Italy is known for its sunny skies, fresh to the local magistrates and made 162 sei- they look slightly off – they are printed produce and organized crime, counter- zures of illicit material. on paper without a watermark, and the sil- feiters in and around this town have made Despite that operation, by far the big- ver hologram catches the light differently quite a name for themselves in law-en- gest in recent years, Colonel Gentili says compared with real euros. forcement circles by printing more than the counterfeiting continues, a tradition In recent years, the authorities have half the euro notes pulled from circulation passed in many cases from father to son. found fake euros in Bulgaria, Colombia, in recent years by the central bank. This month, the police in the southern Russia, Turkey, Iran and Iraq, countries Although the authorities have also Puglia region arrested two men on charg- with large cash economies where it is often found illicit presses in France, Spain, es of counterfeiting and said that organ- easier to spend fake euros because bank Eastern Europe and South America and ized crime groups around the city of Fog- and shop clerks are not so familiar with the say that Lithuanians dominate some coun- gia had teamed up with those from the real thing. Sometimes immigrants from Af- terfeit distribution networks, Italy appears Campania region to produce a swarm of rica and Latin America knowingly buy fake to have a particular artisanal flair for the fake euros. euros in Europe and try to use them back printing arts. And its most accomplished While Campania is dominated by the home to buy property, Colonel Gentili said. practitioners can be found around Giugli- Camorra, the notoriously violent organ- The euro has become the currency ano, where cementblock apartments abut ized crime network, the authorities say of choice for drug dealers, and fake fruit orchards and car dealerships and counterfeiting is a peripheral line of busi- euros have become part of their opera- young African prostitutes stand amid the ness for the gangsters, who prefer to focus tions. Particularly popular is the €500 rushes on unkempt roads. on more lucrative activities like toxic note, worth about $750, the largest ‘‘In Italy, there’s a great ancient and waste dumping, drug trafficking and ille- value for any single bank note in the august tradition: Here, they make fake gal garment workshops. world. money done well,’’ said Col. Alessandro ‘‘Organized crime certainly obtains a Gentili, the head of the Carabinieri Cur- cut from this activity, and it can intervene Source: © International Herald Tribune 26 April rency Anti-counterfeiting Unit in Rome. to regulate its use in the market because it 2012

Citizens coalition announces constitutional complaint against European Stability Mechanism (ESM)

A citizens coalition has announced a severely restricted. A line was crossed. tailed – for eternity in fact and that this constitutional complaint against the The Fiscal Pact of 25 of 27 EU claims was not covered by the German consti- permanent European Stability Mech- more budget discipline and national debt tution. Faction leader Gregor Gysi stat- anism (ESM) and the European Fis- brakes are to be non-redeemable. The ed: “With this treaty you are starting the cal Pact. “If the treaties are ratified as Commission and the Council of Min- foundation of a European Federation, the planned until mid of July without refer- isters would obtain far reaching power United States of Europe, in fact via a fis- endum, the coalition will take legal ac- over the national budgets without par- cal union.” The German Constitution did tion,” the initiators in Berlin announced ticipation of the European Parliament or not permit that. • on 12th April. the national parliaments. Germany’s level The former minister of justice Herta of liability for the ESM starting in July Source: redaktion beck-aktuell Nachrichten, Pres- Däubler-Gmelin (SPD) and the expert for 2012 was unclear, they said. semitteilungen, Fachnews, becklink 1019805 constitutional law Christoph Degenhart were won over as representatives. The The left party: parliament’s rights are (Translation Current Concerns) Linkspartei and the CSU politician Peter curtailed for eternity Gauweiler are planning constitutional Earlier the Ministry of Finance and ex- complaints as well. perts of the Bundestag had pointed to the problem that Germany would eternal- Complaint: surrender ly tie itself to the Fiscal Pact that Chan- of control on national budget cellor Angela Merkel had enforced. An It is criticized by Degenhart and Däu- unilateral termination of the pact was bler-Gmelin that that in the course of the not possible. On end of March 2012 Die European Stability Mechanism (ESM) Linke had warned that through the Fiscal the control over the national budget was Pact the parliamentary rights were cur-