Will Herman van Rompuy Rise To Head A Supra European Govenrment?

Ambrose Evans-Pritchard of The Telegraph wrote: The entire European Project is now at risk of disintegration, with strategic and economic consequences that are very hard to predict. In a speech this morning, EU President Herman Van Rompuy (poet, and writer of Japanese and Latin verse) warned that if Europe’s leaders mishandle the current crisis and allow the eurozone to break up, they will destroy the European Union itself. “We’re in a survival crisis. We all have to work together in order to survive with the euro zone, because if we don’t survive with the euro zone we will not survive with the European Union,” he said.

And Mr van Rompuy has outlined some proposed first steps of fiscal federalism, which are the conclusions of the October 28, 2010, and October 29, 2010 European Council’s Task Force On Economic Governance,  in a speech before the European Parliament. These are presented in video entitled Conclusions On Economic Governance, 24 November 2010 http://vloghvr.consilium.europa.eu/?p=3263. He noted that the proposed reforms “will lead to strict regulations, with adequate incentives for compliance, semi-automatic application and an effective framework for addressing broader macroeconomic imbalances.”  The proposals mean a loss of national sovereignty, as if adopted, would call for vetting of national budgets before presented to state legislatures. 

Given, the recent fall in the Euro and European stock on unsettled fears that more bailouts will be needed and that sovereign debt contagion will spread throughout European Financial Institutions, I ask are we seeing a Dead Union Walking?  — Are European Financial Intsitutions, EUFN, white washed tombs of a bygone era of investment liquidity?  — Is Banco Santander Madrid, STD, a zombie bank?

Well, perhaps so as, The Trading Report in article Euro In Trouble relates: The Euro closed the European session below its 55-day moving average as it weakens further against the U.S. dollar amid the ongoing debt crisis in Ireland that threatens to spread to other heavily indebted European countries. By succumbing to the key technical indicator, the euro can be expected to fall even further in the days ahead, says Ashraf Laidi, chief market strategist at CMC Markets.

The survical crisis Mr. Van Rompuy referred to was mentioned by International Monetary Fund chief Strauss-Kahn, in a speech at the European Banking Congress in Frankfurt, Germany, as a sovereign crisis according to Phillip Aldrick of The Telegraph.

The crisis, which came to the forefront with a seigniorage aid package being granted to Ireland, is now held in abeyance, it has not been abated. And I believe, that Mr. Van Rompuy’s current proposed fiscal federalism reforms are not what is needed now for the stability of the European Union. 

The crisis has its roots in that when people participate in a currency union, there are different interest rates, cultures, trade account balances, and labor rates, as well as known and unrevealed debts. History shows that currency unions usually fail.

Add to those issues is the issue of credit default swaps. These derivatives, these modern-day inventions, shut down sovereign debt issuance. When a sovereign bond or even a corporate bond buyer, sees a mile high pile of these derivatives, he must turn away. CDS have literally destroyed both sovereign debt seigniorage and business lending. These should have been abolished from the get go; but were not; in fact their development and use were encouraged by both Alan Greenspan and Robert Rubin in Congressional testimony.  

A currency union is very appealing at first to weak nations, in this case Portugal, Italy, Greece and Spain, because as investors get wind of its formation, they buy bonds in the weaker nations on the reasonable belief that sovereign interest rates will decline. As interest rates do decline, then their investment soars in value. But then as time wears on and the weaker nations enjoy the benefits of a common currency, their banks abandon lending discipline, and the country abandons fiscal discipline. Development of sports stadiums and other economically unproductive infrastructure occurs, and state employment rises with the hiring of teachers and other professionals. Then debt soars and interest rates rise; and the weaker economies find themselves unable to achieve competitiveness inside a currency union, without the option of currency devaluation at their disposal.

So the only remedy for the Euro sovereign crisis, is for a sovereign to arise at the center of the union, and demand, and enforce internal devaluation (internal depreciation), that is austerity measures in the weak countries.

Greece was extended seigniorage aid in May 2010. This was seigniorage triage, provided to a dying country in an currency union. There is no way it will ever be able to pay back its loans, since it lacks export sources of revenue, and any sale of state assets are unlikely, and as Greece wants to maintain majority interest in all the  industries involved, and as it has little in the way of exports, and is unlikely to be able to crack down on tax cheaters.

Since the European Sovereign Debt Crisis started in November 2009, the European Central Bank, ECB, has been buying distressed bonds from banks all over Europe.  It has become the central bank for Portugal, Italy, Ireland, Greece and Spain. It has effectively provided sovereign debt seigniorage for the economic weaker periphery countries; and in so doing it has become what is known in economic terms as a “bad bank”.  Open Europe in PDF document The Irish Bailout: What Are The Options And What Will They Solve? relates: The ECB, not least due to worries that it’s turning into a “bad bank”, now wants to cut down on its liquidity supply to banks in Ireland and elsewhere.

There is a trigger for all things economic. It was German Chancellor Angela Merkel’s call for a Permanent Crisis Mechanism, a commonly accepted tool which would be used in the event of a sovereign default, as Econogirl reported on October 28, 2010, that lead to a blast higher in periphery European sovereign debt interest rates in November 2010, as well as a run on Ireland’s banks, that brought about the negotiation of seigniorage aid for Ireland.  

I ask why would Mrs. Merkel suggest such a thing? I believe it is because the Germans, knowing that they have a strong and export productive economy, can do without a common currency. The announcement of Germany to push for the Permanent Crisis Mechanism, together with the Basel III requirements is the kiss of death for all of the all European Financial Institutions, EUFN, and accounts for the 4.5% fall in Banco Santander Madrid, STD on November 22, 2010 Lending via European banks died, November 22, 2010 with the announcement of a Ireland bailout agreement. European Financial Institutions now stand as white washed tombs of a prior age of investment liquidity.   

In as much as Mr Strauss-Kahn says there is a sovereign crisis, I believe a sovereign will arise to address the crisis. Perhaps this person will be Herman van Rompuy.

And I believe the sovereign will be accompanied by a seignior, an old English word meaning top dog banker who takes a cut. He will provide credit seigniorage to all European Financial Institutions and corporations and persons residing in the currency union.

And in so doing he will command great authority. An example of such authority is EU’s Economic Affairs Commissioner Olli Rehn’s October 2, 2010 statement in FT article, Ireland May Have To Sacrifice Low Tax Status: “In the coming decade, it’s a fact of life that after what has happened, Ireland will not continue as a low-tax country, but it will rather become a normal tax country in the European context,” he said.  

I believe the seignior (perhaps it will be Mr. Rehn), will pave the way for a global currency system, to replace all current currencies, as they expire in the current bout of global debt deflation that commenced that November 5, 2010, when the currency traders sold most of the world’s currencies, as the bond vigilantes sustained the Interest Rate on the US 30 Year Government Bond above 4%, causing the US Dollar, to rise to 76.59; it closed even higher today at 79.68.

Evidence abounds, and is clear, cogent and convincing that fiscal seigniorage has failed in Europe. As the end of credit approaches, then a Supra Government, of the Sovereign And Seignior, will be the Federal Government of Europe, and sole fiscal and credit seignior. This triune power will be the first, last and only provider of credit in the Eurozone.

There be many Austrian Economists, who being anarcho capitalists, would love to see Germany and its former currency revived, but that is a most unlikely future scenario.

The scenario of a Supra Government, a Sovereign And A Seignior would be fulfillment of bible prophecy

In as much as the IMF chief says we have a sovereign crisis, I believe a world sovereign will arise to address the crisis, this in fulfillment bible prophecy of Revelation13:5-10. I also believe this global leader will be complemented by a global seignior, an Old English term meaning top dog banker who takes a cut, as foretold in Revelation 13:11-17, and that he will implement unified regulation of banking globally, provide seigniorage as well as a global currency system

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