Europe’s leaders will gather in Brussels later this week under intense pressure to head off a potentially catastrophic economic collapse of the Eurozone.
Given the stakes involved, EU leaders and the mainstream media may try to present the summit as a smashing success.
However, there are some things you that this much anticipated summit must actually accomplish in order to actually fins a solution to the crisis.
The EU Summit must produce a plan to centralize:
- EU budget approval and spending, complete with believable enforcement mechanisms
- EU banking regulation and oversight, complete with the ECB authorized to print money as needed to guarantee banking system integrity and prevent fatal bank runs.
- Convincing evidence that EU member nations are ready to cede this power of budgets, banks, and any related powers (like judicial systems that can enforce relevant legal powers) effectively exchanging full national sovereignty for a stable currency union. That would leave them with no more effective sovereignty than individual American states.
- A clear plan of how to provide stopgap funding to support GIIPS and other sovereign bonds and bank deposits while the EU of Europe is being finalized. This is probably the key provision. If the EU can print Euros as needed to guarantee the banking system, and prevent bank runs and a collapse of this system, that might buy the EU enough time without speculative attacks on Spain and Italy to organize and ratify enough of a US of Europe to keep alive without a default that brings a fatal banking collapse.
The idea is clearly enough of a political union that can enforce payment of member debts and sustainable budgets.
Moreover, what are the things the summit cannot omit?
The Details listed below must be included in the summit’s final decisions and statements.
If any are missing, the solutions offered may be regarded as false, just more ‘plans to make plans’.
The Funding details.
Who pays, how much, how will they have the money (would you trust a commitment from Portugal or Spain?), when must they have the cash in.
The Enforcement details.
If one or more member states fail to pay up, who funds shortfalls and how does the EU enforce payment or penalties.
These must include provisions for both administrative and if needed, military takeover.
These must also include provisions for a well funded regulatory body that has the means and sophistication to monitor compliance.
This is critical given that some of the GIIPs suffer from cultures of deep corruption and socially acceptable tax evasion.
How will each state ensure timely ratification of their agreement?
If they don’t, how will the remaining EU can continue to function, make up the funding shortfall, and ensure that contracts and other financial and other commitments of that nation and its citizens remain enforceable.
The above funding plans do not include significant amounts of more debt created.
The cause of EU liquidity issues are insolvency from excessive debt.