Now the EU has an Italian Banking Crisis

This has been brewing for some time and the full effects of it are unclear, but see here:

Aoife White, “EU Approves $166 Billion Liquidity Guarantee for Italy Banks,” Bloomberg.com, July 1, 2016.

Valentina Pop, Gabriele Steinhauser and Giovanni Legorano, “European Commission Authorized Italian Government to support Banks,” Wall Street Journal, June 30, 2016.

The Italian banks reportedly have €360 billion of non-performing loans on their books, and the European Commission – apparently shooting down Angela Merkel’s recent rejection of such a measure – approved a special Italian government scheme to provide as much as 150 billion euros to keep the banks liquid, as well as a separate plan to recapitalise weak banks with 40 billion euros (see here). Sources familiar with the plans said they have been designed to deal with investor panic and even a potential bank run in Italy (!!).

But these measures do not deal with the need to restructure or write off the non-performing loans, and are seen by some as a stop-gap solution.

Indeed, some analysis I have read claims that many Italian banks are technically balance-sheet insolvent already.

The problem seems to be that EU rules prohibit more aggressive government interventions to bail out and fix the banks in an effective manner, and if a really serious banking crisis happens this will empower the anti-EU political forces in Italy to push for a referendum on EU membership, which is already a demand of the Italian Northern League and the “Movimento 5 Stelle” (Five Star Movement) party (which won a number of local elections earlier in June).

With the EU pushing for more austerity in Portugal as well (see here), one has to wonder how long this rotten union is going to last once a new recession hits Europe and nationalist political forces in the south push for political independence or, at the very least, abandoning the Euro.

The Pro-European Union Left is Delusional

I am getting sick of these people. I see them on Facebook and Twitter and their arguments are pathetic.

Some of them appear to be living in a quasi-Marxist internationalist fantasy world. The motto of the pro-EU left may as well be: “We want to destroy Europe in order to save it!”

The EU and Eurozone are outrageous, catastrophic neoliberal disasters. They have caused tremendous suffering. The EU is a corporate tyranny of unelected and incompetent neoliberal lunatics. They are basically destroying Europe as we speak.

If the people of Europe want a supra-national state, let them have it in the future by democracy after the present EU and the ideology of neoliberalism have been torn to shreds.

As far as I am concerned it’s time to make fun of the pro-EU left. Merciless ridicule, derision and scorn is what they deserve.

In that spirit, here is a quick effort:

If you agree, perhaps you would like to share this image on social media, etc.?

EU faces the Truth about Economic Migrants

Or at least Donald Tusk the president of the European council has, as described here, here and here.

Astute people should have realised late last year that perhaps about 50% or so of the migrants are not genuine refugees, but economic migrants. Now the EU realises that mass deportations need to be carried out, as was realised by a number of European governments last month.

Apparently 2,000–3,000 migrants are arriving in Greece every day. It is now clear that Austria and the Balkan states have moved to stricter and stricter border controls. So even if the number of people entering Greece does not accelerate (but it probably will as summer approaches) that means about another 1 million or more people coming into Greece in 2016.

After years of austerity, one wonders what will happen to Greece if the Balkan countries continue to tighten their borders and a tidal wave of a million people flood Greece.

If scenes like this in the video below of what happened early this week at the Greek town of Idomeni bordering Macedonia become normal and massive migrant camps like that in Calais appear all over Greece, one really wonders what the political mood in Greece will start to look like this year.



Alternatively, if the flood of people is allowed into the Balkans and into Germany and other Western European countries or if, as President Recep Tayyip Erdoğan of Turkey wants, large numbers are taken directly from Turkey to Western Europe, the political consequences there will most likely be a massive swing towards the populist right.

Steve Keen on the EU and Brexit

In the video below on RT.

Britain should abandon the Neoliberal Train Wreck that is the EU

As should other countries: it’s plain common sense.

The EU and Eurozone are catastrophic. Of course, sanity prevailed and the UK never joined the Eurozone, but the EU itself is still catastrophic.

Britain should leave the EU as quickly as possible, for the following reasons:

(1) to protect the UK’s economic and political sovereignty;

(2) to protect its democracy;

(3) to protect its welfare state and social services;

(4) to have some hope for a Post Keynesian-style or MMT-style economic policy in the future;

(5) to take control of its borders and immigration policy, because the EU open borders policy is disastrous – disastrous for the welfare state, the working class, the real wage, the employment prospects of the British people and its very social cohesion.

The UK should follow the example of Norway and Switzerland: neither Norway nor Switzerland is a member state of the European Union, but both are part of the European Free Trade Association (EFTA).

Britain can have liberalised trade with the EU by joining the European Free Trade Association (EFTA) or by bilateral trade agreements, and obtain any necessary extra labour by controlled immigration, not open borders mass immigration.

In fact, the EU itself is already in deep crisis. Schengen is already effectively dead, because Merkel killed it.

What will happen this year as another million or more migrants come flooding into the EU?

The Germans are due for a federal election in late 2017 and the French will elect a new president between April and May 2017, and those election cycles will be dominated by the consequences of as many as 2 million new migrants in Europe. If we add to this the possibility of an economic downturn in Europe in 2016 and 2017, things could get very ugly indeed in Europe. What happens as the population is subjected to another savage round of austerity? What happens as neoliberal labour market deregulation is ramped up as the only neoclassical solution to integrating 1 million or more migrants into the labour market? Unless an historic volte face happens, the mainstream left will continue to defend the EU and mass immigration and probably discredit itself for years on end.

The population will be driven to the populist right and far right, and the mainstream right will quickly realise that any further support for the EU, open borders and mass immigration will be political suicide.

I was also struck by an article published late last year about Syriza and the migrant crisis.

If true, I was not aware of the details here:

Ghaith Abdul-Ahad, “Some Tips for the Long-Distance Traveller,” London Review of Books 37.19, 8 October, 2015: 39–41.
http://www.lrb.co.uk/v37/n19/ghaith-abdul-ahad/some-tips-for-the-long-distance-traveller

According to this article, the government in office in Greece before Syriza had a “turn back the boats” policy from Turkey which stopped the flood of migrants, but when Syriza came into office they reversed this, and threw open the door to the EU. Merkel made the mistake of then opening the door to Germany and Western Europe.

And now we see the consequences of this! If true, what poetic justice indeed that the EU, after having smashed democracy in Greece in 2015, may well be hit by an existential crisis set off this year by the chain reaction of events from this one action of its victim Greece.

When the history of this period is written, it may well be said of Alexis Tsipras that he made a decision that caused the collapse of the EU.

Is Schengen Dead?

It looks more and more like it.

Why? Because Merkel’s irresponsible decision to throw Germany’s borders open to 1.1 million migrants has killed it.

There is some interesting analysis here and here, which, despite the brave face put on Wolfgang Schäuble’s remarks in Brussels, reveals a deep, new crisis hitting the EU.

Last year the major threat to the EU was the surge of democracy in Greece against austerity, but in the end the EU – and above all Germany – smashed any hope of that and the Greek government meekly accepted the horrible truth that it is little but an economic colony of the EU.

How paradoxical it is that Germany may have indirectly killed the EU, since, as Jean-Claude Juncker says in line with his neoliberal thinking, what’s the point of having the Euro without Schengen?

And now this year another – and quite possibly far more serious – crisis will hit the EU as the consequences of Merkel’s policies will follow.

Schengen may collapse even further. There will be more backlash against a policy that people simply didn’t vote for and many oppose, as well as the social and economic problems caused by 1.1 million new people suddenly in Europe but from a different culture. The mass sexual assaults in Germany during the New Year hardly augur well for the future. And how are all these people going to get employment? And then there is the nightmare of security concerns.

Even worse, there are signs that another massive wave of illegal immigration into Europe will happen this year, despite the tightening of borders (see here and here).

The million dollar question: what will be the political consequences of this? Will it lead to a vehement anti-EU backlash and the collapse of the EU itself?

Unfortunately, the left is almost totally incapable of seeing that open borders and mass immigration are a catastrophe. It is more likely that the political future of Europe belongs to the populist right or (possibly after a change of heart) a mainstream right devoted to an anti-EU, nationalist and anti-open borders agenda.