Towards a €2 trillion bonus
This week the focus of attention in the unending Eurozone crisis saga has been Germany, where Chancellor Angela Merkel's right-wing coalition was facing a crucial parliamentary vote on the Eurozone's multi-billion euro rescue fund that needs approval from the single currency's 17 governments.
As it happened, Merkel got the vote through on Thursday without need for support from the opposition Social Democrats, which was just as well - they've been giving Merkel a run for her money in string of recent local elections this year and, depending on her main rivals in the Bundestag, would have left her government dead in the water. But Merkel had to do much arm twisting among allies, and in particular the increasingly Euro-sceptic ultra-free market Free Democrat Party, whose poll ratings are in free fall.
In the end, just 15 members of her coalition voted against. But each new call on the German public's purse - the changes to the rescue fund hike Germany's contribution to €211 billion, up from €123bn - costs Merkel much political capital. Germans don't want to sign any more blank cheques and many will now be getting a pretty clear picture of the complete failure of the attached austerity strings in Greece.
Despite the nonsense being peddled about feckless southern Europeans, it is becoming increasingly clear to German public that they are really bailing out some now very troubled French banks, as well as, to a lesser extent, helping their own financial capitalists who for years lent to Eurozone 'peripheral' countries for a handsome profit.
Hence the talk of upping bondholder - holders of Greek government debt - losses or increasing the size of "haircut," as pundits like to say, from 15 per cent agreed in July by Eurozone governments as part of the rescue fund increase.
The nod in Berlin's lower parliament and that of sceptical Finland on Wednesday guarantees the increases in size of the rescue fund, but already it is widely accepted as too little too late. Athens' strategy of squeezing its own people to line the pockets of foreign capitalists is reaching its limits. It is just a question of when and how, not if, Greece will default.
But conscious of the near impossibility of asking for another round of parliamentary approvals from Eurozone states for a larger rescue facility, European officials are working on a plan that would leverage the existing fund to eye-watering €2 trillion. That takes the great European banker bailout bonus to a new level. For the pleasure of being robbed blind, it seems the general public in seventeen Eurozone states will not be asked.
Merkel for her part is caught between a rock and a hard place. Germany and German businesses in particular have been the main beneficiaries of the euro. Since it was launched in 1999, Germany has pursued an aggressive exports-based strategy, keeping prices keen by holding down German wages and relying on a currency weaker than the Deutschmark would otherwise have been.
Deutschland Inc's competitive advantage was locked in at Berlin's insistence by deflationary Euro-wide monetary - interest rates - and fiscal policies - caps on deficits. Its own highly productive industry boomed, but other Euroland states were unable to compete with Germany or countries outside Europe, thanks in part to a currency whose value made their relatively underdeveloped economies uncompetitive, and in part because public spending to boost investment in jobs and skills was strictly restrained.
Now the chickens are coming home to roost - the entire continent is on the edge and Germany risks falling off with it. The beggar-thy-neighbour-induced boom appears to be over. Business sentiment, a future indicator of investment trends, has been slipping for a number of months. The latest German retail sales figures showed consumer spending had dropped at the steepest pace in more than four years.
What is needed is a new Marshall Plan, argue Germany's Social Democrats, who are portraying themselves as the saviours of the European project. to save European integration they voted for the latest bankers' rescue package. But unlike the radical Left Party which voted against, the Social Democrats are very fuzzy on how to sell to the German people a deal whereby they dig deep for a much needed investment plan for jobs and growth in Europe.
For the Left Party - co-founded by former Social Democrat Oskar Lafontaine and now also gaining in popularity - the other side of the bargain must be that banks and financial speculators are brought to heel. They say it's time for an end to "control by corporations and financial lobby groups" and the beginning of a European project "founded on solidarity, not on competition and exclusion."
Central to a fresh start is the "nationalisation of the large private banks and financial corporations."
Tom Gill writes in the Morning Star, where this article first appeared. The photo is by Images of Money.