The Oil Drum

I removed this comment as being not relevant.

Francois

The facts on the ground are that the biggest members of the European Union ignore the provisions of the core documents of the European Union, these being the Maastricht Treaty, the Growth and Stability Pact, and of course, do not now care about the Constitutional issue, since they abandoned it with the complete collapse that was the "non" votes of a couple of years ago. (Has anybody noticed how the Constitutional Referendum, which were "critical" to the future of Europe back then, well, really don't matter too much now?) This begs a question: Upon what legal standing does the European Union now exist?

The Growth and Stability Pact, dead?
http://www.radionetherlands.nl/currentaffairs/region/westerneurope/eu050...
"The Growth and Stability Pact was designed to guarantee that the euro would become and remain a strong and reliable currency. Accordingly, the 12 countries of the 'eurozone' were required to aim for balanced domestic budgets and, in any event, not to allow their national deficits to exceed an upper-limit of three percent of Gross Domestic Product.

Breaking the rules
As it turned out, that proved to be a pipe dream. When both France and Germany strayed beyond the three-percent norm a few years ago, they managed - as the eurozone's two most powerful nations - to exert enough political pressure to cause most of the other countries to grudgingly accept the situation. Contrary to what the rules prescribe, they were not penalised for their transgressions, and the European Commission (EC) - charged with monitoring compliance with those rules - appeared powerless to change the situation. It was at this point, in fact, that the pact was dealt the deathblow."

"Nevertheless, the finance ministers resolved that the pact needed to be relaxed and modified, if only to maintain the impression that some rules still apply to safeguard the stability of the euro. And that is precisely what has just happened."

http://www.ceps.be/Article.php?article_id=135

I will venture to say that not 1 in 10 Americans (or other non-Europeans for that matter) are aware of this, or are aware that the currency they are investing in is in this condition. I often hear Americans say that all European nations MUST HAVE a balanced budget, and when they give the debt numbers for Euro nations, they accept the 3% number as ACTUALLY ENFORCED, which of course Europeans know it is not (by the way, Russians being closer to the scene know that it is not). This is the "greater fool" theory....If I can get in early, and sucker my clients to come in behind me, then I make a killing, no matter how idiotic the currency being invested in actually is.

From the Economist:
European government finances

Sep 2nd 2003
From Economist.com

GERMANY and France, so long the European Union’s head partnership, have become partners in crime. Last Friday, Germany confessed to the European Commission that its budget deficit for 2003 would breach the stability and growth pact for the second year running. The pact, a largely German creation, is meant to stop members of the euro area undermining the single currency through fiscal irresponsibility: countries are permitted to run deficits of no more than 3% of GDP.…

Somebody check for me please...has Germany or France ever bothered to return to compliance? Or after the "non" votes on the Constitutional charters across the EU, have they, like everyone else, pretty much decided to go their own way while talking EU support. The Russians are being asked to give up big volumes of EXTREMELY valuable natural gas in exchange for handfuls of paper backed by this?

http://en.wikipedia.org/wiki/Image:EU_Constitution_Ratification_Map.png

There are also the social justice issues. The EU is by it's nature a VERY secular organization. But there is a growing non secular population in Europe, in the Islamic minority who have NO history of or experience with secular government. And even the Christians of Europe see conflicts: The EU Charter and Maastricht Treaty have provisions getting into the heart of the social justice issue. For example, if we accept the idea of absolute equality of gender, is it still legal to have a church with a male priesthood? We won't even go into how dangerous this all becomes in relation to the Muslim population. (France has seen an inkling though, and the EU of course could do nothing but sit to the sideline and watch the riots like everyone else)

EU workers abroad, do they go by the rules of the EU, the rules of their country of origin, or the rules in which they are working?
You guess...
http://www.guardian.co.uk/comment/story/0%2C3604%2C1432586%2C00.html

So from just after the WWII, we go from the Treaty of Paris to the Treaty of Rome, and then an almost 35 year gap to Maastricht, Treaty of Amsterdam and Treaty of Nice, none of which are any more enforcable than the last, and then the great triumph (extreme irony intended) of the Constitutional Referendums....and so much good will had been built up by 50 years work, we saw what happened there.

But noticably, the ONLY real accomplishment of the EU was to push through this currency. NOTHING else seemed achievable accept the printing of money. Does this make anyone suspicious? Do foriegn investors in Euro currency really have ANY clear understanding of the construction and legal standing of the....what, nation, confederation, organization, alliance, exactly what is it anyway (?), that they are investing in? I have friends who have proclaimed the U.S currency unstable, and called one of the new generation of "international brokers" and asked to be put in the Euro, it's the greatest thing around! When I talked to them I found out they had NO IDEA what the Euro currency or the European economy involved!

And for folks here who are fascinated by the energy situation, I DARE you to ask any of your savvy friends (not TOD readers now!) what the state of European energy is. See how many of them are aware of the North Sea decline and Europe's absolute reliance on Russion natural gas.

By the way, see how many of them know that Europe's unemployment rate is higher than the U.S.'s, or that Europe has a much higher percentage of population getting ready to retire. Just ask them.

We could go on with this for days, and I always feel like I am seen as being unfair or cruel to Europe. That is not the intent. But let's look at from another viewpoint. Just after 9/11, when America most needed it's own citizens to support it, when everyone was hanging a flag out, and when we most needed friends abroad, and everyone was sending us good wishes and flowers, we have to admit, Bush managed to pizz the world off at us.

That's o.k., Bush is not America. But, it was fascinating to watch how our so called "allies" and our "patriotic" business and investing class found any excuse to pull money and support out from under the U.S. just when we were at our weakness. Frankly, it has been sickening. The cultural self loathing that the Americans are capable of is astounding, a true cultural illness. These are the people who on the evidence of "Soviet Life" magazine, see that the U.S.S.R was a roaring success compared to the U.S., that the Japanese are incapable of error, that the Chinese are soon to rule the Earth, and of course, that Europe has ALWAYS been able to best an American in great philosophical, political and social constructions. O.K., fine, we know who our friends have been, and how quickly they will turn on us. But what has been surprising is how they will put their own money and future at risk to be spiteful and vengeful, and invest in schemes that with any analysis would be so suspect as to be obviously bogus.

On the other hand, the Russians do not seem to accept the myth so easily. They are being asked to give up something valuable (natural gas). They are being told they should be glad to give it over to the obviously superior Europeans, who know best how to run these things, and willingly take whatever volume of Euro currency the Europeans are willing to give them, because after all (the great motto of a bubble) it will always be worth later.

Gee, I wonder why they are doubtful? :-)

RC