I don’t know about anyone else, but there seem to me to be a lot of things happening in the money world.
The price of oil has crashed to something less than $50 a barrel, making fracking and North Sea oil uneconomic. The cause, it seems, is oversupply in the face of falling demand.
The Swiss franc, pegged against the Euro for several years, has been unpegged, resulting in something like a 30% rise in its value. Which will result in deflation in Switzerland, and the collapse of Swiss exports, bringing rising unemployment.
And Russia has cut off gas supplies to and through Ukraine.
But what shocked me most was this from the Telegraph’s Ambrose Evans-Pritchard last week:
The European Court of Justice has declared legal supremacy over the sovereign state of Germany, and therefore of Britain, France, Denmark and Poland as well.
The ECJ’s advocate-general has not only brushed aside the careful findings of the German constitutional court on a matter of highest importance, he has gone so far as to claim that Germany is obliged to submit to the final decision. “We cannot possibly accept this and they know it,” said one German jurist close to the case.
The matter at hand is whether the European Central Bank broke the law with its back-stop plan for Italian and Spanish debt (OMT) in 2012. The teleological ECJ – always eager to further the cause of EU integration – did come up with the politically-correct answer as expected. The ECB is in the clear. The opinion is a green light for quantitative easing next week, legally never in doubt.
The European Court did defer to the Verfassungsgericht in Karlsruhe on a few points. The ECB must not get mixed up with the EU bail-out fund (ESM) or take part in Troika rescue operations. But these details are not the deeper import of the case.
The opinion is a vaulting assertion of EU primacy. If the Karlsruhe accepts this, the implication is that Germany will no longer be a fully self-governing sovereign state.
The advocate-general knows he is risking a showdown but views this fight as unavoidable. “It seems to me an all but impossible task to preserve this Union, as we know it today, if it is to be made subject to an absolute reservation, ill-defined and virtually at the discretion of each of the Member States,” he said.
In this he is right. “This Union” – meaning the Union to which EU integrationists aspire – is currently blocked by the German court, the last safeguard of our nation states against encroachment. This is why the battle is historic.
Historic indeed. This is the EU superstate/empire making a power grab. If the Karlsruhe court gives in, that will indeed be the end of the sovereign state.
But no sign of ECB quantitative easing this week, so far. So I suppose they haven’t given in yet.
I can’t say that I really understand QE, except that it’s a way of providing liquidity for struggling banks. But German bankers don’t like it because to them it looks like inflationary money-printing of the sort experienced in Germany after WW1.
Maybe it does the job of providing liquidity very well, but it provides no stimulus to the economy. So Europe is sinking deeper and deeper into slump.
To kickstart European economies, there needs to be wholesale deregulation. And the EU is one vast regulation generator. It doesn’t actually do anything else. So getting rid of the EU would be a good start.
But the entire European political class remains wedded to the Union. It’s only ordinary people who are growing increasingly disenchanted. And ordinary people don’t count.
But demand for deregulation is likely to get louder and louder.
And one little set of regulations that need deregulation are Europe’s smoking bans, of course.
It may be that the EU power grab is a last ditch bluff before the EU ‘project’ finally turns belly up.