EU: German Dominance in Doubt after Summit Defeat

Chancellor Merkel suffered a bruising defeat at last week's Brussels summit after leaders of Italy, Spain and France ganged up on her. Europe's power relations have shifted as a result. It looks like Germany will no longer be calling the shots in the EU.

It was Monti, of all people, "Super Mario," as he's called in Berlin. The affable economics professor from Lombardy, the man the German Chancellery felt was the best thing that could have happened to Italy. The man who could "save Europe," at least according to Time magazine.

It was Monti, of all people, who dropped the bomb at 7 p.m. last Thursday. At the European Council summit in Brussels, the Italian prime minister announced he would not agree to the growth pact. His Spanish counterpart, Mariano Rajoy, stood behind him.

"Are you trying to take us hostage?" Danish Prime Minister Helle Thorning-Schmidt said indignantly. Then the German chancellor spoke up and said: "That's not helpful." It's a sentence Angela Merkel reserves for serious situations.

The Italian prime minister should not believe that escalating the conflict would change anything, Merkel said, and pointed out: "I have to fly to Berlin at noon tomorrow for a vote in the Bundestag." But Monti stood his ground, knowing how much leverage he had. The markets were waiting for a decision. "Go ahead and fly home on Friday, and have them vote in Germany," he told Merkel. "I have until Sunday, and I'll wait until you return."

Not just no, but Hell no.

Only full blown communism can stop the German work ethic. One of the most amazingly horrid things the USSR did is manage to break that while the Wall stood.

They constantly handicap themselves - as do we - but they have the ability to out produce the mess they make. As we used to.

The larger point though is that when Europe pizzes off Germany, bad things happen. To the rest of Europe. Been that way for milenia...

I don’t see where any ’work ethic’ applies. The social market economy is their system by law, and their social-democracy system with all of their socialized this that and the other is still in place; the only thing that changed was getting unions to agree to a nominal wage freeze and the SPD’s change in Hartz IV, which was not all that much really.

The country was the “sick man of Europe” until the euro came along, and that allowed them to play “beggar thy neighbor” with the continent to the effect that they were suddenly no longer the “sick man” and transferred their illness to those other countries who could no longer inflate their currencies at their own will. The euro is their stick with which they’re beating down the continent, which has done nothing different from what they have done for decades—apart from the fact that the German elites now think they have leverage by which to impose their will on their neighbors now (take a look at the Constitutional Court decision regarding the Treaty of Lisbon, where the German federal government was in effect turned into the EU’s overseer). And we fought them in WWII to insure that they would never be able to do this again.

It is interesting to compare the battles between left and right in Europe and in America. Concededly, the right in Europe is well to the left of the right in America but the parallels are nevertheless clear to observe.

The left in America wants no austerity, indeed, Obama and his cohorts simply will not discuss the need to restrain spending in any way. In Europe, the Socialists have ganged up on an international level to undermine Merkle at home as she battles to at least condition bailout on reform. It is interesting to see that Obama unsurprisingly has intervened on behalf of the Socialists.

Where is George Soros in all of this?

There is a real and fundamental divergence of opinion on both continents and between the left and right on each continent about whether the remedy for the world's malaise is to combat inflation or to combat deflation -or to put it more realistically as a conservative, should we be more worried about doing more harm and causing inflation are doing more harm and causing deflation? I believe the world is going into a deflationary environment and if inflation appears it will only appear later or as stagflation in the nearer future. Nevertheless, I think Merkle is less wrong than the Socialists in France and I have no doubt that Obama has put America on a path to destruction which can only be cured by a mixture of austerity, tax cuts, focused protectionism, an aggressive energy policy and repeal of Obama care.

The markets on both continents must be convinced that the governments are under control or they simply will not hire and invest. That invites restraint which the left calls austerity. But it is only through a rational system that we will have growth.

We know that George Soros is active in Europe as he is in America and we know that he is agitating on behalf of the Socialists. My question is how has he insinuated himself into the nuts and bolts of these negotiations?

Thanks Olog-hai.

The affable economics professor from Lombardy, the man the German Chancellery felt was the best thing that could have happened to Italy. The man who could "save Europe," at least according to Time magazine... the Italian prime minister announced he would not agree to the growth pact. His Spanish counterpart, Mariano Rajoy, stood behind him. "Are you trying to take us hostage?" Danish Prime Minister Helle Thorning-Schmidt said indignantly. Then the German chancellor spoke up and said: "That's not helpful."

By "not helpful" Merkel meant "not helpful to me". Ironically, this will probably strengthen her hand at home.

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