EU Parliament and Commission in Standoff Over Fines, Sovereignty

The fall out from this piece of news will probably be blamed on Brexit although it is absolutely nothing to do with Britain's decision to leave the EU and relates to chains of events that began several years ago. It anything can directly be blamed it is the debilitating effect of the European Single Currency system (the Euro) on the weaker economies among European Union member states. A secondary reason is that the unreasonable level of welfare payments impose by EU policy together with the rapid increase in population dues to EU imposed mass immigration policies makes balancing budgets impossible.

In another demonstration of the European Union becoming unjoined,the European Parliament is preparing to take on the dictatorial European Commission (EC), the unelected bureaucrats who make European policy and expect the elected assembly to rubber stamp it, over EC plans to impose penalties on Spain and Portugal for their failure to bring down their budget deficits. The European Parliament move challenges Brussels' right to impose penalties on sovereign states.

The Economic and Financial Affairs Council, July 12 ruled that Portugal and Spain had not reduced their deficits below 3% of GDP, the EU standard for government deficits, by the deadline. It also said efforts made by the two countries had been inadequate.

Commission Peresident Jean-Claude Juncker, nicknamed J-C Drunkard, is set to impose penalties on both countries on July 27. It will be the first time member states have had such sanctions imposed and in the eyes of many Members Of The European Parliament sets a dangerous precedent as it will be seen by the emerging nationalist parties in many member states as an attack on national sovereignty by the bureaucrats.

The penalties include a fines and withholding of funds. Although MEPs in the European Parliament are not part of the sanctions process, the assembly can demand "structural dialogue" over some of the sanctions, effectively halting, or at least reducing, some of them. The process could also delay imposition of the penalties while nationalist and anti - EU groups such as France's Front National, Five Star and Liga Nord in Italy, Alternatif fur Deutschland, The Danish People's Party, Netherlands' Freedom Party and the Sweden Democrats organise the opposition to this profoundly undemocratic course of action.

The President of the European Parliament, Martin Schulz told Juncker and other European Commissioners that the Parliament would raise the issue of the withholding of millions of dollars of EU structural funds. This is the first time this situation has arisen and goes to the heart of power in Brussels, Lisbon and Madrid, bringing to the forefront of European politics the question of who really rules European Union member states, the democratically elected national governments or the unelected bureaucrats of Brussels.

Portugal's finance minister, Mario Centeno sent a letter July 18 to the Commission saying the fines would be unfair as the country is "on the right road to eliminate the excessive deficit" and that it would have "a highly negative impact" on the Portuguese people's support for the European project.

Spain has asked Brussels for two additional years to reduce the deficit. Its finance minister, Luis de Guindos wants the EU to allow it to reduce the deficit to 3 percent of GDP in 2018 instead of 2016.

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False Economy

December, and as we brace ourselves for another slew of depressing economic figures it is understandable that consumers aren't spending.

Economists and business people describe national economies as being in one of two states, growth or recession (they never mention the S word of course - stagnation). What state the economy is decided by taking the sum total of certain types of transactions (selected by statisticians) and then deflating this total by a rate of inflation also devised by statisticians and not representative of the essential spending of ordinary people, but of the political interests of whoever is paying the statisticians. A nominal figure for gross domestic product is thus created, adjusted to take account of inconvenient factors like reality, and termed real GDP.

The fist thing to understand about GDP is that it does not measure the health of an economy but only the rate of churn of money within that economy. For example if a government allows one million migrants into the country and pays them £300 a week each, and these immigrants spend their benefits on food, housing, clothes, transport, a little entertainment and a few other things, GDP is increased by £300 million a week, and hey! The case for immigration benefitting the economy is made.

Another GDP scam understate the rate of price inflation, thus showing growth in GDP where in real terms there has been contraction. If GDP grows year on year by less than the rate of price inflation, in real terms the economy has contracted. More paper money has been spent but less goods and services have been paid for. From the inflation scam it only takes a small leap of flawed logic to associate rising prices with an increase in economic activity (i.e. to show more money has moved when we should be looking at the fact that less trade has been done. It also follows, based on the fallacious assumptions of GDP economics, that falling prices are to be avoided at all costs.

Assumptions and statistics. All statistics are based on assumptions and they lead to ridiculous conclusions. As Socrates said 2500 years ago, if we keep questioning in the end we come to the assumption or fallacy all established truths are founded on

The received wisdom that falling prices are bad for business is being questioned by some economists who have at last woken up to the fact that a double triple quadruple dip recession is in fact a depression. The improvement in everyone's standard of living through falling prices for communications, access to data, and the technology in our homes and everyday life could not possibly have happened, the glass is half full merchants chirrup. Here the fallacy stands out like a sore thumb, obviously if only half the glass is full, the other half is empty. For those in work whose earnings have kept pace with or moved ahead of inflation falling prices have been good, they can afford to fill the empty half of their glass. But what of those whose incomes have dropped. Or those formerly affluent people whose jobs have been offshored or taken over by robots. Falling prices, or rather the conditions that have caused prices to fall have not improved their lot.

It does not end there of course, as deflation bites because profits are being squeezed and tax revenues are falling, employment falls further, people in work cut back more, not knowing when they will be hit and unemployment rises. Then taxes must rise more to cover the increased welfare bill and people in work have less spare cash to spend. And so it goes on with that glass looking more empty than full all the time.

And spare a thought for the prostitutes in Greece who due to a glut on the supply side as women are forced to sell themselves to feed their families, and falling demand, are only able to charge €5 for half an hour.

If rising prices are good for the economy, as one school of economics tells us, how come everyone was so unhappy in Germany's Weimar Republic in 1923, or in Zimbabwe fifteen years ago? Surely, as inflation accelerates the happiness level should rise. Conversely as prices fall and consumer goods become cheaper, people's living standards improve and they should become happier. So how come wherever I look, it's only children and retired people with good pensions like myself who are happy.

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Back to Contents table

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Feeding The Monster

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