[Ed: Part one of this four-part essay was published on UKIP Daily here]
EEC TO EU
Moving through the 1980s into the 1990s, Germany was the economic powerhouse of Europe. Through subsidies and state support Germany was an economic and political success. Hardline monetarists ruled the Bundesbank, schooled in the disaster of the 20s Weimar Republic. Inflation was the number one enemy and was slain, maintaining a very strong currency .
In the early 1990s the concept of Exchange Rate Mechanism was born, as a precursor of the Maastricht Treaty in 1993 which would then lead to the birth of the Euro .
Each country participating in the exercise had to bring their inflation levels, currency values, and other economic criteria as close as possible to Germany’s within a set, tight latitude.
During that period the French in particular, through their government office of statistics (INSEE) , were trumpeting their fall in inflation towards that of Germany . I spent several months a year in France at that time. My utility bills were increasing in double figures year on year, so one was more than puzzled at the claimed success in inflation reduction.
However, let us deal in facts. The UK could not meet those criteria and was forced out of the ERM in 1992, in the midst of a recession that was not helped by this exercise and on the day we could no longer defend sterling’s value vis-a-vis the Deutschemark after raising interest rates to 15 per cent. Now known as White Wednesday.
That was when the experts, including the bank’s economists where I worked, pumped out their message of economic Armageddon for the UK.
Going against that wisdom of people far more qualified than me I was able to contribute very meaningful profits to the bank that year as interest rates were lowered , growth turned round from recession and inflation fell. Not the last time the experts would be wrong …
In 1993 the Maastricht Treaty was signed, the final part of the journey to a common currency to be called the Euro. It was dressed up by the politicians as an opportunity to unleash growth across Europe, with the implication there would be rich rewards for poorer countries. More fools them.
A number of countries had an opt out, including significantly the UK, and kept their own currencies. Again the Eurofanatics, politicians, IMF, OECD, Treasury: all forecast gloom and doom if we didn’t join the Euro.
Of course it did not happen . Gordon Brown later imposed his five tests to make sure that we kept our own currency.
Returning to the Maastricht vote: running a dealing desk across multiple currencies I took a keen interest in the vote that Mitterand predicted would give a 55/45 yes from the French people. As the results came in, it was obvious that central and southern French voters were not like minded. Indeed it was plain when leaving the desk that Mitterand did not have his majority. So imagine the surprise to me (Greenspan and Lamont who were monitoring this too) that Mitterand declared victory, by a narrower margin than expected owing to a huge” yes” turnout in the French Caribbean. Some would say – a bit unbelievable … ?
So the quest for convergence continued, France and Germany ignoring the Growth and Stability pact as suited them, Belgium and Italy never having a hope of meeting debt criteria to qualify, but that was left to best endeavours, to say at some juncture “that’s alright then“.
Of course the elephant in the room was Greece. Fiddled numbers by various corrupt administrations were swept aside to enable their triumphant entry into the Euro. One may well ask how this was possible? Well, with the help of a swap from Goldman Sachs (by a Managing Director, M. Draghi … yes one and the same) they presented expected government receipts and, voilà, they were in! Never mind that these were only “expected” and no one bothered looking at the other side of the balance sheet. No doubt the Greeks were expecting fiscal largesse from northern members of the Eurozone.
It took a few years, but ended badly – very badly for millions of Greeks. Depression and mass unemployment and not a helping hand from any fellow members thanks to Germany intransigence. This is about facts . You will find everything carefully told in the book by Yanis Varoufakis in his best selling book, ‘The Adults in the Room’ – a chilling account.
Attempts were made to change the constitution and legal standing of the EU by votes in some countries (go away until you vote the right decision) or imposition in countries like Germany where referenda are illegal. This is the infamous Aquis Communitaire as predicted by Monnet. Every move pulls power into the European Commission and away from the national government before nations are confined to history with the dawn of the United States Of Europe. See later how this will be done.
The Lisbon Treaty of 2009, like Maastricht is thousands of pages that few would have read, but includes all the impositions that states voted against through new irreversible legal structures …. to be continued ….
(To be continued in Parts Three and Four on UKIP Daily in the next few days)