Rather than admit the innumerable mistakes has has made, ECB president Jean-Claude Trichet has continually upped the ante on taxpayers with increasingly risky measures such as loading up the ECB with junk bonds from Greece and Ireland in clear violation of the Maastricht Treaty.
Today, in the wake of still more failures of the bond market to follow his wishes, Trichet openly calls for a bold new initiative, one that would effectively transform the Euro-Zone, into a fiscal Nanny-Zone as well.
Creation of the "Nanny State"
Bloomberg reports Trichet Calls for Euro Finance Ministry as Crisis DeepensEuropean Central Bank President Jean- Claude Trichet said governments should consider setting up a finance ministry for the 17-nation euro region as the bloc struggles to contain a region-wide sovereign debt crisis.This was bound to happen given the flaws in the creation of the Euro itself.
“Would it be too bold, in the economic field, with a single market, a single currency and a single central bank, to envisage a ministry of finance of the union?” Trichet said in a speech today in Aachen, Germany. He also favors giving the European Union powers to veto the budget measures of countries that go “harmfully astray,” though that would require a change to EU Treaties.
Trichet, who has no formal power over government decision making, hasn’t said what he plans to do when he leaves the ECB at the end of October. He said today that while any single finance ministry would “not necessarily” administer “a large federal budget,” it would “exert direct responsibilities in at least three domains.”
These would include “first, the surveillance of both fiscal policies and competitiveness policies” and “direct responsibilities” for countries in fiscal distress, he said.
It would also carry out “all the typical responsibilities of the executive branches as regards the union’s integrated financial sector, so as to accompany the full integration of financial services, and third, the representation of the union confederation in international financial institutions.”
Trichet said that any new form of fiscal governance would need to be “decided by the people of Europe” and that the EU president, the European Commission and the German finance ministry are sure to have their own views. Calls to the German finance ministry for comments on Trichet’s proposals were not immediately returned. Officials at the French finance ministry declined to comment.
Who is the best person to head up the nanny-state? Why it's none other than Jean-Claude Trichet, soon to be out of his job as ECB president because of term limit restrictions.
Flashback December 17, 2010: Support Rises for "European Nanny State"; Is Germany unfit for the Euro or is the Euro Unfit for the PIIGS?Angela Merkel's Big MistakeFiscal Nanny-Zone
Merkel's big mistake was caving in to Trichet, Noyer, and others who insisted on "no haircuts".
For that, she is now the subject of "The Big Point" with everyone jumping on her back and pointing fingers. Consider this statement from the EuroIntelligence article:
The Left Party’s spokeswoman said Merkel’s position did not reflect the national interest but those of the banks (a position with which we would agree. Merkel is extraordinarily lazy in the definition of what constitutes the national interest.)
European Nanny State
My initial reaction was "It would seem that Merkel stood up FOR Germany and against the banks when she insisted on haircuts."
Just to be safe, I emailed my friend "HB" who lives in Germany, asking for his thoughts. His reply was "I completely agree with your interpretation."
He went on to comment about a reference in the EuroIntelligence article citing Der Spiegel’s online editorial “Union of the Unreconciled” calling for the coordination of all aspects of economic policy, includes taxes, wages, and pensions.
My friend "HB" commentedThis is what the fools that rule the Eurocracy want - a huge centralized nanny state in which taxes are 'harmonized' and citizens can no longer choose between low and high tax nations.
It is the absolutely worst thing that could possibly happen. It would be better for the euro-area to break up.
Trichet was one of the architects of the Maastricht Treaty, and he has violated that treaty at will ever since.
Now he wants to completely trash the treaty, effectively transforming the Euro-Zone into a nanny-zone "Eurocracy".
When will Germany finally step up to the plate and tell Jean-Claude Trichet in no unmistakable terms where to shove it?
Mike "Mish" Shedlock
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Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.