Professor Otmar Issing, the former and first chief economist of the European Central Bank has issued an extraordinary warning. According to the UK’s Daily Mail Newspaper, while speaking to the financial journal “Central Banking” he warned that the European currency, the Euro, is on the road to collapse.
He believes the European Union’s huge financial outlays to prop up failing eurozone economies has put it on a “Slippery Slope” where European leaders are serving ideology over practicality in their bailouts of bankrupt states. He went on to remark that
‘Realistically, it will be a case of muddling through, struggling from one crisis from the next. It is difficult to forecast how long, but it cannot go on endlessly.’
The incredibly honest assessment by perhaps the single individual who understands the system as well as anyone in the world is astonishing in it’s honesty, and highlights one of the most under reported aspects of the bailouts of struggling European Union member nations such as Greece. At the height of the debt crisis in Greece last summer the following breakdown of Greek debt was reported by the U.K. newspaper the Telegraph.
€56 Billion to Germany, €42 Billion to France, €37 Billion to Italy, and €25 Billion to Spain.
If you notice the top four creditors to Greece were also the four most powerful member nations of the same European Union. Which means that each time Germany pushed the Central Bank to give money to Greece from the common fund so Greece could pay it’s creditors, Germany was in fact bailing itself out of it’s own poor lending decisions. According to the Daily Mail U.K.
“Professor Issing criticized the first Greek rescue in 2010 as little more than a bailout for German and French banks, saying it would have been better to eject Greece from the euro as a lesson for other nations. The Greeks should have been offered generous support, but only after it had restored exchange rate viability by returning to the drachma.”
Such a move by Greece however would have been at the expense of it’s creditors, whose owed debt would have tumbled in value, with the end result being that creditor nations would have had to bear the loss of their own poor lending decisions. Professor Issing continued
“‘Market discipline is done away with by ECB [European Central Bank’s] interventions. So there is no fiscal control mechanism from markets or politics. This has all the elements to bring disaster for monetary union.”
I am certain the international banking system serves its purpose, nevertheless it undeniably does so at the expense of weaker nations and to the great benefit of the powerful.
As watchful Christians we should certainly not be surprised by the continued warnings of impeding financial crisis and political instability across the globe. In fact the increasing frequency of these reports only serves to confirm that we are rapidly approaching the second advent.
… It is in the last days that you have stored up your treasure! … You have lived luxuriously on the earth and led a life of wanton pleasure; you have fattened your hearts in a day of slaughter. 6 You have condemned and put to death the righteous man; he does not resist you. 7 Therefore be patient, brethren, until the coming of the Lord. The farmer waits for the precious produce of the soil, being patient about it, until it gets the early and late rains. 8 You too be patient; strengthen your hearts, for the coming of the Lord is near.