I read an article in the Financial Times earlier this week (September 23, 2023) -…
While the Europhile progressives are publishing papers and holding talkfests to discuss their latest EU reform proposals, the on-going reality of the European Union continues to reveal itself – the pretense that there is a rule of law operating – as laid out in the Treaties and the idea that all are equal under that law. When I was researching my 2015 book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale – and over the long period I have studied the concept of European integration it was obvious to me that despite the chimera of a strict, rule-based system that is run by technocrats, the actual practice of the Union is vicariously ad hoc – rules applied in cases where doing otherwise would present ideological problems, abandonment of the rules and outright illegal behaviour when there the interests of the corporate elites are at stake or the existence of the Union is threatened. And while law breaking, relevant officials produce complicated justifications of their behaviour as if what they are doing is within the boundaries specified by the Treaties. The Europhile progressives, meanwhile, continue to hold this embarrassing monstrosity out as the exemplar of freedom, globalism, cosmopolitanism and sophistication. They have reached such a state of denial that what is obvious to those looking in from the outside escapes their attention, or, in the mould of the European technocrats they just ride along with the spurious justifications for the unjustifiable. Europe in 2019.
On June 8, 2019, The euObserver article – Porsche told EU not to publish diesel emission result – revealed the results of its investigation into Dieselgate – the scandal involving the practice deployed by German motor car companies to defraud the public and regulators with respect to carbon emissions.
The scandal demonstrates two broad things:
1. Corporations are cheats and put profit before integrity and respect for the law.
2. The EU technocrats overseeing the legal system are corruptible.
There is a mass of evidence now concerning the behaviour of Volkswagon, the shady behaviour of the European Investment Bank, which has steadfastly refused to make documents relating to its EU loans to VW public, and the lobbying by the big corporations of EU officials to cover up illegal behaviour.
Late last year (December 13, 2018), for example, the General Court of the European Union released – Statement – about several cases involving the “cities of Paris, Brussels and Madrid” relating to the “Commission’s regulation setting excessively high oxides of nitrogen emission limits for the tests for new light passenger and commercial vehicles”.
It found that the European Commission had challenged the “the admissibility of the actions” in the Court – in other words, did not want the evidence heard against it – a classic strategy to cover up maladminstration and illegal behaviour.
The Court ruled that:
… the cities of Paris, Brussels and Madrid are entitled to challenge the oxides of nitrogen emission limits determined by the Commission for RDE tests since they could not include vehicle types which have successfully undergone those tests, and which meet the other type-approval requirements, within the parameters of a traffic-restriction measure based on the level of pollutants.
The Court also found that the fudges the European Commission had deployed (so-called “correction coefficients”) were not lawful and made it:
… impossible to know whether the Euro 6 standard is complied with during those tests … the lack of competence on the part of the Commission established necessarily implies an infringement of Regulation No 715/2007.
In other words, many talkfests – well catered for, flying officials here and there, hotel bills, expense claims etc – went into creating a chimera of action against the polluting car companies. A chimera of a legal constraint on corporations.
But then when it came to the crunch the EU technocracy just cheats – applies illegal adjustments to allow polluting vehicles to ‘pass’ the tests – destroying any integrity the tests might have had.
Europe in 2019.
The latest report from euObserver concerns Porsche.
We now learn that the:
European Commission’s in-house research institute has for months refused to disclose the results of emissions tests it did on a Porsche diesel vehicle, at the request of Porsche …
The test results, from mid-2017, showed that the Porsche Cayenne diesel car was emitting suspiciously high nitrogen oxide emissions when the official EU test was slightly amended.
So the Joint Research Centre, which is the EC’s official test body has known since it began conducting tests on Porsche company cars (it is owned by VW) – that is, from September 2015 when the VW Group “admitted to having committed emissions fraud”, about the illegal cars.
An EU official has admitted (under anonymity) that:
The JRC has signed an agreement with the third party which includes a confidentiality clause …
Europe in 2019 – a neoliberal, corporatist state that lacks transparency and cheats its own laws when convenient.
But when it comes to Greece there were no laws to be broken – a brutal application of the laws was followed instead.
ECB exploiting ‘loopholes’
I wrote last week about the apparent public shift in narrative coming from Bundesbank boss Jens Weidmann as he lobbies to take over Mario Draghi’s post as President of the ECB.
See – A leopard never changes its spots – Jens Weidmann, ECB President aspirant (June 20, 2019).
In the recent past, various high-ranking ECB officials have been making noises about how the bank will once again be prepared to expand its policy interventions – perhaps beyond what is currently held to be acceptable (more later on this).
Executive Board member, Benoît Cœuré, who is trying to get the top ECB job, gave an – Interview in the Financial Times (June 17, 2019) – where he intimated that the central bank “show never ignore market signals”, which at present were painting “a picture of the global economy which is very bleak”.
He was asked about the limits to the ECB’s capacity to buy government or corporate bonds in its attempts to stimulate the Eurozone economy:
FT: Some people have the idea that the issue limit on the proportion of a member state’s bonds you can buy of a third of all the outstanding stock is not as hard as people might have thought in the past. Would you agree with that?
BC: The European Court of Justice has stressed the relevance and usefulness of limits. The limits are there to guard against monetary financing and to protect the price discovery process. On the other hand, the ECJ has also affirmed the principle that we should have broad discretion in designing our instruments. The limits are ours. We already have some degree of freedom across securities. For instance, we already buy up to 50 per cent of supranational bonds, while for individual sovereigns the limit is lower. I’m not saying that’s the way to go, but a more detailed discussion is possible if warranted by our price stability objective.
Then, last week (June 18, 2019), ECB President Mario Draghi gave a speech – Twenty Years of the ECB’s monetary policy – at the ECB Forum on Central Banking held in Sintra, Portugal.
He told the gathering that:
And the APP still has considerable headroom. Moreover, the Treaty requires that our actions are both necessary and proportionate to fulfil our mandate and achieve our objective, which implies that the limits we establish on our tools are specific to the contingencies we face. If the crisis has shown anything, it is that we will use all the flexibility within our mandate to fulfil our mandate – and we will do so again to answer any challenges to price stability in the future.
So the Asset purchase programmes (APP) can be resumed and the ‘limits’ are whatever the ECB thinks warrant the situation.
Now we understand more fully what they were talking about.
It appears that there is a ‘loophole’ – “An obscure clause in government bond contracts” – which will allow the ECB to push those limits out even further while maintaining the charade that all they are doing is providing liquidity to make monetary policy effective.
Previously, the ECB had claimed that it would limit the APP.
When the Public Sector Purchase Programme (PSPP) component was instigated in March 4, 2015, the ECB said that the (Source):
… the limit will initially be set at 25%, for the first six months of purchases and subsequently reviewed by the Governing Council.
Then on September 3, 2015:
… the Governing Council decided to increase it to 33% … The issue limit refers to the maximum share of a single PSPP-eligible security that the Eurosystem is prepared to hold … to mitigate the risk of the ECB becoming a dominant creditor of euro area governments.
However, they also had a 50 per cent limit for “International or supranational institutions located in the euro area”.
So the limit has been pretty slippery to date.
The logic the ECB presented at the time of the rise to 33 per cent was that it did not want to create a situation where the “Eurosystem would have a blocking minority for the purposes of collective action clauses” – which means in English that if there was a situation where a Member State applied for a debt restructuring process which would require the bondholders to approve by vote, the ECB didn’t want to hold the dominant vote.
Since March 2015, the ECB has accumulated 2,169,992 million euros worth of government debt. That is 2.2 trillion.
As a consequence of the PSPP purchases already made, the ECB is near its so-called limit for Finland, Netherlands and Portugal.
It has now been revealed that “a clause, known as “disenfranchisement”, which excludes bondholders directly connected to the issuer of a bond from votes” will allow the ECB to circumvent its concerns about being a dominant creditor in the case of a debt restructuring.
In other words, the ECB would be able to exclude itself from any process even if it becomes the majority owner of a Member State’s outstanding public debt liabilities.
Now here is the rub.
The reason the “disenfranchisement” clause was invented, which would prevent the central banks’ having any voting rights was (Source):
… based on the premise that they would not be free to vote in favour of taking a loss on their holdings because that would tantamount to directly financing the government that issued that debt.
This is prohibited by EU Treaties.
Are you all getting the picture.
At the time these clauses were inserted, the Economic and Financial Committee, “the EU body which oversaw the introduction … in 2012 said … national central banks were a prime example of a state institution that should keep its voting rights.”
But then they realised that the only thing that was keeping the Eurozone solvent was the fact that the ECB was buying all this debt and effectively funding Member State government fiscal deficits.
The charade meant that they had to make sure this backdoor funding continued while they kept straight faces when they all had to front the press and explain exactly how the ECB buying 2.1 trillion euros worth of Member State debt wasn’t breaching the no bail-out articles of the Treaty.
Children learn about deception early in life – at pantomimes and the like.
We learn to recognise ruses and tricks as part of our maturation process – all the name of having some fun with adults.
The European Union maintains that sort of game. It is as if the technocrats think the citizens are still children that will play along with all these ruses.
On the one hand, the technocrats threaten Italy with dire consequences if they do not impose worse austerity to meet so-called Stability and Growth Pact targets – with massive human suffering as a result/
Yet, meanwhile, over in Frankfurt, the ECB is merrily funding government deficits – totally in contravention of the European law, if was properly interpreted by the courts – and they all turn a blind eye and create loopholes in the rules that allow them to do anything they want.
And the Europhile progressives blithely carry on as if a few reforms are all that is needed to make this monstrosity a progressive paradise.
That is enough for today!
(c) Copyright 2019 William Mitchell. All Rights Reserved.