I had an exchange with Country Codger about the possibility of the return to the DMark. Let me show you, how unlikely this is with the current political powers and their determination and commitment to the Euro, without regard for the costs.
By now, every interested individual knows, that the Euro is on the brink of collapse and with it possibly the whole European Union. I do not want to address the why’s and how’s but instead want to show you how our politicians , instead of acknowledging past mistakes and taking measures to withdraw from a doomed system, take the opposite way of perpetuating the old way to it’s inevitable collapse. And in the process, try to steal our freedoms, sovereignty and of course our wealth.
The ESM or European Stability Mechanism is a proposal for a treaty between the European states, which is to replace the now expiring ESFS and ESFM. The treaty’s proclaimed goal is to “ensure the financial stability of the euro area”
I also do not want to discuss how and if this goal can be achieved by this treaty. Let me just state that in my opinion it will be able to postpone the inevitable. Instead I want to show how, if the ESM is to be passed, what it would mean for European states.
You can read the whole proposal here: http://consilium.europa.eu/media/1216793/esm%20treaty%20en.pdf
I will focus on the points I find most disturbing from the point of view of a Euro country’s citizen.
The first pages describe the board of governors and other administrative things.
The fun starts with Chapter 3 Article 8.4
4. ESM Members hereby irrevocably and unconditionally undertake to provide their
contribution to the authorized capital stock, in accordance with their contribution key in Annex I.
They shall meet all capital calls on a timely basis in accordance with the terms set out in this Treaty.
“irrevocably and unconditionally”?
Wow, those are pretty strong words. Sure there is a way out of this, right?
Well if you find one, let me know. Maybe I skipped it somhow.
1. The Board of Governors may call in authorized unpaid capital at any time and set an
appropriate period of time for its payment by the ESM Members.
3. […] ESM Members hereby irrevocably and
unconditionally undertake to pay on demand any capital call made on them by the
Managing Director pursuant to this paragraph, such demand to be paid within seven days of receipt.
OK, so at any time, the ESM members may be called to pay the “authorized” sum by the ESM Board. And in that case again they “irrevocably and unconditionally” commit to pay those Euros.
But what is the authorized sum and who authorizes it?
Article 10 clears that up for us.
1. The Board of Governors shall review regularly and at least every five years the maximum
lending volume and the adequacy of the authorized capital stock of the ESM. It may decide to
change the authorized capital stock and amend Article 8 and Annex II accordingly.
OK. The ESM Board of Governors can increase the capital stock at any time, they feel there is a need for it. Like the very unlikely event of a member needing bailouts or such …
Article 17 regulates the possibility of taking credits:
1. The ESM shall be empowered to borrow on the capital markets from banks, financial
institutions or other persons or institutions for the performance of its purpose.
2. The modalities of the borrowing operations shall be determined by the Managing Director, in
accordance with detailed guidelines to be adopted by the Board of Directors.
Wow now we are talking power! No need for national parliaments to decide anything like they have to now with the ESFS and ESFM. Just join the ESM and the Euro rescue team is on it’s way.
Well with this kind of power, there are surely major supervisory bodies being enacted right?
Well let us see.
1. To enable the ESM to fulfill its purpose, the legal status and the privileges and immunities set out in this Article shall be accorded to the ESM in the territory of each ESM Member.
3. The ESM, its property, funding and assets, wherever located and by whomsoever held, shall enjoy immunity from every form of judicial process except to the extent that the ESM expressly waives its immunity for the purpose of any proceedings or by the terms of any contract, including the documentation of the funding instruments.
4. The property, funding and assets of the ESM shall, wherever located and by whomsoever
held, be immune from search, requisition, confiscation, expropriation or any other form of seizure,
taking or foreclosure by executive, judicial, administrative or legislative action.
5. The archives of the ESM and all documents belonging to the ESM or held by it, shall
6. The premises of the ESM shall be inviolable.
8. To the extent necessary to carry out the activities provided for in this Treaty, all property,
funding and assets of the ESM shall be free from restrictions, regulations, controls and moratoria of any nature.
9. The ESM shall be exempted from any requirement to be authorized or licensed as a credit
institution, investment services provider or other authorized licensed or regulated entity under the laws of each ESM Member.
Immunities of persons
1. In the interest of the ESM, the Chairperson of the Board of Governors, Governors, alternate
Governors, Directors, alternate Directors, as well as the Managing Director and other staff members
shall be immune from legal proceedings with respect to acts performed by them in their official
capacity and shall enjoy inviolability in respect of their official papers and documents.
Nope. No supervision. Just immunities, inviolability acts and exempts.
So as I see it, the ESM shall be an instrument of unlimited power to fund failing Euro states with money from not yet failing states which must be paid within seven days …
When this is not enough, say, when the stronger states overstretch themselves, than the ESM can borrow the needed money from banks.
National governments have now way to leave the ESM once they have joined. There is no mention of an exit strategy for national governments and no end date to the ESM treaty.
The Board is virtually immune to prosecution and the ESM documents and assets are untouchable meaning, that no government can verify the ESM’s operations nor can it be prosecuted in case of fraud or mismanagement.
It is notable, that Germany’s share in this transfer union is over 27%. So more than 1/4 of the ESM funds are to be taken from German taxpayer money. The German economy is the strongest one in Europe, but how long will we last, when the ESM is ratified?
What is even more notable is the fact, that the ESM is almost nonexistent in the official debate. One might think that a creature like this, clearly violating all national sovereignty and the German constitution would be on the front pages of all papers. But no. There is a small opposition in the liberal party, which at least managed to postpone the ratification from October 2011 to 2012.