ZeroHedge - BY TYLER DURDEN - MONDAY, SEP 19, 2022
Authored by Tuomas Malinen via The Epoch Times,
The possible, even likely, collapse of the European economy would inflict some heavy costs to present European institutions. In this entry, Dr. Peter Nyberg and I detail why we believe we are likely to see some rupturing of the European Union (EU) as originally conceived.
This may occur in two ways: Either the European Union disintegrates completely, or it mutates into something unrecognizable from its original purpose. This comment concentrates on some of the factors causing disintegration.
The functioning of the EU has, until recently, been built on two political pillars that now appear to be crumbling. Primarily, German growth has made possible the joint financing (through low-cost debt, the EU budget, and the central bank's clearing system) of unsuccessful economies without the EU forcing them to commit to politically unacceptable reforms. Beneficent global developments have made possible the concentration on economic integration while going slow on the much more contentious integration of cultural, social, and foreign policies.
The deterioration of the global economy, together with EU policies, now threatens industry and living standards in EU member states, reduces the scope of joint economic support, and forces member states to rapidly evaluate their readiness for possibly radical reductions in their political self-determination. This is most evident in Italy.
The yields of Italian sovereign debt have reached levels that can be considered unsustainable, given the country’s high indebtedness and low rate of economic growth. For example, the yield of the Italian 10-year bond breached the 4 percent line late this past week. The maturity structure of Italian debt is also rather unfavorable. At the end of June, for example, Italy had issued only 52 percent of its needs for external financing in 2022. In addition, 35 percent of her outstanding debt will come due already in 2024. Half of her total debt will come due within five years.
Without active country-specific support from the European Central Bank (ECB), which the newly introduced Transmission Protection Instrument is designed to facilitate, Italian debt is unsustainable at current yields. Disagreements among member states on the wisdom of filling the ECB with Italian bonds are bound to weaken the glue keeping the EU together as before.
The energy crisis is also sowing seeds of serious inner conflict. The politics in the EU are becoming less forgiving as difficulties mount.
Contentious Issues Piling Up
Both Hungary and the Czech Republic have objected to the plans for a price cap on Russian gas, which now looks unlikely to be enforced. The European Commission is also planning to cut funding for the Hungarian government of Victor Orban due to “rule-of-law concerns.” This is unlikely to increase the incentives for Hungary to stay in the union. More generally, as funding is made conditional on countries meeting the test of adhering to “European values,” one can expect the list of such essentially political requirements to grow as economic conditions worsen and demands for uniform policies grow.
For example, Poland is fed up with constant extra demands from the EU, like the demand to walk back from the changes the Polish government was planning to the judicial system, considering the distribution of funds from the Recovery Fund to its government. Krzysztof Sobolewski, the governing party’s secretary-general, has warned that without a clear change in the actions of Brussels, “We will have no choice but to pull out all the cannons in our arsenal and open fire.” Since a number of contentious decisions still require unanimity, such a threat might be unwise to take lightly.
Fault lines are also emerging regarding the Russia sanctions.
Moderation in this respect, as ultimately needed by Germany and especially Italy, is not readily accepted (and may even attract internal sanctions). Russia naturally uses existing differences to reduce the cohesion of the EU. Reports state that Russia is preparing the first shipment from its new liquefied natural gas plant to Greece. Hungary, as an outlier, is buying additional gas from Russia in accordance with their new agreement. It will be interesting to see what Germany may choose to do if the impact of energy scarcity on its economy and population is as large as some reports suggest.
Besides financially, Italy is also between a “rock and a hard place” on gas issues. While she has been able to cut Russian gas imports from around 40 percent to 15–20 percent, it’s becoming practically impossible to cut them much further. There are serious bottlenecks dictating how much gas can be transferred from south to north Italy. Essentially, only a sufficient Russian gas supply can keep the lights on in the north of Italy, which is also the industrial hub of the country.
Practically, this means that President Vladimir Putin has the ability to push Italy into a deep recession and create yet another economic basket case in the EU. This time Germany may not be able to guarantee the financing needed for saving Italian companies and the nation’s banks. If so, yet another debt crisis may well come ablaze in the eurozone. The question is, will the new government of Italy just sit and wait for this, or will it perhaps insist that the EU or itself negotiate a deal with Russia?
So, how will the EU respond to these threats?
We are assuming that European Commission is at some point encouraged to propose a Recovery Fund 2.0, which would need to be considerably larger than the previous one (of around €800 billion). The fund would provide financing for countries to cope with rising energy prices as well as to help the bond markets of Italy, and others, retain market confidence. The ECB may even be forced to restart quantitative easing while it raises rates. Indeed, this may already be happening, as the balance sheet of the ECB has grown by some €13 billion since mid-August.
The commission is likely to try to gather more power for itself through essentially unconstitutional demands, like the preposterous “mandatory demand cut” for electricity consumption. The commission has no right, legally or otherwise, to prescribe such action from member states, though reducing demand by itself is a sensible policy at this point and could be the subject of a commission suggestion.
The question remains, will all the member states “play ball” in this and coming issues? We are not so sure.
*Follow the WEF trail to Switzerland to discover the Khazarian Mafia hiding behind Klaus Schwab and his cohorts. The US and its people have nothing to do with the disasters caused to the ordinary people of the Earth.
It is the Khazarian Mob that is presently using Ukraine as a battlefield to destroy both the US as well as the world's economy and human subsistence. The participants get temporary awards but they must remember: The Devil shows no gratitude. When your usefulness is over you will be cast into the abyss as a traitor!
The Khazarian Mob has once again constructed an intricate web, whose aim is to destroy the world's economy by setting people up against each other, blocking each other's supply chains, and leaving just death and ruins. As a consequence, the world is now facing life-threatening price rises of both electricity and gas.
What everybody must be aware of is that this is not a war to prevent Putin from occupying Ukraine, but an attempt by the evil Khazarian Jews/WEF/NATO to control yet another country in their growing New World Order. They are simply using Ukraine as a battlefield. Their plan is to destroy totally the world's economy and turn the population into slaves.
Like the Freemasons, they have also life-threatening rules in their membership, one being REVENGE, 10 times harder than was ever perpetrated on them.
Russia in particular, in the past, has expelled the Khazars several times. I have 20 detailed articles in book format on the Khazarian Jews if anybody is interested in further information.
Putin, and earlier also Trump, are the ONLY Presidents who have enough guts to see what they are attempting to do to the world population and have sufficient courage to do something about it.
The bottom line is for the people to regain their original, moral principles, which have intentionally been watered out over the past generations by our press, TV, and other media owned by the Illuminati/Bilderberger Group, corrupting our morals by making misbehavior acceptable to our society. Only in this way shall we conquer this oncoming wave of evil.
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