Rome gets its orders…
The European Central Bank bought Italian and Spanish government bonds after interest rates demanded by “investors” hit record levels. The ECB’s price was austerity, telling the Italian government exactly what to do and when and how to do it. The unelected and unaccountable ECB is running Italian fiscal and labour policy; this only became public when the letter was leaked to the Italian press.
The ECB also ordered Berlusconi to enact these measures by emergency decree. The package of 45.5 billion euros in spending cuts over the next two years included privatisations, tax hikes and labour market deregulation; the second round of cuts in as many months. The Italian opposition cooperated by voting through the government’s fast-tracked bill “out of a sense of responsibility”.
...as Spain bows the neck
Spanish Prime Minister José Luis Rodríguez Zapatero and leader of the opposition Mariano Rajoy have agreed to insert a limit on the level of public debt and deficit into the Spanish constitution. This paves the way for the ECB to buy government bonds, and for the new austerity budget, cutting another 20 billion euros.
Ways of making you stable
Germany’s economy minister, Philipp Roesler, has proposed a new unelected “stability council” to impose sanctions on EU countries that do not adopt rigid budget discipline and pro-business labour policies. Meanwhile, the EU and IMF have forced Ireland to set up a Fiscal Advisory Council composed of outside fiscal referees, with significant overseas representation. The European Commission has ordered a number of member states to create their own fiscal councils. Britain already has the self-imposed Office for Budget Responsibility, with similar aims.
Former German Chancellor Gerhard Schroeder has called for closer EU integration in response to eurozone instability. He said. “The Commission will have to be turned into a government that is controlled...by the European Parliament. That translates into a United States of Europe.” ■