Unthinkable Iceberg for Europe’s Unsinkable Ship
Sorry, but history didn’t end sometime between your birth and your breakfast today…
BACK in 2009 when Barack Obama received the Nobel Peace Prize just nine months after becoming US president, he said he felt “surprised” and “deeply humbled”.
No such shock and awe today for the European Union’s unelected leaders, of course. Self-assurance and pride are now the EU’s hallmarks, at least at the executive level. But its shiny new Nobel Peace Prize risks just the same historical irony.
“Mr. Obama decimated Al Qaeda’s leadership,” as Peter L.Bergen noted in the New York Times this spring. “He overthrew the Libyan dictator. He ramped up drone attacks in Pakistan, waged effective covert wars in Yemen and Somalia and authorized a threefold increase in the number of American troops in Afghanistan. He became the first president to authorize the assassination of a United States citizen, Anwar al-Awlaki…And, of course, Mr. Obama ordered and oversaw the Navy SEAL raid that killed Osama bin Laden.”
That raid – unsanctioned military action inside another country’s sovereign border – may have boosted Obama’s Can Do image at home. (Bill Clinton and the Democrats’ marketing people sure think so.) But it jarred a bit with his Peace Prize citation for “extraordinary efforts to strengthen international diplomacy and cooperation between peoples.”
It’s also hard to square drone strikes abroad, let alone his move to the all-seeing eye-in-the-sky over US citizens at home, with the Nobel committee’s 2009 claim that “Democracy and human rights are to be strengthened”. And let’s not go near Guantanamo. Not unless the US secret service decide that we should!
Still, let’s not be churlish about Obama’s peaceable record. Not when the European Union is taking its turn in the stocks, ready for its share of history’s rotten tomatoes. Today’s award is “a great honour for all the 500 million citizens of Europe,” said the unelected president of the region’s executive commission, former Maoist radical Jose Manuel Barroso this morning. Here’s hoping historical irony leaves those 500 million other souls out of it.
“The union and its forerunners,” said the Nobel committee Friday morning, “have for over six decades contributed to the advancement of peace and reconciliation, democracy and human rights in Europe.”
Never mind the Marshall Plan, mutually assured destruction or NATO’s army on the Rhine. Witness peace on the streets of Athens…reconciliation between Catalonia and the rest of Spain…democracy at all levels of the EU in Brussels…and human rights in, say, relative newcomers to what was a free-trade zone but is increasingly a political and soon-to-be fiscal union, Bulgaria, Poland or Romania.
“The dreadful suffering in World War II demonstrated the need for a new Europe,” the Norwegian trustees go on. “Over a seventy-year period, Germany and France had fought three wars. Today war between Germany and France is unthinkable.”
Gulp! It’s hard to pick the most recent instance of such a flat-footed hostage to fortune. Europe’s mass central-bank gold sales of 1998-2002 perhaps, right as a 20-year bear market ended and the price of the relic began rising 7 times over? Or maybe Dubya Bush’s “mission accomplished” speech of May 2003, barely two months into the Iraqi disaster? Or how about the IMF saying “financial innovation has helped make the banking and overall financial system more resilient” in April 2006…?
Okay, so it’s easy to giggle at grand men making sweeping claims about what tomorrow will bring. But only because it really isn’t so hard to put yourself into history. Or to realize that history didn’t end sometime between your birth and your breakfast today. These buffoons could at least try to spy the pride in their pronouncements – humbly or otherwise – plus the leaf-covered bear trap ahead.
“In retrospect,” said the City of London’s outgoing regulation chief, Adair Turner, in a speech Thursday night, “it was a fool’s paradise. The first eight years [of the UK's Financial Services Authority regime, starting in 1999] seemed plain sailing, the ocean, iceberg free. But that was a delusion. The vulnerabilities were relentlessly growing, but we didn’t spot them.”
Wow, a senior figure admits his mistakes! (And let’s face it, such mistakes are invariably “his” and not hers.) Here at least then is one man who’s learned the ultimate lesson of history – that it ain’t finished yet. But really? No. Because for as long as he has a hand on the tiller, Turner sees historical icebergs only behind him, not in the present or future.
“Quantitative easing alone may be subject to declining marginal impact,” his lordship went on in his Mansion House speech last night – a speech coinciding with Turner’s application to become the next chief of the Bank of England, thus piling central-bank joy onto his success as City regulator.
“Optimal policy also needs to include a willingness to employ still more innovative and unconventional policies…”
Gulp again! Because the kind of innovation he apparently has in mind is all too common in history. Turner wants the central bank to create and hand money straight to the government, without ever getting it back – or so “it is understood,” according to the BBC’s Robert Peston, briefed as ever at the top level no doubt.
This novelty – “in effect, printing money to finance public spending,” as Peston explains – is no such thing. France tried it in the early 18th century, and again under the early Revolutionary Republic. So did Weimar Germany immediately after World War I…Austria at the end of WWII…and Zimbabwe at the start of the 21st century. The result every time, and in every other example as well, was disaster. People lost all confidence in currency. Because with government spending fed by money from nowhere, the government’s money quickly meant nothing, with a value to match.
There are other contenders, thank goodness, for top job at the Bank of England. But their unconventional policies all look all-too familiar too – more money creation, interest rates stuck at zero, direct lending to business, choosing now this sector and then that to inflate, and all the while sailing straight for the unthinkable iceberg in their unsinkable ship.
No, the European Union doesn’t look set for civil war today. Yes, it is hard to imagine one set of cheese-eaters attacking its neighbors. Barack Obama himself, however, was rightly surprised at his Nobel Peace Prize. History may well find the European Union’s award deeply ironic as well.
“The stabilizing part played by the EU has helped to transform most of Europe from a continent of war to a continent of peace,” says the project’s Peace Prize citation, shoving a black hood over Europe’s head and bundling it into fortune’s getaway car.
Adrian Ash is head of research at BullionVault – the secure, low-cost gold and silver market for private investors online, where you can buy physical gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.
(c) BullionVault 2012
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