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European Monetary Fund:
Buying up Countries at a Discount

The issue of creating a European Monetary Fund to bail out Greece and other troubled countries in the EU has stirred up a huge debate and a made lot of headlines, but this is just one more supranational attempt to save a bankrupt system, instead of shutting it down.

The German government has taken the lead in promoting such a fund, although Chancellor Angela Merkel recognized that it would require changing the EU Treaty, with its current "no bail-out" rule. However, after ramming through the Lisbon Treaty against the will of the peoples, the chances of having EU members agree to a change now are zero.

Italy's Finance Minister Giulio Tremonti, for example, said on March 8 that he sees no reason to create an EMF. We already have an International Monetary Fund, that we all finance, so why don't we use that?, he asked. Tremonti also delivered a well-targetted attack on those who decry the so-called PIGS countries (Portugal, Ireland, Greece, Spain). "We should instead focus on the home of financial speculation, which I call the FIRE countries." FIRE stands for countries, such as the U.K. and the U.S., where the economies are based on "Finance, Insurance and Real Estate."

At the center of ongoing discussion about the creation of a European Monetary Fund is a draft worked out one year ago by Deutsche Bank economist Thomas Mayer and Daniel Gros from the Center for European Policy Studies in Brussels. The draft was sent to "competent people" a few weeks ago, Gros said in an interview in the Italian daily Il Messaggero of March 8. The EMF would have more power than the IMF, because it could put non-complying countries into receivership.

Daniel Gros is also president of San Paolo IMI Asset Management, and Intesa-SanPaolo of Italy is one of the 11 member banks of the Inter-Alpha Group, which is dictating financial policy. He explained how his version of the EMF would work:

If a country "receives a loan and does not implement the requested budget corrections," then "we propose that the European Fund not only suspend aid to the troubled country, but that it also buy its sovereign debt at a discount, so that depositors and banks not lose too much, and the collapse is prevented. At that point, however, the EMF becomes the sole owner of the country's debt, with a deciding voice on economic choices. The news is exactly in such a possibility to have a sort of controlled bankruptcy, which is a disciplinary mechanism stronger than what the IMF has."

The EMF must be created quickly, in view of the next deadlines on sales of Greek debt. "If Germany, the only country which has money, gives the green light, it will be quickly created." According to media leaks, experts at the German Finance Ministry are pursuing a modification of the Mayer-Gros draft, to add an "insolvency mechanism" to the future EMF, which would allow a troubled EU member-nation - such as Greece is now - to file for sovereign default, and thereby become "eligible" for EMF bridging loans under harsh conditionalities.

What the EU bureaucrats and politicians are not taking into account, in all their schemes, is the mass strike that's developing in Europe, as well as the United States.

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