Lord Rothschild: The New World Order Is At Risk


Baron Jacob Rothschild – concerned banker or Bond villain? (Picture Source:  http://www.myfirstclasslife.com  )

In the RIT Capital Partners 2014 annual report, the head of Rothschild family banking empire warned that “the geopolitical situation is most dangerous since WWII.” A year later, Baron Jacob Rothschild repeated his warning about the outcome of “what is surely the greatest experiment in monetary policy in the history of the world”. In August 2017 with markets still behaving irrationally he cautioned that “share prices have in many cases risen to unprecedented levels at a time when economic growth is by no means assured.”

Little did he know at the time that, driven by High Frequency Trading, computer algorithms and a quasi religious blind faith in technology they would keep rising, but related to that, he also made another warning which the market has so far ignored:

The period of monetary accommodation may well be coming to an end. Geopolitical problems remain widespread and are proving increasingly difficult to resolve.

In the latest half-year commentary from RIT Capital Partners published yesterday, Lord Rothschild made his sternest warning to date, this time focusing on the global economic system that was established after WWII to create a new world order, and which he believes is now in jeopardy.

The billionaire banker pointed to the US-China trade war, which is really a US versus Russia, China and Iran currency war, and the Eurozone crisis, with the resurgence of nationalism threatening the European Unity project after the UK’s Brexit vote, as the key problems putting economic order at risk, and the lack of a “common approach” – a reference to the gradual unwind of global thinking in the wake of President Trump – that has made “co-operation today much more difficult”:

“In 9/11 and in the 2008 financial crisis, the powers of the world worked together with a common approach. Co-operation today is proving much more difficult. This puts at risk the post-war economic and security order.”

It wasn’t clear if he was referring to the post-war fiat money standard that emerged once FDR devalued the dollar relative to gold, and then fixed a price for the yellow metal, a tenuous link that was subsequently destroyed by Nixon who finally took the US off the gold standard, or the primacy of the dollar which emerged as the world’s reserve currency after the end of WWII, paving the way for the US to bid for global hegemony, but whenever one of the people who profited handsomely from the “post war world order” warns it may be on its last legs, it may be time to worry.

Either way it is hard to believe that Rothschild is a stupid man, although living in an elitist bubble he may be detached from reality, but his comments suggest that he is unaware the great mass of people have woken up to the fact that globalisation can only benefit the elite in the west, while diminishing the educated populations of developed nations in favour of buying the loyalty of uneducated third world multitudes with handouts and cheap gadgets.

With global risks growing after politicians and the banking cartel have kicked the can down the road for several years by printing money, how is Rothschild positioned? He writes that “in the circumstances our policy is to maintain our limited exposure to quoted equities and to enter into new commitments with great caution” and indeed, in the first half, RIT had a net quoted equity exposure of only 47%, historically low. The reason: the iconic banking family is concerned that the 10-year bullish cycle and market rally could finally be ending.

While Rothschild noted that “many of the world’s economies have enjoyed a broad-based acceleration not seen since the aftermath of the financial crisis of 2008, with as many as 120 countries seeing stronger growth last year” he also cautioned that “we continue to believe that this is not an appropriate time to add to risk. Current stock market valuations remain high by historical standards, inflated by years of low interest rates and the policy of quantitative easing which is now coming to an end.”

One potential risk is Europe, where debt levels have reached “potentially destructive levels”.

Quite so, but the growth we have seen since the 2008 crash has not been organic growth but has occurred mainly because interest rates at which governments lend to banks (by selling bonds to fund their deficits,) have been artificially maintained at suicidally low levels. This has enabled banks to borrow at a quarter or a half per cent, and use their borrowings to buy bonds with a fixed rate of three or three and a half per cent (or higher for nations with weaker economies.) These bonds often give a higher yield as it is possible to buy them at a discount.

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Can Americans Overthrow The Evil That Rules Them?
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Even The BIS Is Shocked At How Broken Markets Have Become.
If the Bank of International Settlements (BIS) the bank where banks and governments do business is worried about the state of the markets, we are in bigger trouble than anyone is letting on.

Based on info at ZH (reveal)
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EU’s arrogant plan to break defiance in Italy is a dangerous game

After Eurosceptic parties Lega and Five Star Movement thwarted the atempt of pro – EU president Matarella to overturn the democratic vote and prevent the Eurosceptic coalition from forming a government, the EU, showing its usual comtempt for democracy and the welfare of the people has decided to punish the nation and its people, in similar ways to those used to punish Greece, Portugal and Ireland when the diktat of Brussels was defied. The result is Italy no longer has a lender of last resort ready to buy up its sovereign debt, and therefore has no last line of defence for its always dodgy commercial banking system.

As long as Italians remain defiant and refuse to accept a government of EU approved bureaucratic appointees, The European Central Bank will progressively removing its shield as quantitative easing is wound down and purchases of Italian bonds fall to zero. There will be no protection by the end of the year. The Draghi pledge to do “whatever it takes” to prop up Italy’s membership of the single currency system no longer holds.

No ECB rescue will be possible unless the Italian parliament formally authorises the government to invoke the EU /IMF bail-out mechanisms (OMT-ESM) and accepts austerity imposed by Brussels. This would amount to a “Troika” regime similar to the one that wreaked havoc on society in Greece in order to protect the interests of European .

The bail out funds would then have to be approved by a vote in the German Bundestag and the Dutch Tweede Kamer. The terms they would impose on Italy would effectively put that nation under German occupation. An Italian government would not be able to act without permission from Berlin. It is inconceivable that either Lega nationalists and Five Star Eurosceptics would accept such an arrangement. Some of them would see it as a tactical opportunity to free their country from the “German cage” of monetary union.

President Sergio Mattarella may be a man of Virtù but he is also an unelected placeman of the old “casta”. Should he try to deliver Italy to EU budget commissars through a technical government, in defiance of his own parliament, he risks a dangerous breakdown of civil order.

What the EU are overlooking is that Italy, with a population of almost sisty million and the eighth largest economy in the world, might not accept being bullied as Ireland, Portugal and Greece with their small populations and weak economies had to. They are making the same mistake with Britain, and despite the best efforts of Theresa (the appeaser) May to yield to all their demands are making a civilised process leading to Btitain’s exit from the Union impossible.

Europe has gone back to the ridiculous circumstances of the 2011 crisis when Brussels prioritised saving the failinjg single currency over the economic interests of membr states and a Eurozone member state could lose access to the capital markets and slide into bankruptcy, like any private company, or the City of Detroit, or Orange County (1994).

Italy however, despite its perpetual political and financial chaos chaos, is not a poor nation. The country does not have a debt problem as such. While public liabilities (sovereign debt etc.) are high at 132pc of GDP, private liabilities are low. The Bank of International Settlements estimates that total (core) debt is 263pc of GDP, compared to 290pc in the Netherlands, 303pc in France, 321pc in Portugal, and 338pc in Belgium.

Italians have greater financial wealth per capita than the Germans. They have €1 trillion in bank accounts and $3 trillion in liquid assets. The country has a current account surplus of 2.6pc of GDP. It has a primary budget surplus of 1.7pc of GDP, and a better fiscal record lately than France or Spain.

It is rich but it has become trapped in a “bad equilibrium” with an overvalued intra-EMU exchange rate, as a direct result of being forced to accept the Euro single currency twenty years ago, when although it did not meet the qualifying standards set by the EU itself, it was admitted thanks to creative accounting because the project was never about economic stability, but was seen a major step towards political union and a European Superstate.

<!– Source: Restricting QE to break rebel defiance in Italy is a dangerous game –>

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The rise and fall of Emmanuel Macron

Emmanuel - as Jupiter
(image source: agoravox.fr” hspace=10 vspace=10>

Earlier this year the young, optimistic (rather than charismatic,) political outsider, Emmanuel Macron was elected president of France and poster boy for what we were told was the dawn of a resurgent European Union. That was then, this is now, and less than six months later, policy failures and self inflicted embarrassments such as declaring he would rule in the style of a Roman God have caused support for the former Golman Sachs banker to collapse even more rapidly that that of his predecessor in the Elysee Palace, the hapless socilist Francoise Hollande.

In the Spring of this year Macron, helped by the propanganda machines of the French establishment and the E. U. Commission comfortable defeated the anti-Brussels, anti-globalist, anti – Islamification National Front. Media coverage of the candidate projected a softer and more progressive image for the EU after its treatment of Greece had revealed the undemocratic and authoritarian nature of its power structure.

Attempts to explain the rapid decline of Macron and his government have focused on his pompous approach to governance—literally comparing his leadership to that of the Roman God Jupiter, his obsession with photo – opportunities and his defence of a lack of policy statements by airily declaring that ordinary voters could not understand the complexities of government. But there are deeper causees too. He has misdiagnosed the origins of the French economic malaise, and therefore his Jovian decrees are doing more harm than good.

It’s easy to point to the errors in the president’s perspective by merely examining the data. Macron’s economic policy cites a bloated public sector as the fundamental cause of France’s economic ills. The truly horrendous level of government debt is cited as evidence of this: as of March 2017, the debt stood at 111 percent of GDP, almost twice the 60 percent of GDP maximum allowed by the E. U’s Maastricht Treaty.

Private debt however is worse still: 187 percent of GDP, a result of easy credit and the encouragement of consumer spending to prop up an ailing economy. So, why does Macron, in common most other politicians of al parties not worry about this far higher level of debt?

The reason is he was schooled in mainstream economics. Thus Macron has been indictrinated with the idea that private debt is not relevant. It’s just a “redistribution”, according to Ben Bernanke, which “absent implausibly large differences in marginal spending propensities” between savers and lenders, “should have no significant macroeconomic effects.” The more cynical among you will recognise that as an exercise in talking bollocks.

Bernake’s belief is contradicted by the data for countries which, like France, have a private debt ratio well in excess of 100 percent of GDP. There ought to be little or no correlation between credit (the annual change in private debt) and unemployment if Bernake is correct. However, in his home country of the USA, the relationship between credit extended by the banks and unemployment since 1990 is minus 0.91: meaning the more debt people take on, the more is spent in the domestic economy. In France’s case, the correlation is lower but still substantial at minus 0.62, when according to mainstream economics, it should be close to zero.

So credit matters, not merely because savers are much less likely to consume than debtors, but because bank credit creates new money. And that is what the Macron government has faied to understand, resulting in its having focused on reducing government debt by squeezing private credit.

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Italeave or Quitaly? The EU Is Falling Apart

eurail-italy-overview-1

Italy: Too beautiful to be part of EU bureaucratic dictatorship (picture source)

Since the shock of Britain voting for ‘Brexit’ just over a year ago this blog has been speculating on which EU nation to quit the former free trade association that is being driven by Germany and the globalist elites closer and closer to becoming a single political enity, a Federal superstate (called Germany?)

Our money has always been on Italy although we hedged our bet with a wager on Hungary. And it’s starting to look as if we were correct.

Under the headline Is Italy heading for debt restructuring or euro exit? Financial newsletter Eurointelligence reports that a possible programme for Italy’s leaving the Union is already being discussed in the Italian parliament by the likely partners in a ruling coalition following the next election.

from Eurointelligence (not publicly available)

We are reporting from an important conference in Rome yesterday that has caught the Italian news headlines this morning – on the future of Italian public debt. It was organized by the Five Star Movement, held in the Italian chamber of deputies, and openly discussed issues such default mechanism inside the eurozone, sovereign debt restructuring mechanisms, parallel payment systems, and of course euro exit.

What is important about this debate is that it is now taking place in public – you can’t be more public than inside the parliament. Italians, not only the Five Star Movement, are openly talking about these issues.

One of us was on the podium, where we reiterated our criticism of the Five Star Movement’s previous-held cavalier notion of a euro referendum. The essential point we were trying to make in the debate, well reflected in this morning’s coverage by the main newspapers, is that euro exit is not a decision to be taken lightly. The announcement of a referendum would produce a financial crisis and might turn into a self-fulfilling prophecy. Euro exit belongs to the category of things that, citing Shakespeare’s Macbeth, “if it were done when ‘tis done, then ‘twere well It were done quickly“.

What struck us about this event was the sheer political leverage. Luigi di Maio, the presumptive Five Star candidate for the job of prime minister, seemed to distance himself from supporting euro exit. He sat through the entire 12-hour marathon of discussions. Beppe Grillo and Davide Casaleggio made short appearances. It was very clear that the Five Star Movement is now aggressively tackling the topic of Italy’s future in the eurozone, which is likely to become a major election issue. It also raises questions, as some Italian commentators did this morning, about possible coalition choices for the party if it adopts a more nuanced position on the euro.

A lot of space was given to a discussion on fiscal money – coupons issued by the state to people for use in tax payments. We recall that Yanis Varoufakis worked on a similar scheme for Greece, and one of his advisers at the time gave some details of how such a scheme can be made to work and why it did not work in Greece. The answer is that it requires an extraordinary degree of technical and logistical preparation that is outside the scope of what most governments are physically capable of.

Conferences such as these never reach consensus, but they bring up questions. One of the questions on fiscal money is whether it is sustainable or merely transitional. Is it just an instrument through which a country transitions to a new currency, or just a short-term liquidity measure, or can it work as a supplemental form of money?

Another discussion that struck us was a paper by Alberto Bagnai and Brigitte Granville, who did a stochastic simulation of the costs of euro exit. They noted that there would be an initial cost but that strong counter-cyclical growth would soon resume. The problem with this simulation is that it does not take sufficiently into account the multiple financial shocks that are likely to be dominant during such a phase. Euro exit would do major damage to the financial system both of Italy and the eurozone. The authors have a variable that includes a banking crisis, but we do not think this does justice to the financial Armageddon we are likely to see after an Italian euro exit.

And finally, we noted a comment by Heiner Flassbeck, formerly at the German finance ministry and Unctad, who noted that there can be no solution to the eurozone’s persistent crisis unless one insists on symmetric adjustment in the eurozone. He advocates the strategy that Italy should make a credible threat to leave the eurozone in order to force a German policy shift.

All of Italy’s major political parties, except for the  Democratic Party, the party of Matteo Renzi’s failed government, have flirted with supporting moves to leave the Euro. The current front runners in polls, not that polls are a predictor of outcomes, as we have learned several times recently, with only the french election reflecting polling figures and it is widely suspected that the French result was decided before a single vote was cast.

The path to Italeave is not easy, a referendum and a constitutional change will be required before any decision can be ratified, but trouble is brewing on a huge number of fronts simultaneously:

The Italian banking system is insolvent.
Another refugee crisis is brewing as flimsy, overloaded boats bring thousands of new illegal entrants every week.
Italy’s youth unemployment is a whopping 37%
The ECB is the only buyer for Italian bonds and yields are at record levels
Italy’s debt to GDP ratio is over 130% to the consternation of Eurozone officials
The global recovery still is not happening or EU members.
It is no longer taboo in Italy to talk of leaving the EU or taking back control of the nation’s borders.

Any number of things could start a chain reaction making Italeave look good to a majority of Italian voters. And despite the recent stitch up of Five Star movement in local elections, the other anti – immigration, anti – federalisation parties, Liga Nord and Forza Italia made big advances.

And when Italy goes, more will follow, at an accelerating rate we predict.

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Few of you were aware probably that there is an EU referendum vote in The Netherlands this week. As usual with anything negative about the EU barely a word has been printed in the topic in mainstream media and the silence from our notionally unbiased national broadcaster The Bolshevik Broadcasting Corporation (BBC) has been deafening.

French, Belgians, Dutch, Italians Follow Britain in Euroskepticism

Europeans want us British to lead them out of Europe. Don’t be fooled by project fear, the European Union (aka the Euronazi Federal Superstate) is falling apart. There will not be chaos if we leave, there will be chaos if we stay.

Head Of European Institute: Brexit ‘Better’ For Everyone

Brexit would be the best result of Britain’s in / out referendum for both Britain and the EU i a Belgian professor who heads up the European Institute at the London School of Economics (LSE) has said.

Johnson’s article lines up his reasons why Britain must exit on June 23rd. It’s time to be brave

OK, I know a lot of you think Boris is most accurately described by a word many people find offensive, but he’s put together a very good argument here on why we must leave the EU. Published in part here under ‘fair use’ terms and conditions, in the public interest …

Cameron’s EU Package: Not A Deal But A Few Turns In The Spin Machine
As we and almost everybody else predicted, David Cameron’s deal to improve Britain’s relationship with the EU is worthless. It changes nmothing, and can be vetoed once we have voted to stay in.

Cameron Plays Deal Or No Deal In Europe

David Cameron, who was apparently up all night trying to make other European leaders understand why his country needs a better deal in order to poersuade the prople it is a good idea stay in the EU. Unless Cameron gets what will enable him to sell the idea of surrendering national sovereignty to a Federal European Superstate ruled by a committee of unelected bureaucrats in to the British public he will not campaign for the UK to remain in the bloc

EU Refuses to Block Eurozone Integration to Reach Agreement With UK

Austrian Chancellor Werner Faymann said at the E?U summit on British membership terms that the European Union wants to reach an agreement with the United Kingdom, but it is not prepared to compromise the banking union (financial integration) or the further integration of monetary union (UK being forced to abandon the pound join the Euro?) to achieve this goal.

Cameron’s EU Deal Worthless. It Can Be Vetoed In European Parliament?
Opinion polls show Britain is evenly divided on the question of whether to leave or remain in the EU, though it has been suggested up to 10 million other voters, many of them women, have yet to make a decision. How they cast their vote will shape the future of the world’s fifth largest economy and the EU itself. But what is really at stake is more important than economics …

Obama’s intervention in UK politics triggers angry backlash
Angry Britons have launched a petition calling for U.S. President Barack Obama to be prevented from speaking in the UK parliament on Britain’s forthcoming referendum on European Union (EU) membership.

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Did The Bank Of England Just Admit Financial Markets Aren’t "Real"?

On a day that has seen global financial markets take a roller coaster ride, which is not the fault of greedy bankers but is the latest move in the currency war being fought between the USA led developed world and the eastern bloc and emerging powers led by Russia and China, we spotted a story that reveals the truth about ‘markets which is that they are all rigged and the eastern bloc are better tat playiong the system than the west..

The Bank of England has announced an “Open Forum” to be held on November 11, with the title: Building Real Markets for the Good of the People. No, I’m not making this up. Here’s a screenshot from the BOE website:

This might be good news for people with pensions and savings, but don’t depend on it – the corruption in the financial system is very deep. At best we can hope to see curbs on the algorithm driven high frequency trading that has served investment bankers and financial traders so well and the public so poorly.

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I Love A Good Greek Drama

First of all sad but not unexpected news this week that blog.co.uk is to close. We will be able to export our blogs to wordpress apparently but whether all the links well transfer and the SEO fuel be passed on we cannot yet know.

Meanwhile, life and the greek economic crisis go on. In what might be an attempt to turn a crisis into a Greek drama, one of the country’s oldest surviving newspapers I Kathimerini has predicted the latest developments will drive the country to civil war.

It has been a painful six months six painful for Greece, with round after round of bitter argument between Greek politicians (Yannis varoufakis notably) and its creditors producing all sorts of speculation about what a “Grexit” would actually entail but no workable solution.

With no historical precendent, planning a member state’s exit from the currency bloc has proved a virtually impossible task, but the collective efforts of the marketsd, mainstream media, political opportunists, and fuckwit economists has managed to produce a veritable dogs dinner of diagrams, decision trees, flowcharts, schematics, statistics, spells and charms in a futile attempt to map the complex interplay of politics, economics, and financial considerations that would follow if Athens decided to finally break off its ill-fated relationship with Brussels.

And it wasn’t just people with an interest drawing up Grexit plans. The game was joined by David Cameron, Francois Hollande, Piers Morgan, John Bishop, Beppe Grillo, King salaman, old Barack Obama and all and all, old Uncle Tom Cobleigh and all.

EU officials denied the existence of a “Plan B” right up until German FinMin Wolfgang Schaeuble’s “swift time-out” alternative was “leaked” last weekend, no one outside of polite eurocrat circles pretends that a Greek exit wasn’t contemplated all along. Yanis Varoufakis insists that Athens was threatened with capital controls as early as February if it did not acquiesce to creditor demands.

Now in the most shocking revelation yet about what EU officials really thought may happen in the event Greece crashed out of the EMU and unceremoniously reintroduced the drachma, highly repected newspaper Kathimerini has published a description of what the leader writer calls the “Grexit Black Book,” which purportedly contained the suggestion that civil war would breakout in Greece in the event the country was forced out of the currency bloc.

Here’s more (via Google translate)You’ll see what I mean about Greek drama:

” On the 13th floor of the building Verlaymont in Brussels, a few meters from the office of the European Commission President, Jean-Claude Juncker, stored in a special security room and in a safe Greece’s exit plan from the Eurozone. There, in a multi-page volume, written in less than a month from 15-member team of the European Commission, answered questions on how to tackle such an outflow, including, as shocking as it may sound, even the possibility of the country out of the Treaty Schengen, and not only being driven outside the euro, but also outside the EU

According to European official, in that the European Commission Summit already had a bound volume, a multi-page document, which described the Greek prime minister, before the start of the session, by the same Mr. Juncker with all the details of a Grexit , giving him to understand the legal and political context of such a decision. In multipage document in accordance with European official who has the ability to know its contents, there are detailed answers to 200 questions that would arise in case Grexit.

These questions, as he explains official, are interrelated, as an exit from the euro would create a cascade of events, which would evolve in a relatively short time. From the drachmopoiisi economy to foreign exchange controls that would take place at the country’s borders and which will ultimately lead at the exit of Greece from the Schengen Treaty.

The authors of the draft, according to European official, conducted under conditions of absolute secrecy. A special group of 15 people of the European Commission, by direct contact with Greece started to prepare, and was also in direct contact with a number of senior officials and DGs in the European Commission who had expertise in specific areas. The writing of the project started when the expiry date of the program (end of June) was approaching, so it is the Commission prepared for every eventuality, and by the time the referendum was announced, Friday, June 26, the relevant procedures were accelerated. The weekend of the work referendum intensified, so now two days later, Tuesday of that Synod, the project has been finalized.

According to well-informed source, involved in creating the plan worked “suffer the pain” as typically describe the “K” and “overwhelmed” because they could not believe that things had reached this point, and most of them had direct involvement with the Greek rescue programs. The European Commission also was hoped that even until the last minute solution would be found as members of this group knew better than anyone the consequences exit of Greece from the Eurozone and understand the cost of such a decision. One of those involved with direct knowledge of Greek reality in the critical phase of the training, he said the rest of the group that “if implemented this plan, the streets of Athens will sound tracks of tanks.”

It’s not entirely clear what is meant by “will sound the tracks of tanks,” but perhaps google translate which is good but far from perfect, has obfuscated the sense of what the Greek text was saying. We must assume the suggestion is not that the EU and its constituent member states would somehow seek to orchestrate a military takeover of the Greek state in the event Athens makes the ‘wrong’ decision about EMU membership (although with help from the USA, that’s exactly what they did in Ukraine).

A more resonable interpretation based on the information presented by Kathimerini seems to be that Brussels was of the opinion that the referendum results together with the divergent rhetoric emanating from Greek politicians on the far-right and far-left betrayed the degree to which the Greek people were divided on the issue of austerity. Although Tsipras’ concessions will have far-reaching consequences for national politics and Greek society, it looks as though Brussels feared that the economic malaise that would have resulted from a Greek departure from the single currency and return to the drachma might have triggered a level of civil unrest that would ultimately have to be brought under control by the Greek army. We can only wait and see.

Greece: A New Versailles

In spite of rejoicing over the story (which is looking more credible as time passes) that leftie loony Comrade Jeremy Corbyn is set to win the race to lead the Labour Party and will certainly take the party so far to the left they will end up on the right of Pol Pot, we are still cheering another left winger, former Greek finance minister Yannis Varoufakis.

In his latest swing of the big dead fish with which he keeps slapping the EU leadership, V-fak has accused Brussels and the Troika of imposing “A new Versailles” on Greece, a reference to the humiliating and punitive treaty France (though opposed by Britain and the USA insisted on imposing on Germany after World War 1 and which is generall accepted as having led to the rise of Naziism and the outbreak of World War 2.

Here’s a little from V-fak’s latest outburst, with the qualifier that while we do not support a lot of his left socialist economic thinking, he has the big one absolutely right, globalism and the expansionist policies of the EU are corporatism, the sibling of fascism, and have nothing to do with democracy, free speech and the underlying principles of democratic societies. Over to V-fak.

In the next hours and days, I shall be sitting in Parliament to assess the legislation that is part of the recent Euro Summit agreement on Greece. I am also looking forward to hearing in person from my comrades, Alexis Tsipras and Euclid Tsakalotos, who have been through so much over the past few days. Till then, I shall reserve judgment regarding the legislation before us. Meanwhile, here are some first, impressionistic thoughts stirred up by the Euro Summit’s Statement.

A New Versailles Treaty is haunting Europe – I used that expression back in the Spring of 2010 to describe the first Greek ‘bailout’ that was being prepared at that time. If that allegory was pertinent then it is, sadly, all too germane now.

Never before has the European Union made a decision that undermines so fundamentally the project of European Integration. Europe’s leaders, in treating Alexis Tsipras and our government the way they did, dealt a decisive blow against the European project.

The project of European integration has, indeed, been fatally wounded over the past few days. And as Paul Krugman rightly says, whatever you think of Syriza, or Greece, it wasn’t the Greeks or Syriza who killed off the dream of a democratic, united Europe.

Back in 1971 Nick Kaldor, the noted Cambridge economist, had warned that forging monetary union before a political union was possible would lead not only to a failed monetary union but also to the deconstruction of the European political project. Later on, in 1999, German-British sociologist Ralf Dahrendorf also warned that economic and monetary union would split rather than unite Europe. All these years I hoped that they were wrong. Now, the powers that be in Brussels, in Berlin and in Frankfurt have conspired to prove them right.

The Euro Summit statement of yesterday morning reads like a document committing to paper Greece’s Terms of Surrender. It is meant as a statement confirming that Greece acquiesces to becoming a vassal of the Eurogroup.

The Euro Summit statement of yesterday morning has nothing to do with economics, nor with any concern for the type of reform agenda capable of lifting Greece out of its mire. It is purely and simply a manifestation of the politics of humiliation in action. Even if one loathes our government one must see that the Eurogroup’s list of demands represents a major departure from decency and reason.

The Euro Summit statement of yesterday morning signalled a complete annulment of national sovereignty, without putting in its place a supra-national, pan-European, sovereign body politic. Europeans, even those who give not a damn for Greece, ought to beware.

Much energy is expended by the media on whether the Terms of Surrender will pass through Greek Parliament, and in particular on whether MPs like myself will toe the line and vote in favour of the relevant legislation. I do not think this is the most interesting of questions. The crucial question is: Does the Greek economy stand any chance of recovery under these terms?