The financial crisis that hit the United States is rapidly expanding into Europe and the rest of the world. First to sense it is the United Kingdom which is the base of the American financial institutions. Indeed, Lehman Brothers and other American bankrupt institutions are London based. This explains why, before the end of this year, 100.000 jobs will be lost in the city of London.

The crisis is not coincidental and is not due to speculations or games. The crisis stems from the fact that the post war base of our economic system, was wrong. Indeed the theory that ‘the financial system is in principle stable,’ is not true. Practice is proving that ‘the financial system is in principle unstable,’ and such instability is endogenous; that is, it is generated by the system.

It should be pointed out that the United States, have the means to exert damage control. The Federal Reserve Bank (FED) and the Federal Deposit Insurance Corporation (FDIC) are the basic tools Washington has mechanisms of intervention and has already poured over five trillion Euros, taxpayers money, in rescue operations, displaying an unprecedented attitude of Stalinist socialism .

Europe has no such mechanisms and it is highly vulnerable. The role of the European Central Bank (ECB) is not similar to the role of the FED. The European Central Bank has only the authority over monetary policy but contrarily to the FED it has no authority over prudential supervision and financial stability. The crisis has proven that monetary policy cannot be separate from financial stability. The FED became the “lender of last resort” in order to protect the American banking system, controlling the damage and thus defusing the impact of the crisis. In our case, in the case of Europe, there is no “lender of last resort.”

The problem of Europe is in Brussels. The central European administration is only administration. The European Commission has in practice become the Secretariat of the Council and the College does not play the political role it should. The main reason is that the body of the Commissioners, is not a politically uniform body. Commissioners are appointed by governments and each one reflects the political colour of the government of origin. This does not allow the President of the Commission to call for political discipline in the decision making process. This has given the upper hand to the administration, a body of highly capable civil servants, practically free and extremely able to manipulate interests for the sake of interests.

The synergy at this moment in Europe is grim. European political leaders in Brussels, who should have managed to prepare Europe for the crisis of the financial system, have so far done nothing. The signals that crisis was coming and that it was a matter of time to its manifestation are evident since over a year.

Now, under the excuse that it is too late to do anything, both the European Commission and the European Parliament are busy with the coming European election due next June.

In the meantime, Europe is overtaken by the oriental kismet syndrome, impassively expecting the catastrophe to come, doing nothing to avoid it.

As the situation takes form, when the financial system crisis will come to continental Europe developments will be spectacular, dramatic and rapid. Europe does not have the capabilities of the American system because it is lacking of a central system of stability control and preventive interventions. Once one major financial conglomerate will go bankrupt, it may signal an endless domino effect that will generate total instability and chaos. Major European financial conglomerates are present in most EU Member States, under different schemes and in such a way that are not subject to a global control system. Thus, in our case the “lender of last resort” that might have stopped the collapse, does not exist.

Chaos brings order and this is good because it forces rejuvenation upon societies and brings progress. But it is good as long as it is part of a major stable system which is undergoing its self-corrections.

In our case, it seems that the upcoming chaos will be total, not limited to the collapse of the financial system. In our world finance, politics and society are intrinsically linked. Europe is already undergoing a crisis of political values. The role of politicians is marginalized and more and more political decisions are taken by the administrations at national and federal level. In this context, democratic freedoms are gradually curtailed. Citizens are monitored and their financial behaviours and attitudes are recorded by many organizations, public and private. Suppression mechanisms and systems subordinate to the administrative structures, not to the political leaderships, are thriving. All this is happening under the nose of the political elite which seems incapable to understand and impotent to act.

Therefore, it should not be ruled out that the chaos that will reign when the financial crisis will knock Europe’s door in its totality; when the old continent will undergo its “big bang.” This implies that besides a new financial order, new values and new social concepts may be restored. May or may not.

Our political system is in crisis. It is because of this political crisis that Europe is not ready to face the upcoming crisis of its financial system. It is a crisis unfolding slowly and silently since years, lost in every-day life problems, which has now reached critical levels, depleting the foundations of our democracy.

If we continue to provocatively overlook this element, the political element, the day after may find Europe returning to the misery of a new dark age- instead of taking a strong step forward.

C.