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Europe needs political, economic and financial unity to combat crisis

PUBLISHED  03:54 February 2, 2012

By Gianni Pittella

Now Reading: Europe needs political, economic and financial unity to combat crisis

Everybody knows that the global financial market is dominated by a small oligarchy of investment centers that are maneuvering flows of money that are twenty times the world GDP. Therefore, it is difficult to avoid thinking that behind the furious speculative attack to the euro and the systematic downgrade of sovereign debts of Eurozone countries there was not a guidance, and what is happening during last days is confirming this hypothesis.

What needs to happen to convince EU governments and the European Commission to shift to the position of the European Parliament, which is demanding the creation of an independent rating agency? And why they’re still waiting to decide to apply sanctions against misleading judgments, and most important to let an independent body as the EU Court of Auditors classify sovereign debts?

Whenever politics is weak, speculators win. Actually rating agencies are doing politics and four privately-owned agencies are deciding, without control, our own destiny. Rating agencies currently operating are all privately-owned and this situation is firing up endless discussions about their real legitimacy, but the costs for the creation and the management of a new European agency was momentously considered too much from the commission.

The Obama administration, hit by the wave of subprime crisis, that almost risked the default was then forced to negotiate with the Republicans and now it has to deal with the downfall of American exports determined by the euro weakness, which was itself caused by speculation. On the back of this scenario, there has been a cold war for ten years that establishes the dollar supremacy as official currency for global trade threatened by the common European currency, after that the mark had conquered all of Eastern Europe from the fall of the Berlin Wall to 2001.

The repercussions for the old economic and financial equilibria that have been governing the world so far are easily understandable and give us a useful tip to comprehend what is happening on the markets right now. The American treasury starts to see that its operating space is threatened, space that gave the possibility to print currency out as much as needed without creating inflation and pushing the economy with endless flows of money to low interest rates. Before the crisis, the Chinese and the Russians were seriously thinking of substituting the dollar with the euro for economic but also geopolitical reasons in their enormous International transactions.

If this is in the game, it is clear that in front of the dimensions of the economic and political speculative attacks that are happening in the euro area, Europe can only answer with the maximum political, economical and financial unity, reinforcing all the mechanisms of common governance and abandoning as soon as possible an intergovernmental approach . This is the reason why European Parliament asks for a democratic Union with the full inclusion of this institution in the discussions around the future of the eurozone and the economic governance.