Former Maoist J.M. Barroso almost in a trance at the sight of his beloved "imperial" flag in Prague

A former communist and a former Maoist today joined forces at the Prague Castle:

The new Czech president hoisted the European Union flag at the seat of the country's presidency for the first time on Wednesday, marking a significant shift in attitude from his euroskeptic predecessor.

The Czech Republic joined the bloc in 2004, along with nine other countries, but then President Vaclav Klaus refused to raise the flag at Prague Castle, an ancient landmark.

But after Klaus's departure from office last month, new leftist President Milos Zeman - a self-proclaimed euro-federalist - made a point of hoisting the flag with much fanfare in one of his first public appearances.

European Commission President Jose Manuel Barroso accompanied Zeman at the flag-raising ceremony, which featured a military band playing Czech and EU anthems.

The Maoist, who was almost in a trance at the sight of his beloved "imperial" flag, considered this occasion so important that he felt a need to tweet the following in the EU's premier language: 

José Manuel Barroso ‏@BarrosoEU47m

Heureux de voir drapeau #UE hissé sur Chateau de #Prague pour la 1ère fois depuis l'adhésion avec le Président #Zeman

PS

Flag raisings are without doubt some of Barroso's favourite events. They apparently make it easier for him to forget this less than pleasant reality: Only 34% of the Czechs have a favourable view of the European Union, and even fewer, 31%, think that European integration has strengthened their economy. 

Václav Klaus on the present European leaders: "Their way of thinking is based on an almost communist type of reasoning"

Yesterday, now former Czech President, Václav Klaus again reminded us about what is wrong with the present European Union:

As I said, I see the important part of the problem in the European economic and social system itself. It is more than evident that the overregulated economy, additionally constrained by a heavy load of social and environmental requirements, operating in a paternalistic welfare state atmosphere, cannot grow. This burden is too heavy and the incentives to a productive work are too weak. If Europe wants to restart its economic development, it has to undertake a fundamental transformation, a systemic change, something we had to do 20 years ago in our part of Europe.

The other part of the problem is the European integration model. The excessive and unnatural centralization, harmonization, standardization and unification of the European continent based on the concept of “an ever-closer Union” is another obstacle.

These complex issues deserve to be discussed from many perspectives, but it is evident that they found their “climax” in the attempt to monetarily unify the whole continent. This was the moment when the marginal costs of the European integration project started to visibly exceed its benefits. This evident failure, and it is appropriate to call it a failure, was inevitable, was expected, and was well understood by many of us in advance. Its consequences – especially for economically weaker European countries which were used to undergo unpleasant, but much needed and unavoidable adjustment-bringing devaluations of their currencies repeatedly in the past – were well-known in advance as well. All economists who deserve to be called economists were aware of the fact that Greece and some other countries were doomed to fail having been imprisoned in such a system. History gives us similar examples. --

Let’s not be misled. When discussing the current European problems, it is wrong to concentrate on the achievements or failures of individual countries, e.g. on Greece or any other country in the European South. Greece did not bring about the current European problem, Greece is the victim of the Eurozone system of one currency. The system is a problem.Greece made just one tragic error – to enter the Eurozone. Everything else was its usual behavior, which I – and we all – don’t have a right to criticize.

Greece’s degree of economic efficiency or inefficiency and its propensity to live with a sovereign debt was or should have been well-known to anyone. Letting Greeceleave the Eurozone – in an organized way – would be the beginning of a long journey of this country to a healthy economic future. I have no ambitions to change Greece, I want to change the EU institutional arrangements. The Greeks hopefully already understood that “one size does not fit all” and I only wish the same would be understood by leading EU politicians. I don’t see it, however.

Their way of thinking is based on an almost communist type of reasoning: economic laws do not exist, politics may dictate economics. People like me were raised in an era when such a mode of thinking was dominant in communist countries of Central and Eastern Europe. Some of us dared to express our disagreement with it already in the past. We were considered enemies then, we are considered enemies now again.

Read the entire speech at the Cato Institute here

Václav Klaus: "the best promoter of “social and environmental quality” is economic growth"

Opposing the global warming hoax does not mean that one does not care for the environment. On the contrary, as Czech President Václav Klaus pointed out in his remarks at the EU-CELAC Summit in Santiago de Chile, on 26 January:

- The term sustainable development is not an economic concept, but a political doctrine with far-reaching economic implications, and

- the best promoter of “social and environmental quality” is economic growth. The history has proved that the optimal economic response to social and environmental problems is abandoning any policies that hinder economic growth.

To say that does not imply any underestimation of social and environmental problems. This statement of mine is about sequencing – the economic growth makes the achievement of non-economic goals and ambitions possible. Being wealthier and having greater human capital means being able to employ cleaner, environment protecting technologies.

We have to take care of our forests, rivers, seas, of the air in the cities, but we should stop fighting the non-existent danger, the ideological doctrine of excessive, the planet and people endangering, man-made global warming. I find it promising that this catastrophic view about the future has already crossed its zenith. In our efforts to guarantee a prosperous future for both continents, Europe and Latin America, we should refute such politically motivated environmental agendas.

Václav Klaus on Europe's political leaders: "Their way of thinking is based on an almost communist type of reasoning"

Václav Klaus, head and shoulders above the rest

For a few weeks still there is one Head of State in Europe who is head and shoulders above the rest - the Czech Republic's Václav Klaus. 

Klaus has not hesitated to speak out about  the the failed European project as well as the senseless global warming policies (adopted by the same European leaders, who are responsible for the current European mess).

The speech which Klaus gave at the 10th International Vienna Congress com.sult 2013 yesterday should be compulsory reading for Angela Merkel, Francois Hollande and all the others. Here is an excerpt:

Let´s not be misled. It is wrong when discussing the current European problems to concentrate on the individual countries, e.g. on Greece or any other country in the European South. Greece did not bring about the current European problem, Greece is the victim of the Eurozone system of one currency. The system is a problem. Greece made just one tragic error – to enter the Eurozone. Everything else was its usual behavior, which I – and we all – don´t have a right to criticize.

Greece´s degree of economic efficiency or inefficiency and its propensity to live with a sovereign debt was or should have been well-known to anyone. To let Greece leave the Eurozone – in an organized way – would be the beginning of a long journey of this country to a healthy economic future. The Greeks hopefully already understood that “one size does not fit all” and I only wish the same would be understood by leading EU politicians. I don´t see it, however.

Their way of thinking is based on an almost communist type of reasoning: economic laws do not exist, politics may dictate economics. People like me were raised in an era when such a mode of thinking was dominant in communist countries of Central and Eastern Europe. Some of us dared to express our disagreement with it already in the past. We were considered enemies then, we are considered enemies now.

Time is ripe for a fundamental decision: should we continue believing in the dogma that politics can dictate economics and continue defending the common currency and other similar arrangements at whatever costs or should we finally accept that we have to return to economic rationality?

The answer to such a question given by the overwhelming majority of European politicians until now has been YES, we should continue. Our task is to tell them that the consequences of such a policy will be higher and higher costs for all of us. At one moment, these costs will become intolerable and unbearable. We should say NO.

What we need are not more frequent summits in Brussels, but a fundamental transformation of our thinking and of our behaviour. Europe has to undertake a systemic change. Coming to such a decision needs a genuine political process, not the approval of a document prepared behind closed doors. It must arise as an outcome of political debates in individual EU member countries. It must be generated by the people, the “demos” of these countries.

We speak about a crisis. But crisis is – in Schumpeter’s definition (and Schumpeter belongs both to my country and to Austria) – a process of creative destruction. Not everything can be saved and maintained. Something must be destroyed or left behind in this process, especially the wrong ideas. We should get rid of utopian dreams, of irrational economic activities and of their promotion by European governments. Part of this implies that even some states must be left to fall. The opponents of such positions keep saying that such a solution would be costly. It is not true. The prolongation of the current muddling through is more costly. The costs the Europeans are afraid of are already here. They are sometimes called sunk costs.

Read the entire speech here

Merkel's senseless energy transition policy is hurting poor people, small businesses - and neighboring countries

Merkel's senseless energy transition policy is seriously hurting poor people and small businesses in Germany.

Germans are beginning to understand what chancellor Angela Merkel's energy transition policy means in practice. Last year electricity prices rose by a record 12 % - which means an additional cost of 125 euros for an average household - and the rise in the prices of electricity and gas is expected to continue. No wonder then that thousands of poor, mostly elderly people, are forced to live in unheated apartments, because they are unable to pay for the energy.

At the same time taxpayers last year paid in excess of 20 billion euros in subsidies to owners of inefficient wind turbines and other renewable energy producers.

In addition, taxpayers are also paying large sums as compensation for companies, which suffer because of fluctuations in the power grid caused by unreliable wind energy: 

Wind being an inconsistent source of energy, Germany's heavy reliance on it causes fluctuations in the power grid that, in turn, can force companies to shut down production for fear of a blackout.Such companies are financially compensated at the taxpayers' expense - up to 20,000 euros per megawatt per year when analysts say 2,000 euros would be a perfectly reasonable figure. The total cost of Germany's green-energy project thus rises by the millions.

The senseless energy transition policy is not only hurting taxpayers, and particularly poor and elderly people. It is also hurting Germany's small businesses, which unlike large companies are unable to avoid paying the "green" surcharges: 

Additionally, businesses can apply to be exempt from paying a surcharge that finances green-energy subsidies when it would inhibit their ability to compete globally. But it's not just multinationals that are granted such exempt status. Weekly Der Spiegel reports that among the more than 1,500 companies that are able to escape paying the tax this year are chocolate factories, poultry farms and slaughterhouses. It quotes energy expert Andreas Löschel as warning that if the policy isn't reversed, "only the stupid ones will not be freed from the surcharge." Even many midsize companies can prove some sort of international competition, so the tax burden falls disproportionately on small businesses.

And the negative effects of Merkel's Energiewende are hurting even Germany's neighbors:

Germany's green-energy push nevertheless remains fairly popular at home, but not abroad. Neighboring countries like the Czech Republic and Poland, which are tied to the same electricity grid as Germany, have been compelled to absorb the fluctuations that stem from its wind-energy production. These countries now intend to build security switches on their borders to prevent overloads and blackouts.

The conservative German newspaper Die Welt has little sympathy for its own government, arguing the Czechs and the Poles cannot be blamed for acting in what it calls "self-defense." Rather, Merkel's administration was "blinded" by its lofty ambitions, the paper editorialized last month, and used the grids of neighboring countries without even asking their permission, let alone paying for it.

Die Welt recognizes that the Czech Republic's and Poland's decision fragments the European energy market and "makes Germany the electric island in the European energy network."

Germany may meet its goal of boosting renewable energy production significantly to wane itself of coal, natural gas and nuclear, but that achievement will come at a price: literally for the German consumer, who will be paying a higher electricity rate than his European counterparts, but more importantly to the European single market which is now one bit less integrated.

Read the entire article here

Germans are hard working and law abiding people, which is why they so far have been prepared to pay for Merkel's energy madness, without complaining too much. But it is most likely that their patience will run thin in the not too distant future, forcing Merkel - or her successor - to make another Energiewende, reversing the entire policy. 

Czech President Klaus: A process of creative destruction is needed to save Europe

Czech President Vaclav Klaus has again delivered a sharp criticism of the overregulated European economic and social system and integration model, which has led to economic stagnation and an acute sovereign debt crisis:

The benefits – promised as a result of accepting a common currency – never arrived. The assumed increase in international trade and in financial transaction was relatively small and was more than offset by the costs of this arrangement.

In good weather (in economic sense), even the non-optimal currency areas could function (as all kinds of fixed exchange rate regimes did for some time). When bad weather came – the financial and economic crisis at the end of the last decade – all the inconsistencies, weaknesses, inefficiencies, discrepancies, imbalances and disequilibria became evident and the monetary union ceased to properly function. This can´t be considered a surprise. In the past all fixed exchange rate regimes needed exchange rates realignments sooner or later which is another argument found in every elementary economic textbook.

The expectations, better to say wishes or dreams, that a very heterogeneous European economy would be made homogenous by means of monetary unification were proved to be wrong. The same is true about all – now proposed – banking and fiscal unions.The European economies have diverged, not converged since the introduction of euro. The elimination of one of the most important economic variables – of the exchange rate – from the existing economic system led to an inexcusable blindness of politicians, economists, bankers and all other economic agents.

Klaus laments the fact that the current European leaders still refuse to admit that "one size does not fit all":

The European Union decision-makers do not want to see it. Their way of thinking is based on an almost communist type of reasoning: economic laws do not exist, politics may dictate economics. People like me were raised in an era when such a mode of thinking was dominant in communist countries of Central and Eastern Europe. Some of us dared to express our disagreement with it already in the past. We were considered enemies then, we are considered enemies now.

Time is ripe for a fundamental decision: should we continue believing in the dogma that politics can dictate economics and continue defending the common currency at whatever costs or should we finally accept that we have to return to economic rationality?

The answer to such a question given by the overwhelming majority of European politicians until now has been YES, we should continue. Our task is to tell them that the consequences of such a policy will be higher and higher costs for all of us. At one moment, these costs will become intolerable and unbearable. We should say NO. We should accept that we find ourselves in a blind alley and in such a case the only possible way out is the way back.

As I said, what we need is not a new summit in Brussels, but a fundamental transformation of our thinking and of our behaviour. Europe has to undertake a systemic change. Coming to such a decision needs a genuine political process, not the approval of a document prepared behind closed doors by a group of EU bureaucrats. It must arise as an outcome of political debates in individual EU member countries. It must be generated by the people, the “demos” of these countries. (There is no demos in Europe, there are just “inhabitants” of Europe.)

We undergo a crisis. But crisis is – in Schumpeter’s definition – a process of creative destruction. Not everything can be saved and maintained. Something must be destroyed or left behind in this process, especially the wrong ideas. We should get rid of utopian dreams, of irrational economic activities and of their promotion by European governments. Part of this implies that even some states must be left to fall. The opponents of such positions keep saying that such a solution would be costly. It is not true. The prolongation of the current muddling through is more costly. The costs the Europeans are afraid of are already here. They are the so-called sunk costs.

Read the entire speech here

The current leaders of the EU countries are prisoners of their own failed policies, and will not be part of the solution. However, there will be a time when a new generation of European politicians are ready for wiser and more realistic ways to cooperate in Europe. 

Czech President: Eight measures that could save Europe

Czech President Václav Klaus is just about the only European leader who dares to tell the truth about the present state of the euro and the European Union. And he knows what should be done in order to make the necessary changes: 

.. there is time for a fundamental decision: should we continue believing in the dogma that politics can dictate economics and continue defending the common currency at whatever costs or should we finally accept that we have to return to economic rationality?

The answer to such a question given by the overwhelming majority of European politicians has been until now YES, we should continue. Our task is to tell them that the consequences of such a policy will be higher and higher costs for all of us. At one moment, these costs will become intolerable and unbearable.

We should say NO. The European politicians should be forced to admit that we find ourselves in a blind alley and that in such a case the only possible way out is the way back.

--

Europeans should say NO and start introducing radical systemic changes which have to include the following measures:

1. Europe has to get rid of the unproductive and paternalistic soziale Marktwirtschaft, “augmented” (which means further undermined) by the growing role of the green ideology.

2. Europe should accept that the economic adjustment processes take time and thatthe impatient politicians and governments usually make things worse. The politicians should not try to mastermind the markets, to micromanage the economy, to “produce” growth by government stimuli and incentives.

3. Europe should start preparing comprehensive reductions of government spending and forget flirting with solutions based on tax increases. The reductions must dominantly deal with mandatory expenditures, because discretionary spending cuts are – as a long term solution – quantitatively more or less insignificant.

4. Europe should interrupt the creeping, but constantly expanding green legislation.The Greens must be stopped from taking over much of our economy under the banner of such flawed ideas as the global warming doctrine.

5. Europe should get rid of the excessive centralization, harmonization, standardization of the continent and after half a century of such measures start decentralizing, deregulating and desubsidizing its society and economy.

6.Europe should make it possible for countries which are the victims of the European monetary union to leave it and to return to their own monetary arrangements.

7.Europe should forget such plans as a fiscal union or a banking union, not to speak about antidemocratic ambitions to politically unify the whole continent.

8. Europe should return to democracy which can exist only at the level of nation-states, not at the level of the whole continent. It requires returning from supranationalism to intergovernmentalism.

Read the entire speech here

Václav Klaus on the global warming debate: "It is all about freedom"

Chech President Václav Klaus´s notes for his speech at the Heartland Institute conference are worth reading. Here is an extract: 

Can a decisive change come as a result of new empirical data? I doubt it as well.It is evident that the current temperature data confirm neither the GWD alarmist and apocalyptic views, nor their quasi-scientific hypotheses about the exclusivity of relationship between CO₂ and temperature. The world has not warmed up very much since the end of the last century but a period of twelve years is too short to shatter the whole carefully built edifice of the GWD. We shouldn´t forget that we have been arguing in the past that a century in climatology is too short to prove the global warming as a long term trend. That is why, to my great regret, we have to – symmetrically – accept that a decade is not sufficient to do the opposite.

There is no doubt that most of the true-believers in the GWD remain undisturbed in their views. Some individuals leave the bandwagon (the most recent well-known case is James Lovelock) but those people who have vested interests (and there are many of them now) together with the men and women who innocently and naively sympathize with any idea which is against freedom, capitalism and markets are still “marching on”.

Discussing technicalities is not sufficient, because the supporters of the GWD are not interested in them. We are not dealing with people who are authentically interested in science and in incremental changes in temperature and their causes. For them, the temperature data are just an instrument in their plans to change the world, to suppress human freedom, to bring people back to underdevelopment. Their ideas are the ideas of ideologues, not of scientists or climatologists. Data and sophisticated theories will never change their views.

We have to accept that they have succeeded in establishing the religion of environmentalism as the official religion of Western society, as the religion which asks for a radical transformation of the whole Western civilization. We – at least some of us – have to play with them in the arena chosen by them.

There are probably more and more people around us now who do not buy the alarmism of the GWD but we have to accept that they are not sufficiently motivated to do anything against it. And they don’t know how. Politicians and political activists, bureaucrats in the national and international organizations, and representatives of the subsidized businesses are organized and due to it are able to push this doctrine further ahead because to do so is in their narrowly defined interests. Ordinary people are not organized and do not have politically formulated interests. They are also not helped by the existing political parties because these parties are not raising this issue either. They are already – almost all of them – more or less captured by the Greens.

To sum up my today’s simple message: empirical data are important; scientific discoveries are important; the disclosure of malpractices in the IPCC and other “bastions” of the GWD are important; but we have to take part in the undergoing ideological battle. The subtitle of my five years old book was “What is Endangered: Climate or Freedom?” There is no doubt that it is all about freedom. We should keep that in mind.

President Václav Klaus on what Europe needs

My favourite European head of state - Czech President Václav Klaus - offers some excellent suggestions as to how to solve the European malaise:

As I said, the escaping from the current European crisis needs a fundamental systemic change, which means at least two things: 

-       the transformation of the European social and economic system, and

-       the restructuring of the European institutional or political arrangement (in another terminology, the form of European integration).

Let me tentatively suggest the main components of such a change:

1.     We have to get rid of the unproductive and paternalistic soziale Marktwirtschaft, “augmented” (which means further undermined) by the growing role of the green ideology.

2.     We should accept that the economic adjustment processes take time and that the impatient politicians and governments usually make things worse. The politicians should not try to mastermind the market, to micromanage the economy, to “produce” growth by government stimuli and incentives.

3.     We should start making comprehensive reductions of government expenditures and forget flirting with solutions based on tax increases. These reductions must dominantly deal with mandatory expenditures, because discretionary spending cuts are – as a long term solution – quantitatively more or less insignificant.

4.     We should stop the creeping, but constantly expanding green legislation. The Greens must be stopped from taking over much of our economy under the banner of such flawed ideas as the global warming doctrine.

5.     We should get rid of the centralization, harmonization, standardization of the European continent and after half a century of such measures start decentralizing, deregulating and desubsidizing our society and economy.

6.     We should make it possible for countries which are the victims of the European monetary union to leave it and to return to their own monetary arrangements.

7.     We should forget such plans as a European fiscal union, not to speak about ostentatively antidemocratic ambitions to politically unify Europe.

8.     We should return to democracy, which can exist only at the level of nation-states, not at the level of the whole continent. It requires returning from supranationalism to intergovernmentalism.

Read the entire speech here

PS

 Germany - a country that I greatly admire - is regrettably the main obstacle towards the kind of development Klaus suggests.

For historic reasons, Germans - both political leaders and the population in general - have for decades now supported a utopian idea of Europe. As the influence of the Church - sadly - has declined in Germany, this almost religious "Europeanism" has filled the vacuum. During the last decade or so this developmeent  has been augmented by the growth of the "green" religion, which now seems to dominate all major political parties in Germany.

This new secular religion will of course in the end bring nothing but failure. Only the ingenuity of the German entrepreneurs and workers has - so far - prevented an economic and social decline. But this is only the calm before the storm.

When the Chinese bubble bursts, and the so far extremely succesful German export industry grinds to a halt, the greatest failures of the Merkel government - the senseless support for the failed euro currency and  the even more senseless "Energiewende" (energy transition policy) - will become evident to German voters.

Sadly, there are not many politicians and parties, which are ready to take over when the storm begins to blow in Germany. Hopefully some good people in the traditionally sensible CSU (the CDU´s Bavarian sister party) will then show real leadership and bring Germany back to a sound path to the future, in line with what President Klaus has suggested.

President Klaus: The present EU is a straightjacket blocking economic activity

Czech President Václav Klaus is always worth listening to. In a key-note speech given at the 13th GCC Industrialists’ Conference in Riyadh, Klaus describes what went wrong with the European project, "which started with a rational and undoubtedly positive idea of its founders to liberalize Europe, to open it up, to eliminate barriers existing at the borders of European countries, to form a free trade zone and a customs union, to create a common market and a large interconnected economic space":

The overal liberalization and the removal of barriers were replaced by a different project – by centralization, regulation, and standardization, by harmonization of most of economic activities and economic parameters, by radical shift of competencies from individual member countries to the EU headquarters in Brussels, by the change of the whole concept of integration from intergovernmentalism to supranationalism, by de-nationalization of European member states and by a shift towards European governance. A fundamentally heterogeneous European continent, which flourished in the past because of its diversity and non-uniformity, has been gradually artificially unified and homogenized by a centrally organized governance and legislation. It brought about negative economic effects and led to what is called a democratic deficit (or lack of democratic accountability). I call it postdemocracy.
This very problematic tendency has been accelerating in time with crucial turning points connected with both the Maastricht and Lisbon treaties. At a lower level of integration, the consequences of centralization had not been that dramatic. In the era of a deeper integration, the existing European heterogeneity became more and more in contradiction with the institutional uniformity, which turned into a form of straightjacket and keeps blocking the economic activity.
The most important moment in this process was the establishment of the European Monetary Union and the introduction of common currency in a group of originally 12, now 17 countries that do not form an optimal currency area. The current Eurozone sovereign debt crisis is an inevitable consequence of one currency, one exchange rate, one interest rate for countries with very different economic parameters. The political decision about this arrangement was taken without sufficient attention being paid to the existing economic fundamentals. I have to say that some of us have been criticizing this project for years, as early as in the early 1990s.

Read the entire speech here


PS

The problem is that the failed European system that Klaus describes so well is almost impossible to change, at least to the better. It is therefore likely that the required reforms will take place only after a deep economic and social crisis.

Václav Klaus: The EU is a foreign empire

Czech president Václav Klaus has again - rightly - warned about the danger to freedom created by he present "ever-closer Europe" ideology:

"First, Vienna ruled over us for three centuries, and then Berlin did for a few years. Then the four decades of Moscow followed, and then ten years of freedom. Now we have Brussels," Klaus told the European Forum held in Alpbach, Austria.
The president was answering a question about whether he regretted the fact his country had joined the EU.

"After the Velvet Revolution of 1989, there were graffiti on the walls reading, "Back to Europe", and in that situation, it went without saying that we belonged to Europe. That was before Maastricht, that was the time of the European Community," he explained.

According to him, Europeans should cooperate and live together, but that should be taking place through bilateral cooperation between governments, rather than through "supernationalism

Read the entire article here

It is useful to read what Klaus had to say about the EU in a speech he gave on July 22 in Perth, Australia:

A special case is Europe. In the 1950s, the leading idea behind European integration was to liberalize, to open-up, to remove barriers at the borders of individual European countries, to enable free movement of not only goods and services but of people and ideas around the European continent. It was a positive concept. The situation changed during the 1980s and the decisive breakthrough came with the Maastricht Treaty in December 1991. Integration had turned into unification, liberalization into centralization of decision making, into harmonization of rules and legislation, into the strengthening of European institutions at the expense of institutions in member states, into the growth of democratic deficit, into post-democracy.
It was shifted further in the same direction by the Lisbon Treaty in 2009. The EU has been gradually changing from community of cooperating nations to the union of non-sovereign entities. We see that the move towards an “ever-closer Europe” – without an authentic European identity and an European demos – leads to the accelerated formation of supranational bureaucratic structures. It tends to restrain freedom, democracy and democratic accountability, not to speak about economic efficiency, entrepreneurship and competitiveness.
The recent problems with the euro demonstrate it quite convincingly. When I had been criticizing the concept of the artificially created European common currency for the last two decades, no one wanted to listen. It does not give me any pleasure to see now that I was right. It would have been better for me – as for someone who lives in Europe – if I were wrong.
Let me conclude by saying that fighting for freedom remains the issue of the day even in the 21^st century. We should not become victims of new progressive “isms” dreaming about changing the world and perfecting the men defended and promoted by political correctness. We should stand up for our good old conservative beliefs and convictions. Both in Europe and in Australia.

Read the entire speech here

Czech president Klaus´s global forecast

Czech president Václav Klaus is one the very few politicians, who´s speeches and articles always are interesting to read. In his recent speech at the Com.Sult congress in Vienna Klaus offers the following forecast for the next two years:

1. the European single currency, the Euro, will survive its current acute crisis but we will pay a very high price for it in long-term economic slowdown if not stagnation, in a heavy burden of inter-country fiscal transfers, in the further loss of sovereignty of the EU member states, in increasing centralization of decision-making in Brussels, in a growing democratic deficit;
2. eurodebt crisis à la Greece or Ireland will reach other eurozone countries. The costs of helping them will be increasing but these costs will be – reluctantly and unwillingly – paid by the tax-payers in the rest of the EU;
3. economic growth in Central and Eastern European countries, including the Czech Republic, will be faster than in Western Europe. The gap in the level of economic development between the European East and West will keep diminishing;
4. economic growth in the U.S. will continue to be weak. It will be taken as a disappointment and Obama’s administration will have more and more problems. It becomes clear that – because of structural deficiencies – Obama’s fiscal stimulus cannot rescue the U.S. economy. It stimulates employment more in China and India than in America;
5. global economic growth will continue to depend on new dynamic economies in Asia and Latin America. The BRIC countries will grow fast and their catching-up process will continue. The BRIC economies as a group are practically as important to the global economy as the United States economy already now and their role in the world economy will grow.

Read the entire speech here. The analysis in the first part of the speech is strongly recommended reading.

The climate in Europe is deinitively changing.. which is proved by the fact that at the Vienna Congress the whole audience (700 participants) applauded loudly and were shouting "bravo" after President Klaus said the following sentense: "As someone who spent almost fifty years living in an oppressive, visibly irrational and hopelessly inefficient communist system, I hope I can afford to say that I see more similarities between communism and the current EU than it is considered politically correct to admit".


My comment to Klaus´s points:

"Mrs. Merkel and I will never, never allow the Euro to fail"
 Nicolas Sarkozy

"Let me say this very clearly again. The euro is our currency. And it is much more than just a currency. It is the embodiment of Europe today. Should the euro fail, Europe will fail"
Angela Merkel  

If one considers what Merkel and Sarkozy said a couple of days ago in Davos, Klaus´s (from a eurorealist point of view) rather pessimistic forecast looks very plausible, but I think there is another scenario that may lead to an accelerated demise of the euro in its current form. This scenario takes a more pessimistic view of the development in China as its point of departure:

It now seems very likely that the Chinese property bubble will burst in the near future, causing huge problems for countries now relying on exports to China.

The present strong economic growth in Germany - the euro paymaster - is very dependent on exports to China. A crisis in the Chinese economy would thus have major repercussions for Germany (and of course many other countries). In that kind of a situation Germany will - despite Merkel´s and Sarkozy´s fine words in Davos - not hesitate to change its attitude towards the common currency. An entirely new ballgame would follow. It could lead to the formation of e.g. a "Northern euro" consisting of those countries that are capable of playing on the same level as Germany, or some other similar arrangement.