(5h) The ECB is interfering with the democratic processes

Finally, the specialists at the European Central Bank (ECB) had the guts to do what they always wanted to do: QE or Quantitative Easing. Not democratically-elected politicians decided this; no, unelected economists and bankers decided to introduce QE as they know everything about bringing a world economy to its knees so they can profit. Because lowering the interest rates to almost zero over the past years didn't seem to stimulate the economy, QE means 'printing money' by buying the government bonds of Member States in the hope it will stimulate the economy and to prevent inflation turns into deflation. Maybe there are moments QE can be used but only when really necessary and not now when the economy is relatively OK (although doesn't grow as strong as it did in the past as can be expected) because even economists admit QE (and thus its consequences) is little understood. I even claim politicians and economists should have been preparing the people for decreasing prices as that would be positive when incomes go down. Now QE may result in increasing prices when inflation remains above zero while wages for many people may fall except for the very rich, resulting in an even more unequal society. Indeed, at the same time as QE is introduced, even less government is demanded to save money so taxes can be reduced even further. As a consequence, more unemployed teachers, nurses, police but also civil servants and thus even less control on the (big) industry and even more laws that can be avoided unchecked (such as happened at HSBC but not exclusively there) while the people that (fear to) loose their job are even less likely to buy things and thus to stimulate the economy. Is QE meant to result in continuously increasing prices until they collapse as happened during the first part of this crisis? €60 billion per month is allowed to flood the markets and up to a total of €1.1 trillion, money that no longer belongs to the central banks and governments but to private banks that should use it to stimulate the economy. But, as it seems the QE took (many) politicians by surprise, I conclude that politicians couldn't introduce policies that should force banks to use the money in such a way it would benefit the economy and not the banks (of which many have their headquarters outside the EU such as in Switzerland and London where euros may be used to enrich those places by e.g. improving cities while Eurozone countries may benefit little in comparison to what they gave countries). Europe should have introduced schemes on which conditions the money can be used instead of giving a blanco cheque.

But QE is also an attack on our democracies. For instance, some Belgian politicians told our finance minister to shut-up because he dared to question whether QE is a good decision and whether it would not increase the problem. But he was told not to scare people - political language for saying that people should not be informed about possible dangers. If even democratically-elected politicians have to keep silent and can't question certain policies, who can? And it is not only one Belgian (Flemish) politician who doubt the QE, also in Germany and the UK people warn for any not yet understood consequences. But, what can be expected from old political parties that want power? Indeed, they will not accept that people question the decision of the powerful as those parties want to continue to sit around the same table as those powerful. But at least the investors saw it was good as shares went up because they probably see the opportunities for themselves. I think it is unacceptable that, when politicians decide against certain policies, bankers still go ahead although of course, that is the consequence of giving away these powers to the industry that then can use these powers to benefit themselves.

Will it work? I don't think so and by the time a new banking crisis hits Europe, the release now of about 1.1 billion euro may have weakened the currency to such an extend that the EU will not be able to guarantee people's savings that people may loose when banks fail. Because independent economists warn us that the QE may result in a currency that becomes weaker. In addition, banks will decide what happens with the money (probably without being told how) and thus are likely to invest in old economies such as the fossil fuel industry as here a return is still guaranteed, certainly now investments in green energy have decreased while many countries start to be in favour of fracking; thus that climate change will happen is even more likely. But, they will probably not invest the money in new school buildings and hospitals or pay the wages of teachers, nurses and civil servants because here the return is much slower although they may use some of the money to pay their own bonus. They may also approve mortgages so people can buy even more expensive homes until that bubble burst again, together with other bubbles. But it is unlikely there will be many investments in new industries (such as green energy) that still have huge potentials to grow although result in less profits because afterwards people don't need to buy as much oil, gas or electricity as before. But as a result, climate change may be their undoing as scientists warn us the unpredictability of the weather increased.

And we can be sure the ECB (but also other central banks) will continue to use their powers to force their own policies on society and thus will continue to endanger democracies. Indeed, the 'wrong' political parties were elected during the latest Greek election and thus within days after my previous publication about Greece, the ECB decided that Greece should be punished by being harsh although it seems the ECB threw out a lifeline before the recent EU top. Nevertheless, it shall teach ordinary people a lesson to dare to vote against the elite while it acts as a warning to people in other countries to behave.

After Greece was punished last year by forcing it to pay a higher EU membership fee for having better than expected growth, now the ECB found another way to destroy Greece as the ECB restricted financing to Greece's banks (thus if I understand it well, less QE for Greece) and as a result shares felt because the markets know what this means: it will become even more difficult for Greeks to take money out their bank accounts to buy food, pay the rent or mortgage or pay employees and thus they will further impoverish what will further reduce the Greek economy and thus the likelihood debts can ever be repaid as income from taxes will further decrease. Greek banks can still receive money from the Greek Central Bank but at a higher interest rate and thus the country that needs most urgently cheap money and thus borrow at the lowest cost now has to pay more than others ('The poorer you are, the less you get and the more you shall pay' seems to be an expression of bankers). The ECB may do this in the hope the Greek government will fall so elections can bring a return of the old powers who will agree to continue austerity and the sell-out of the country although next time the wrong parties may be elected. But it is also a warning to people in other countries to behave or face punishment. And don't expect much help from the new head of the EU, Mr Juncker, as he loves too much bankers and other industrials to not give them what they ask as he demonstrated when he was Luxembourg's PM and helped (big) companies to avoid paying taxes in their own country although he promised to tackle tax avoidance (by ordinary people) in his new job. Even some American politicians understand that the decision of the ECB may undermine Greece democratically-elected government.

If these measures will fail (I also predict that central banks in collaboration with private banks will one day start playing with the interest rates if they may consider that is needed to prevent banks sinking or 'to stimulate the economy' as that too is central bank policies) while after TTIP (Transatlantic Trade and Investment Partnership) comes into power that will give even more powers to banks and multinationals against small investors, then people but also politicians and judges may have enough of bankers and economists and dictate via laws what banks are allowed to do, even how much their employees can earn while any new products will need approval in parliaments. Then politicians will assure banks are very strictly controlled by financial and justice departments that will punish misbehaving bankers while the Fourth Power (specialists and ordinary people in control organisations) will check whether politicians, civil servants (including police) and judges do their job to keep the financial and other sectors in control to prevent again that corruption rises. Then economists may be ridiculed if it seems non-economists understand the economy better than them or would not use techniques they don't understand but keep the system as simple as possible. Of course, maybe the financial sector find ways on how to solve the crisis and good luck to them because I too prefer a solution instead of a failure. Still, most scientists agree we can't continue living as we do and thus redistribution of wealth is needed to ensure more people can work where they live what will result in a reduced workload so people can enjoy more their free time and friends, family and travelling while today the markets demand always larger profits compared with the previous year what result in employees who have to work harder while the numbers of unemployed continue to grow as well as the anger from people towards other people.

In conclusion, rules should be followed so interferences in the markets should be as little as possible except the normal corrections because the current changes benefit those who know about the changes in advance while confuse the markets and result only in more chaos. Changes should be discussed by politicians, together with economists, not enforced by people who work in the sector because that results in people with advance knowledge and thus disadvantage for everyone else. In addition, something that is little understood should not be tested on the economy of about half a billion people, certainly not when Japan already showed that low interest rates or Quantitative Easing didn't work to stimulate its economy. I'm sure, to be continued ...


Popular posts from this blog

Theresa May calls for immigration based on skills and wealth

(15d) Previous USA President Obama gave advise

Gay Pride Brussels