Mohammed El Erian, Head of the world's largest Bond Fund, PIMCO, had earlier described the Eurozone Debt Crisis as a slow motion train wreck. He told CNBC,
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"The first rule of crisis management hasn't been met by the Europeans, and that is to get ahead of the crisis, be seen as proactive rather than reactive, As long as they're being seen as reactive we're going to have a slow-motion wreck going on in Europe. We're going to wake up and it's going to be a new country we're talking about. Unless we see more than just liquidity support, unless we see something that deals with the balance sheets, expect this contagion to go up."
Rather than doing that, what yesterday, amounted to was the ECB announcing that it was thinking about applying the breaks to avoid the wreck that everyone else could see was already unfolding. Yet not only did this result in Eurozone periphery economy Bonds being sold off, but, in fact, the spread between those Bonds and German Bunds narrowed yesterday and today.
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What this demonstrates, yet again, is something I have been discussing over the last few months, and which, in fact, the Wikileaks revelations also demonstrate. The way modern states work, is not on the basis of democracy and openness. In recent days, we have heard a multiplicity of politicians, and full-time bureaucrats decrying the leaks, and making the case that it is obvious that such people have to lie through their teeth in what they say in Public compared with what they actually think and do behind the scenes. The reality is that if they had to act out in the open, if they had to express their real beliefs and ideas, and motivations for doing what they do, a large part of the ideological edifice of Capitalist society would be torn down. Either they would not get support from the population at large for the actions they propose, or else they would be forced to air the differences between different sections of the ruling class and its state in public view, in order that the dominant section could win popular support for its actions. That would weaken the position of Capital as against Labour, it would mean putting some real content into the sham of bourgeois democracy. So instead, the ruling class hold these debates behind closed doors, the blood is cleaned up off the carpet, before the rest of us are allowed a look into the room.
In short, the changes that Big Capital needs in Europe, and which I have outlined over recent months will not be brought about by open democratic debate, but by bureaucratic wrangling, and arm twisting.
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In another interview with CNBC, yesterday, Spanish PM, Zapaterro, spelled out those necessary changes towards the creation of an EU state.
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