Eurobloat #0028 • August 2012
August is the month Europe goes on holiday, so naturally it is the month a central banker decided to underwrite a whole continent's debt with a sentence. While the eurozone broke its own unemployment record, the men who built the euro reached for the only tool they ever trust: more of everything they already had too much of.
Folly of the Month: The bank that promised everything and printed nothing
On 2 August 2012 the Governing Council of the European Central Bank let it be known that it might undertake outright open market operations of a size adequate to reach its objective, the warm-up act for the formal scheme unveiled weeks later in which the bank promised outright transactions in secondary sovereign bond markets with, in its own words, no ex ante quantitative limits on size. A central bank that exists to keep prices stable had decided its real job was keeping a currency union together by buying the debt of the governments that ran it into the ground. The genius of the scheme was that it cost nothing in August, because the mere threat moved the markets, which means no parliament ever had to vote for the unlimited liability now hanging over every taxpayer in the bloc. They called it safeguarding the singleness of the monetary policy. The rest of us call it a blank cheque written in a language designed so nobody could read the amount.
→ ecb.europa.eu → ecb.europa.eu
1. The euro's jobless miracle reaches a fresh record
August 2012 produced the highest eurozone unemployment ever recorded, 11.4 per cent, with 18.2 million people out of work, and roughly one young Spaniard or Greek in two unable to find a job. The single currency was supposed to deliver growth and convergence; it delivered convergence on misery instead, with Germany at 5.5 per cent and Spain near 25.
2. The plan to log everyone's calls is merely resting
Quietly during August the Commission let it be known that the promised revision of the Data Retention Directive had no precise timetable, having postponed the real review to 2014. The directive forcing every member state to store every citizen's phone and internet records was not abandoned on principle, you understand. It was simply parked, so the people who designed mass retention could keep insisting member states implement it while pretending to think about whether it was lawful.
3. Greece guards its own border, no thank-you note from Brussels
In early August 2012 Greece launched Operation Aspida, deploying around 1,800 extra officers to its land border with Turkey at Evros, alongside Operation Xenios Zeus inland. A member state finally enforcing its own frontier worked so well that the crossings simply moved to the Aegean islands, which is the predictable result when a borderless Schengen leaves the messy business of an external border to whichever country happens to sit on the edge of it.
4. Spain prepares its homework for the headmaster
By the end of August 2012 the Spanish authorities, in consultation with the Commission, the ECB and the IMF, were to deliver the legislative blueprint for a bad-bank scheme, with stress-test data handed to consultants by mid-month. Madrid had requested up to 100 billion euros for its banks and in return was set deadlines, reviews and reading lists by a troika that answers to no Spanish voter.
5. Cyprus chairs the club while asking it for money
Cyprus spent August presiding over the Council of the European Union, the bloc's rotating chairmanship it had taken up on 1 July, while its banking system teetered and it begged the same bloc for a rescue. Officials gamely insisted they would not let the crisis distract them and that the presidency would proceed as normal, which is one way of describing a host that has to pass round the collection plate between sessions.
6. The slow march towards an ECB that supervises everyone
August was spent preparing the Commission's proposal, tabled in September, to hand the European Central Bank sweeping authority as the single supervisor of the eurozone's banks. The same institution that had just promised unlimited bond buying was now to be made referee of the lenders whose debts it would be buying, which is the sort of conflict of interest that would close down a smaller firm.
7. Brussels law decides how high your electricity meter hangs
The Court of Justice was wrestling with Belov, a Bulgarian case asking whether mounting electricity meters seven metres up in Roma districts breached EU anti-discrimination law. Whatever one makes of the merits, the lesson is the reach: the question of where a power company fixes a meter in a Bulgarian town now travels to Luxembourg, because there is apparently no corner of national life too small for the Charter to occupy.
8. The biggest trade war Brussels ever picked is loaded and waiting
Following a complaint lodged on 25 July 2012, the Commission spent August preparing to open, on 6 September, its largest ever anti-dumping investigation, against some 21 billion euros of Chinese solar panels. Nothing says open and confident trading bloc quite like preparing to slap duties on the cheap clean-energy kit your own climate targets demand.
9. The roaming caps grind on, one tariff at a time
Throughout August the freshly lowered mobile roaming price caps, in force since 1 July 2012, continued to govern what your phone could charge you abroad, down to the megabyte. It is a small mercy on the bill and a large monument to a Union that believes the proper level for setting the price of a text message is a regulation binding 27 nations at once.
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