Euro summit deal denounced as economically unsustainable

By agency reporter
12 Dec 2011

The Green Party has dismissed current solutions to the Euro-zone crisis as short-sighted, economically unsustainable and tantamount to an attack on European democracy.

Current solutions to the sovereign debt crisis all amount to the same thing: the poorest paying the bill, says the party in England and Wales.

Two solutions are currently being discussed; first, a 2 trillion euro fund to bail out indebted countries so that they can pay their debts to banks; second, a multi-billion euro project to recapitalise the banks so that indebted countries can be allowed to default without bankrupting banks.

The first solution asks European tax payers to underwrite a €2 trillion fund. The second asks Europeans tax payers to underwrite banks. Essentially, they are the same regressive solution, which hits the poorest hardest and does nothing to resolve a systemic crisis.

The current solution does nothing to prevent future unsustainable debt and subsequent future crisis, say the Greens. Instead, it undermines democracy by putting the survival of banks before the interests of society.

Instead the Green Party has put forward an ambitious alternative to the neo-liberal, pro-corporate ideology that is governing economic policy in Paris, Berlin and the European Central Bank.

First, the party says, banks must pay for themselves. The level of capital reserve must be raised and new ratios of fractional reserve banking need to introduced and enshrined in legislation. In this way, unsustainable sovereign debt will be paid for by the banking creditors who decided to make a profit by taking the risk; not the societies who stand to suffer.

This will mean that the financial sector will need to reduce its asset base which will hit lending to the real economy. To offset this, a massive Green Investment Bank (GIB) must be created to lend to sustainable businesses and industries, where the financial sector fails to do so.

Such a GIB could be funded by the same capital that is being discussed for the €2 trillion bailout fund and the recapitalisation of European banks. In addition, the GIB could be funded by a higher banking levy and a financial transaction tax. The difference would be that tax payer's money would not be going into the financial black hole of hedge fund balance sheets. Instead, the money will be used to create real - tax payer owned - assets, in affordable homes, renewable energy and sustainable industry.

The Greens are calling on European governments to dismiss the needs of private financial institutions, provide millions of jobs and give tax payers control over their own economy. You might call it a democratic solution to the Euro-zone crisis.

[Ekk/3]

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