The future of the European Union hangs in the balance and with it, the fate of much of Western Europe. Before we discuss what’s happening in Germany, the British Parliament passed a bill last week called, ‘Referendum Lock‘. Essentially the British are requiring any movement of sovereignty, or treaty effecting the UK to be voted on by the British public. Previously, under the “passerelle clauses”, the EU council of ministers could vote and mandate. This exempts Great Britain from automatically following an EU council decision.
The British are slowly trying to redefine their position within the EU. Whether or not they remain a member in the long term is another question.
Germans’ trust in the EU hits all-time low FAZ reports on a poll conducted by the Allensbach Institute, showing that German citizens’ trust in the EU has fallen to an all-time low. 63% of respondents had “little or no trust” in the EU, up from 51% in March 2010. Only 25% had “very large or large trust” in European integration, down from 37% ten months ago. 68% of respondents had “little or no trust” in the single currency.
A poll conducted by Bloomberg, of 1,000 investors, analysts and traders, reveals that 59% think one or more members of the eurozone will leave the currency by 2016, 11% think this will happen within 12 months. The Wall Street Journal reports that yesterday’s debut bond auction to fund the EFSF was nine times oversubscribed.
As Greece, Portugal, Spain, Ireland and other EU nations continue to drain Germany and France, I predict a tipping point. Not necessarily in 2011, but sooner than later, when those countries revert to the currencies in use prior to the Euro. Germany still can shed itself of the Euro. Despite the temporary challenges from such a move, in the long run a strong Deutschmark would be better for Germans and the time is coming when the voting public will demand it. When and if that happens, most of the rest of Europe will find themselves in a very deep financial hole.
Germany holds the key to any future that the EU may have, and it appears that the great mass of the German people do not have confidence in the EU. The German people will find themselves bailing out nations who have no intention of capping their debts and deficits. (Ireland, Greece, Portugal, Spain, etc.) When the tipping point comes, the German people will vote their future and it will bode badly for the Euro as a currency and will be the death knell for the EU as we now know it.