The fall of the euro and the search for alternatives

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11.01.2011 The modern economic order considers itself without alternatives – but is it really? By Abu Bakr Rieger
The fall of the euro (the USD) and the search for alternatives
(gm) It is one of the ironies of modern history that China is set to buy yet more government bonds from European debt transgressors in order to help buy up the euro and that it should be a communist regime who lends a hand to capitalists everywhere. Having already rescued the Africans and Americans, now the Chinese are to save the Europeans from drowning. Thus globalism proves itself an effective neutraliser of perceived political and cultural divides.
To kick off his tour of Europe, China’s Executive Vice-Premier Li Keqiang announced in Madrid his country’s intention to buy up more Spanish securities: “We are a reliable long-term investor, which is why we are investing in Spain as a financial location.” Meanwhile, the two states signed economic treaties worth 5.6 billion euros.

China had previously helped bail out Greece by buying government securities. “With financial stability packages, China is supporting the EU by helping indebted countries weather the crisis,” wrote Li in a guest article for Munich’s Süddeutsche Zeitung.

China’s shopping spree through Europe’s major capitals is based on a simple strategy: Beijing is buying up sections of the economy, and with them influence on European policies. The game is far from over. China has vast foreign currency reserves of around 2.65 trillion dollars.

Given the silent synthesis of two formerly adversarial systems – made clear for all to see by the crisis of the euro – 21st century politics will need some rethinking. Authoritarian capitalism is preparing for more hostile takeovers, having become almost unassailable in its role as the new Mega-Creditor. Economic value is establishing itself as the only relevant evaluational category. The US Secretary of State formulated the new state of affairs, asking who would talk straight with their creditors?

‘Economic state of emergency’ is a mode of governance which will now have to be re-assessed following the various campaigns that have been needed to save the euro. Scottish author Ian Dallas was probably the first to formulate an intellectual foundation for this phenomenon in his book Technique of the Coup de Banque. He saw clearly that in recent decades it has been economic powers, not politics, that have transgressed the law. The financial system, presenting as global financial technique, has become so powerful that man now has to return to the all-inclusive context of Revelation in order to survive spiritually and politically.

The euro crisis is a painful reminder to Europeans of the lost primacy of politics. Intellectual resistance is resurgent, especially in the motherland of the deutschmark. A recent publication by former head of the German Association of Industry, Hans-Olaf Henkel, has turned heads. In his book Rettet unser Geld (Save Our Money), the former industry manager criticises the failure of politics, claiming that all of the guarantees for the stability of the euro which were made to the Germans in return for giving up the deutschmark were thrown overboard during the Greek crisis.

The actual “Guardian of the Constitution”, the Bundesbank, was disempowered when the euro was established. It is known that Helmut Kohl bought France’s consent to German re-unification with a promise to give up the deutschmark. Nevertheless, recalls Henkel rightly, the then Finance Minister Theo Waigel initially set up the European finance structure along typically German lines and not, say, French ones (i.e. laissez faire). To financially conservative Germans, the independence of the European Central Bank and the prevention of a “transfer union” (in which poorer parts of Europe such as Greece, Portugal and Spain would become semi-permanent peripheries dependent on massive subsidies from richer countries) were formerly non-negotiable.

Then came what Olaf Henkel calls “the Putsch”. First of all, deficit procedures were not taken seriously. Then the Maastricht criteria were softened, the Greeks were dragged on board the leaking boat, and then, as a prelim and with bad weather approaching – the European rescue umbrella was opened wide.

In May 2010 Sarkozy cowed Angela Merkel into submission, threatening the imminent collapse of currency, nation and world, and – Henkel comments bitterly – even with the re-introduction of the worthless old Franc. Merkel gave way. A despairing Henkel quotes the head of the Ifo Institute for Economic Research, pointing to the naivety of the Chancellor: “It was the French banking system that was in danger, not the euro.”

Henkel sums up the consequences for the Germans: “I’m afraid they still haven’t noticed that what happened in Brussels that day in May 2010 was a putsch against the rule of law, a betrayal of the German state, and a financial fraud on German taxpayers.” There it is again, the state of emergency.

This image of a putsch also encompasses Henkel’s theory that former German President Horst Köhler stepped down during those days in May on account of pressure to sign the European rescue package – a pressure which was fundamentally anti-constitutional. The President was given less than two days for his difficult assessment of the constitutionality of the Act. Köhler, former head of the IWF, had previously criticised the world financial markets, calling them a “monster” that prevents political freedom.

Like euro-critic Henkel, many Germans and other Europeans are busy wondering what political force is still left standing against all this. It’s a difficult question. None of the parties, Left or Right, seems to see an alternative either to the euro or to the politics of new indebtedness. New “Right wing” parties are neoliberal when it comes to economic issues, while gathering up Europe’s old racism and directing it against the Muslims. The presses in the paper money factories run hot. More and more intellectuals are asking what it means when a system constantly describes itself as being without alternative.

It is here that another of history’s ironies reveals itself. The only really rational alternatives to today’s suicidal financial system are to be found within Europe’s religious heritage. The religions, after all, agreed for centuries that the taking of interest – the mother of all economic problems – is forbidden. Disparaged by politics as unenlightened and backward, recently it has been Muslim and Christian thinkers who have defined this other side.

Unlike businessman Henkel they are not critics of the euro alone, they consider the paper money experiment a moral and economic failure. Calling for free markets, alternative currencies and a return to the ban on interest, they are busy crafting potential alternatives to the banking system. “The banks are dead” – a sentence which induces indignation and cries of disbelief in today’s “secular” Europe.

The political idea of liberating money has a long tradition in Europe, and the myth of paper money has been attacked numerously, by such figures as Sylvio Gesell with his famous experiment in Wörgl, and by great European thinkers from Goethe to Ramuz. In Goethe’s renowned play Faust, the idea of paper money is attributed to Mephistopheles. And in German philosophy, Martin Heidegger defined the nature of Technik (technique, technology) as “challenging the creation”.

Politics of all orientations ignored the stark dangers of an escalating paper money system, and political ideologies saw paper money, banks and the interest system itself merely as welcome techniques of acquiring power. After the Second World War, money printed by central banks financed new imperial ambitions. The history of the influence of European philosophy ends with us gazing out on an economic vortex which threatens to suck in and consume the old political order. Man, ever desirous of power, has ended up impotent.

The “Coup de Banque” of the 21st century – announces a newly refined conviction – can only take place using new, authentic currencies. Islam, vilified by its opponents as a political ideology, in fact contains a complete, alternative economic model, and one which limits the power of politics over markets and money. According to Muslim tradition, the foundation for a just economic order is the rational, free treatment of money as a means of exchange. And of course, more than 1.5 billion Muslims already hold the greatest potential for a sustainable monetary union with their Gold Dinar and Silver Dirham.