The Marshall Plan
Alternatively, the Acheson Plan.
The Marshall plan was the magnificent gesture from the USA to Europe in 1947. It was a plan that delivered massive investment, loans and gifts that formed the bedrock of Europe’s peace and rebuilding from which the affected population of Europe benefited for the next 60 years. However, This plan would have not seen the light of day had it not been for the tenacity of one man, Dean Acheson, secretary of state, USA ( 1893-1971) after whom the plan should have been rightly named, The Acheson Plan.
Although this is now considered history, forgotten, unremarked on, inconsequential for today or entirely unknown now by most pre 50 years olds, such was its impact that it formed the rapid reconstruction of Europe and led directly to the establishment of the ECSC, EEC, later the EU and the eventual necessity of creating the Euro.
Perhaps it is because the purpose of the Acheson plan has now been forgotten and the success of its achievements have come to careless fruition, that events have allowed professional politicians of young age to get lost in the creation of ‘the great project’ of a complete European integration. It is a project that still has some way to go with its divergent size and all of its construction having been accomplished without having established a bedrock of commonality and has generally kept a relaxed form of interdependence. The continued diversity of structure now gives rise to the idea held in some quarters in the USA, reluctant UK politicians and the markets that the project is doom to failure and the weakened euro will be the first evidence of its ultimate demise, undoing the achievement and security of the great project.
There can be little doubt that the rapid expansion of the EU from the initial 7 countries to the now 27, was bound to pose some considerable risk, not the least of which is the financial bind that was formed to hold the EEC together with wildly different economic strengths, or lack of. Those countries that also adopted the single currency now find that the currency is under pressure from the predatory financial market that is seeking to maximise it own advantage by putting pressure on the borrowings of the weaker performing members. Having to stay within a common interest rate that has been much lower than necessary and operating within a manipulated PSBR to GDP, has ignored the changed shape of global economics. Being too timid and slow to react to internal issues caused by the rapid enlargement of the EEC to the EU was a strategic deficiency. This lack of strategic direction, in both economic productive strengths and fiscal organisation is proving to be the Achilles heel of the great project, it is a situation that has become more dangerously uncertain with the abrogation of all controls over the past 3 years of the over exuberance and stupidity of the financial markets.
One of the problems of the common currency and its most obvious one were and is the different range of productive ability of the participating countries i.e. the piigs vs. the rest, (in current generic terms). The powerhouse generators, market privateers and the profligate consumers were not being monitored and were essentially indemnified with corrupt governmental controls that they are allowed to runaway with the illusion of expansion without substance.
The different productive ability between members of the EU was not of its-self an irresolvable problem, after all, within the UK, USA, Japan, China and India, for example, there are areas of huge disparity of economic or productive capacity and ability, yet they cooperate as a unit internally. The reason this ‘unity’ is the case, is ultimately because they have unified currencies and fiscal control that ‘manages’ the tensions between the different internal provinces. This functioning of cooperation succeeds even leaving aside the overall political authority or any devolved financial control that is exercised by ‘local’ regional government or the military and social control (the sovereignty issue). All of which is an additional effect to allow their single potentially dysfunctional structures to survive and examples the essential element of their existence in that their single denominations under common fiscal rules allows flexibility to support the weaker provinces. The EU has had no such overall fiscal force, consistently avoiding the necessity to recognise the need for one, while pushing on with the great project.
During the period of expansion, the inherent dichotomy of the EEC/EU between fiscal control and deviant inequitable expansion was only to be tolerated while the opportunity for growth via trade was available and supervised for the fulfilment of key parties. The construct of the union remained untested against global pressure or the market as growth was relatively easy to obtain from the initial formation of the ECSC to the metamorphosis into the EU. It was always the case though that such an expansionary benign time that allowed the Union to mature, would eventually be challenged. Although the pillars of such a challenge have been foreseen; such as conflict, divergent economic growth, pressure of social difference, population mobility and energy; they have not been of sufficient intensity to derail the project. It was inevitably one pillar, created by the EU itself, the euro, which was to offer the first real test of sustainability. It is this that the unrestrained market is designed to test.
Up to now, the ‘market’ has had no responsibility for its actions and it carries no risk in forcing a currency or interest bond war. As has been proven thus far, the market has a guarantee of last resort, sovereign support. It (the market) is immorally opportunistic on factoring in an inflationary interest insurance premium, to lift the yield on bonds against a mythical default scenario that does nothing but help propagate the contagion of uncertainty and it does so in a vacuum of culpable inactivity by governments against it. Governments are only driven to acquiesce to rumour and throw money at the market to support a weak member, at the same time create a deflationary spiral that offers no solution to the predatory nature of the markets that will remain unconvinced of the strength of such support. It is in this febrile period that the issue of the breaking of the EU or the Euro gathers momentum and some, thinking to gain advantage from the ensuing chaos, wish for it.
Some UK politicos that fondle power and independent sovereignty are working to an agenda to unpick it from the EU, an agenda that has no real proven merit. Hawkish traders, who also do not thrive on certainty and stability, will welcome the break up of the single currency. These parties might consider that a break up for some could be seen as a way of saving the stronger countries, to extricate from the weak with a controlled fragmentation to perhaps default and realign their domestic demands. Nevertheless, if just one or more choose to keep and reshape the euro, to say, first tier and second tier currencies, it will be a short-term relief. As the first tier, value will be made to rise and undermine export potential and feed inflation while the weaker will still be obligated on the first tier and at ransom to the market. In either case, the strength of each can only be gained by having fiscal sovereignty. If the euro fails completely it must mean a return to capital exchange controls, huge currency market manipulation, and trading one off against another and a constant flight of smart money. Against the impact development of huge sovereign wealth, as is increasing in evidence from China, Russia, India, South Americas, Middle East, it is impractical that any one European country can stand alone against this flow of financial pressure these countries can exert.
This pre-emptive scenario of a defunct euro or a realignment of the EU, serves no constructive purpose no matter how it is seen. Even if it is thought a breakup is as a way of soothing markets, creating fiscal flexibility or justifying the limited negativity expressed in the USA of the European project. A project that is perhaps also viewed as a potential challenge to its own economic dominance or yearning of splendid isolation, offer nothing but future anxiety and no clean view of what stable system is available to replace the EU concordat or the euro. The pronouncements of economic pundits of ill repute should carry no weight; those that failed to shout out warnings of western financial corruption are even less capable of offering a guide to solving current uncertainties.
Without exceptionally strong and new financial controls that consent to markets to operate responsibly, to allow beneficial trade and not engage in exploitive opportunism, instability will remain and get worse. With such controls, it should also be possible to make it clear that market manipulations will not be without penalty.
With the current game of holding interest rates low and devaluing currency between the prime members of the G20, the EU and the euro offers a measure of protection from market manipulation albeit that the weaker countries have to suffer interest rates on the selling of government bonds at a higher rate. As the market ultimately relies on sovereign legitimacy and stability, the EU provides the ‘loan guarantee’ to keep the euro active and defaults at bay. In providing such support, it is in effect essentially acting as a second global reserve currency. This is due to its being like a currency of a large sovereign state backed by legitimacy and stability.
The tension created by the global recession as a result of the continuing affect of the CC is of paramount importance to the west and it is in its own interest to find a path to stability and the save the Euro. The loss of the Euro will inevitably increase exposure of the Dollar and any other perceived strong currency, to currency traders. As the market is gambling on a restructure and elements verbalise doubt, it is a race to the bottom of trade opportunism with a collapsed balance of security as the reward, giving rise to an easy wider reason for conflict.
The Acheson - Marshall Plan completely recognised that the destruction wrought onto the European continent, the destruction of infrastructure and the fragmentation of any social cohesion would open up a battlefront. One that would not be won by being isolationist. That potential battle of the time, against a new antagonist looking to expansion, seemed clear and had it occurred it would have been more costly and immensely damaging as it was likely to be a battle against ideological totalitarianism. To forestall that event the considerably cheaper option of pumping money into Europe to drive forward optimism and developments, was the most inspired and sensible thing to do and at the same time created a useful market expansion and buffer to the force of nihilism.
No one could see how successful that plan would work. It has eventually allowed the markets to trump US & EU government incompetence of fiscal prudence (limited though it was) and to forget the base and reasons upon which the plan was built. The ‘smart’ movers have no interest in stability; their prime cause is to make money with no redress and in doing so are aiding in the process of unleashing devastating forces. It is, one would hope, optimistically inconceivable, that there is no one unaware of the damaged that will be done as there are quiet clearly developing consequences. Are the people that control the mechanism of the market and government to progress blindly on in self-denial of the responsibility that they have to stabilise this impending storm?
Perhaps the west, in the guise of the USA, being the main instigator of the current economic pressures and the EU of dubious defendant sovereignty, needs another person to formulate a new type of Acheson plan. A plan to stop the Euro project from failing with the financial, trade and asset damaged that would be caused if it fails. If it did fail, it will because of lack of current dramatic action against unfolding market mayhem. Maybe then, s/he will get a statue inscribed with the epithet “For restoring the fabric of European life” (with apologies to Alistair Cooke) and it might also say ‘for making markets work for peace’
© Renot 2010
0112101600
The Marshall plan was the magnificent gesture from the USA to Europe in 1947. It was a plan that delivered massive investment, loans and gifts that formed the bedrock of Europe’s peace and rebuilding from which the affected population of Europe benefited for the next 60 years. However, This plan would have not seen the light of day had it not been for the tenacity of one man, Dean Acheson, secretary of state, USA ( 1893-1971) after whom the plan should have been rightly named, The Acheson Plan.
Although this is now considered history, forgotten, unremarked on, inconsequential for today or entirely unknown now by most pre 50 years olds, such was its impact that it formed the rapid reconstruction of Europe and led directly to the establishment of the ECSC, EEC, later the EU and the eventual necessity of creating the Euro.
Perhaps it is because the purpose of the Acheson plan has now been forgotten and the success of its achievements have come to careless fruition, that events have allowed professional politicians of young age to get lost in the creation of ‘the great project’ of a complete European integration. It is a project that still has some way to go with its divergent size and all of its construction having been accomplished without having established a bedrock of commonality and has generally kept a relaxed form of interdependence. The continued diversity of structure now gives rise to the idea held in some quarters in the USA, reluctant UK politicians and the markets that the project is doom to failure and the weakened euro will be the first evidence of its ultimate demise, undoing the achievement and security of the great project.
There can be little doubt that the rapid expansion of the EU from the initial 7 countries to the now 27, was bound to pose some considerable risk, not the least of which is the financial bind that was formed to hold the EEC together with wildly different economic strengths, or lack of. Those countries that also adopted the single currency now find that the currency is under pressure from the predatory financial market that is seeking to maximise it own advantage by putting pressure on the borrowings of the weaker performing members. Having to stay within a common interest rate that has been much lower than necessary and operating within a manipulated PSBR to GDP, has ignored the changed shape of global economics. Being too timid and slow to react to internal issues caused by the rapid enlargement of the EEC to the EU was a strategic deficiency. This lack of strategic direction, in both economic productive strengths and fiscal organisation is proving to be the Achilles heel of the great project, it is a situation that has become more dangerously uncertain with the abrogation of all controls over the past 3 years of the over exuberance and stupidity of the financial markets.
One of the problems of the common currency and its most obvious one were and is the different range of productive ability of the participating countries i.e. the piigs vs. the rest, (in current generic terms). The powerhouse generators, market privateers and the profligate consumers were not being monitored and were essentially indemnified with corrupt governmental controls that they are allowed to runaway with the illusion of expansion without substance.
The different productive ability between members of the EU was not of its-self an irresolvable problem, after all, within the UK, USA, Japan, China and India, for example, there are areas of huge disparity of economic or productive capacity and ability, yet they cooperate as a unit internally. The reason this ‘unity’ is the case, is ultimately because they have unified currencies and fiscal control that ‘manages’ the tensions between the different internal provinces. This functioning of cooperation succeeds even leaving aside the overall political authority or any devolved financial control that is exercised by ‘local’ regional government or the military and social control (the sovereignty issue). All of which is an additional effect to allow their single potentially dysfunctional structures to survive and examples the essential element of their existence in that their single denominations under common fiscal rules allows flexibility to support the weaker provinces. The EU has had no such overall fiscal force, consistently avoiding the necessity to recognise the need for one, while pushing on with the great project.
During the period of expansion, the inherent dichotomy of the EEC/EU between fiscal control and deviant inequitable expansion was only to be tolerated while the opportunity for growth via trade was available and supervised for the fulfilment of key parties. The construct of the union remained untested against global pressure or the market as growth was relatively easy to obtain from the initial formation of the ECSC to the metamorphosis into the EU. It was always the case though that such an expansionary benign time that allowed the Union to mature, would eventually be challenged. Although the pillars of such a challenge have been foreseen; such as conflict, divergent economic growth, pressure of social difference, population mobility and energy; they have not been of sufficient intensity to derail the project. It was inevitably one pillar, created by the EU itself, the euro, which was to offer the first real test of sustainability. It is this that the unrestrained market is designed to test.
Up to now, the ‘market’ has had no responsibility for its actions and it carries no risk in forcing a currency or interest bond war. As has been proven thus far, the market has a guarantee of last resort, sovereign support. It (the market) is immorally opportunistic on factoring in an inflationary interest insurance premium, to lift the yield on bonds against a mythical default scenario that does nothing but help propagate the contagion of uncertainty and it does so in a vacuum of culpable inactivity by governments against it. Governments are only driven to acquiesce to rumour and throw money at the market to support a weak member, at the same time create a deflationary spiral that offers no solution to the predatory nature of the markets that will remain unconvinced of the strength of such support. It is in this febrile period that the issue of the breaking of the EU or the Euro gathers momentum and some, thinking to gain advantage from the ensuing chaos, wish for it.
Some UK politicos that fondle power and independent sovereignty are working to an agenda to unpick it from the EU, an agenda that has no real proven merit. Hawkish traders, who also do not thrive on certainty and stability, will welcome the break up of the single currency. These parties might consider that a break up for some could be seen as a way of saving the stronger countries, to extricate from the weak with a controlled fragmentation to perhaps default and realign their domestic demands. Nevertheless, if just one or more choose to keep and reshape the euro, to say, first tier and second tier currencies, it will be a short-term relief. As the first tier, value will be made to rise and undermine export potential and feed inflation while the weaker will still be obligated on the first tier and at ransom to the market. In either case, the strength of each can only be gained by having fiscal sovereignty. If the euro fails completely it must mean a return to capital exchange controls, huge currency market manipulation, and trading one off against another and a constant flight of smart money. Against the impact development of huge sovereign wealth, as is increasing in evidence from China, Russia, India, South Americas, Middle East, it is impractical that any one European country can stand alone against this flow of financial pressure these countries can exert.
This pre-emptive scenario of a defunct euro or a realignment of the EU, serves no constructive purpose no matter how it is seen. Even if it is thought a breakup is as a way of soothing markets, creating fiscal flexibility or justifying the limited negativity expressed in the USA of the European project. A project that is perhaps also viewed as a potential challenge to its own economic dominance or yearning of splendid isolation, offer nothing but future anxiety and no clean view of what stable system is available to replace the EU concordat or the euro. The pronouncements of economic pundits of ill repute should carry no weight; those that failed to shout out warnings of western financial corruption are even less capable of offering a guide to solving current uncertainties.
Without exceptionally strong and new financial controls that consent to markets to operate responsibly, to allow beneficial trade and not engage in exploitive opportunism, instability will remain and get worse. With such controls, it should also be possible to make it clear that market manipulations will not be without penalty.
With the current game of holding interest rates low and devaluing currency between the prime members of the G20, the EU and the euro offers a measure of protection from market manipulation albeit that the weaker countries have to suffer interest rates on the selling of government bonds at a higher rate. As the market ultimately relies on sovereign legitimacy and stability, the EU provides the ‘loan guarantee’ to keep the euro active and defaults at bay. In providing such support, it is in effect essentially acting as a second global reserve currency. This is due to its being like a currency of a large sovereign state backed by legitimacy and stability.
The tension created by the global recession as a result of the continuing affect of the CC is of paramount importance to the west and it is in its own interest to find a path to stability and the save the Euro. The loss of the Euro will inevitably increase exposure of the Dollar and any other perceived strong currency, to currency traders. As the market is gambling on a restructure and elements verbalise doubt, it is a race to the bottom of trade opportunism with a collapsed balance of security as the reward, giving rise to an easy wider reason for conflict.
The Acheson - Marshall Plan completely recognised that the destruction wrought onto the European continent, the destruction of infrastructure and the fragmentation of any social cohesion would open up a battlefront. One that would not be won by being isolationist. That potential battle of the time, against a new antagonist looking to expansion, seemed clear and had it occurred it would have been more costly and immensely damaging as it was likely to be a battle against ideological totalitarianism. To forestall that event the considerably cheaper option of pumping money into Europe to drive forward optimism and developments, was the most inspired and sensible thing to do and at the same time created a useful market expansion and buffer to the force of nihilism.
No one could see how successful that plan would work. It has eventually allowed the markets to trump US & EU government incompetence of fiscal prudence (limited though it was) and to forget the base and reasons upon which the plan was built. The ‘smart’ movers have no interest in stability; their prime cause is to make money with no redress and in doing so are aiding in the process of unleashing devastating forces. It is, one would hope, optimistically inconceivable, that there is no one unaware of the damaged that will be done as there are quiet clearly developing consequences. Are the people that control the mechanism of the market and government to progress blindly on in self-denial of the responsibility that they have to stabilise this impending storm?
Perhaps the west, in the guise of the USA, being the main instigator of the current economic pressures and the EU of dubious defendant sovereignty, needs another person to formulate a new type of Acheson plan. A plan to stop the Euro project from failing with the financial, trade and asset damaged that would be caused if it fails. If it did fail, it will because of lack of current dramatic action against unfolding market mayhem. Maybe then, s/he will get a statue inscribed with the epithet “For restoring the fabric of European life” (with apologies to Alistair Cooke) and it might also say ‘for making markets work for peace’
© Renot 2010
0112101600
Labels: Marshall Plan Acheson
posted by Renot at 12:23 am
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