EMMANUEL MACRON and Christina Lagarde are planning to use the Covid-19 crisis to get German taxpayers to pay for the European political union under French leadership, a professor of economics has claimed.
Since the start of the year, the European Central Bank has injected a stimulus of €2.2trillion (£1.8trillion) into the economy, even though its ammunition was sorely depleted even before Covid-19 struck. Its benchmark deposit rate was minus 0.5 percent, and it had been buying Government and corporate bonds through its quantitative-easing (QE) scheme since 2015. But the bank warded off a credit crunch earlier this year by ripping up self-imposed rules.
Instead of buying a country’s assets in rough proportion to the size of its GDP, it has bought more of those of Italy and Spain.
Dr David Blake, a professor of economics at Cass Business School and a member of Economists for Free Trade, has explained the wider implications of this.
Mr Blake argued French President Emmanuel Macron and European Central Bank President Christina Lagarde are planning to use the Covid-19 crisis to get German taxpayers to pay for European political union under French leadership, using the Target2 cross-border payments system.
He wrote in a recent report: “we need to look at what is happening in TARGET2, the eurozone’s cross-border payment system.
Referring to a graph, Dr Blake added: “You can see from the TARGET2 balances below that these purchases of Italian and Spanish bonds are actually being paid for by Germany.
“TARGET2 is supposed to be used only for financing short-term trade imbalances between EZ members.
“This is what broadly happened until the financial crisis.”
However, since then, the economist noted, Germany has been funding the ECB’s Italian and Spanish bond purchases – as well as the capital flight of Italian and Spanish citizens concerned about the solvency of their banking systems.
This is visible during the eurozone sovereign-debt crisis of 2010-12, the effects of which lasted until 2019.
Then, Covid-19 struck at the beginning of 2020 and the ECB’s buying of Italian and Spanish bonds went into overdrive – again paid for by Germany.
Dr Blake concluded in his piece for Briefings for Britain: “This is all part of the plan by President Emmanuel Macron and Lagarde, a former French Finance Minister, to get Germany to pay for the political unification of Europe – under French leadership.
“A necessary prerequisite for political union is fiscal union and this, in turn, requires the mutualisation of the national debts of the member states – with each member state’s debt being guaranteed by every other member state.
“But in practice, this means all member states’ national debts being guaranteed by Germany. Germany has resisted this until now.
“But it is apparent that Macron and Lagarde are using the cloak of covid-19 to force the mutualisation of member state national debts by the back door – with German taxpayers paying for this.”
It is no secret the French President is planning to manoeuvre himself as leader of Europe.
In November 2019, Mr Macron travelled to Beijing and met with Chinese counterpart Xi Jinping.