European, as distinct from national, supervision is required to create a European Treasury with the power to tax and therefore borrow. Soros, whose fame derives in no small part from billions made in deciphering the steps, and missteps, of European fiscal and monetary authorities, touched upon the fatal flaw of the European Union and its single currency: the lack of a direct federal power, i.e., a pan-European authority with the power to impose taxes and dictates directly upon the citizens, as opposed to merely upon the member countries. This "direct" style of federation was formulated in the United States in 1787, after the indirect method failed under the Articles of Incorporation.
Hamilton, Madison and Jay, in the Federalist papers, described clearly the flaws of indirect federation, making reference to several historical examples. In brief, they argued that when the federal power is constrained to act upon states, who in turn act upon the people, every disobedience by a member state involves the federation in the unenviable choice between civil war and acquiescence. The latter is nearly always the path followed, which provides each other member state with the rationale to disobey some other dictate of the federation when desirable. The result is an unraveling of federal power, an inevitable embarrassment of federal finances, and an eventual disintegration of the union.
Soros touches upon this timeless principle of political theory when he asserts that a federal tax power must be coupled with the ability to regulate certain corporations, especially banks and financial institutions, before Europe can become stable. The American States realized this during the mid 1780s when the competition among the several states and spite for the federal power resulted in interstate protectionism and finally even armed rebellion.
Ironically, in the American drama, the largest member state, New York, pushed for a stronger federal power, with the weaker states desiring greater autonomy, whereas in Europe today, the situation is much reversed, with Germany opposing the strengthening of the federal power and the weaker states ambivalent so long as aid is forthcoming. Here, Soros again points out that it is in fact the citizens of Germany who hold the keys to the entire situation. He also points out the desirability, from Germany's point of view, of avoiding a loss of the low-valued euro in favor of a higher valued Deutsche mark, which would inevitably cripple the German export-machine.
The famed currency speculator has explained the European federal necessity. It remains to be seen whether he has put his money on the Germans bowing to, and taking advantage of, such necessity, or rather has placed bets on a breakup of Europe. Of course, only a George Soros may truly know which bet to make, and with his recent expulsion of third party fiduciary money, perhaps he has set up his funds for the ultimate career-capping gamble. Only time will tell.
Hamilton, Madison and Jay, in the Federalist papers, described clearly the flaws of indirect federation, making reference to several historical examples. In brief, they argued that when the federal power is constrained to act upon states, who in turn act upon the people, every disobedience by a member state involves the federation in the unenviable choice between civil war and acquiescence. The latter is nearly always the path followed, which provides each other member state with the rationale to disobey some other dictate of the federation when desirable. The result is an unraveling of federal power, an inevitable embarrassment of federal finances, and an eventual disintegration of the union.
Soros touches upon this timeless principle of political theory when he asserts that a federal tax power must be coupled with the ability to regulate certain corporations, especially banks and financial institutions, before Europe can become stable. The American States realized this during the mid 1780s when the competition among the several states and spite for the federal power resulted in interstate protectionism and finally even armed rebellion.
Ironically, in the American drama, the largest member state, New York, pushed for a stronger federal power, with the weaker states desiring greater autonomy, whereas in Europe today, the situation is much reversed, with Germany opposing the strengthening of the federal power and the weaker states ambivalent so long as aid is forthcoming. Here, Soros again points out that it is in fact the citizens of Germany who hold the keys to the entire situation. He also points out the desirability, from Germany's point of view, of avoiding a loss of the low-valued euro in favor of a higher valued Deutsche mark, which would inevitably cripple the German export-machine.
The famed currency speculator has explained the European federal necessity. It remains to be seen whether he has put his money on the Germans bowing to, and taking advantage of, such necessity, or rather has placed bets on a breakup of Europe. Of course, only a George Soros may truly know which bet to make, and with his recent expulsion of third party fiduciary money, perhaps he has set up his funds for the ultimate career-capping gamble. Only time will tell.
