Thanks to the new accounting system of the European Union SEC 2010, GDP of member countries will magically “grow” starting in September 2014. In ten weeks, member states shall have provided Eurostat with new figures which include the so-called “non-observed economy,” part of which is the “illegal economy,” i.e. drug traffic, smuggling and prostitution.
Some countries have already announced dramatic increases of GDP — for instance, 4.5% for Spain. Italy will “gain,” according to a feature in Italy’s La Voce by Mario Centorrino, Piero David e Antonella Gangemi, between EU24-EU60 billions from drug traffic, EU7.5 billion from prostitution and EU841 million from cigarette smuggling. This would reduce the deficit-to-GDP ratio by 0.03/0.05 points, allowing it to add to its spending between EU15-31 billion additionally this year.
SEC 2010 has introduced two more major changes: armaments spending is no longer accounted for as “intermediate goods” but as “investments,” and R&D as “capital.”
Thanks to this provision, GDP for countries with high investments in R&D will grow more than for countries with an illegal economy. For instance, Finland and Sweden will “grow” 4-5%, and Belgium, Denmark, Germany and France by 2-3%. Austria, Netherland and U.K. will have growth of 3-4%, according to Centorrino, David, and Gangemi.
However, there are reasons to believe that the EU intention to boost R&D is not a healthy proposition as it might appear. Given the EU/NATO plans for aggressive military buildup, it might be used for military purposes. The rest of the enhanced spending capability will be used, you can bet on it, for bank bailouts — i.e., to pay gambling losses.
Draghi Calls for More Power for the EU Commission within the EU ‘Government’
In an interview with the Dutch paper De Telegraaf, ECB President Mario Draghi said that it is necessary to accord more government power to the European Commission. Rigid budget rules and a Banking Union for the Eurozone are not sufficient, he said: “Economic policy cannot be a national business only,” and similar to the already-existing oversight of budget decisions, there must be a single decision and implementation process for “structural reforms.”
Draghi then wept crocodile tears over the high unemployment, a rhetorical gimmick to push for quantitative easing. High unemployment means a drop in consumption, which “endangers the recovery.” Therefore, the ECB has “stretched the unlimited access of banks to liquidity up to the end of 2016. This is a signal.”
Meanwhile, it seems as though Germany’s SPD and the CDU have reached an agreement on leadership within the EU structures. The CDU has announced that they will support Martin Schulz’s candidacy for a second term as president of the European Parliament. SPD head Sigmar Gabriel has said they support a Schulz-Juncker ticket, with Schulz remaining as president of the European Parliament, and former Luxembourg Prime Minister and former Eurogroup President Jean-Claude Juncker as President of the European Commission.