'Not much democracy left in Europe'
“And obviously there is also Germany’s political elite that is now hugely powerful. There is a huge worry whether these reforms are going to be successful. We have not got much more democracy left in Europe,” he stated.
The reforms may cause the governments involved to lose their sovereignty and their autonomy, especially if there is fiscal control over their economies. And according to Wellings, we may see these countries rebelling.
“I think there is a chance there will be some sort of rebellion, hopefully a political one and not anything worse. But of course we could see rebellion among the German people, because they are the real losers from fiscal integration,” he explained.
German Chancellor Angela Merkel has said investor confidence cannot be “restored purely financially”. She said Europe needs a “coherent political answer”, that is why the technocrats are trying to sort out the mess. But as Richard Wellings emphasized, the irony is that many of these technocrats are the architects of the disastrous euro project in the first place.
“It is annoying that they are now in charge of all of these countries. But the real problem is of course that the system itself is fundamentally flawed because it does not work, and the only long-term solution is an orderly breakup,” he stressed.
News is coming from France as well. It still retains its triple-A credit score, but the markets aren't treating it as such. Its borrowing costs are rising. And according to Wellings, it is very alarming.
“And if you look at the prices of credit defaults, it suggests that the true credit rate of France is BBB or something of that sort. And this is very worrying for France,” he concluded.