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Euro-constitution forum posts
(April-May 2005)
by Michael J. Kosares
_____________________________

MK (4/5/05; 19:28:14MT - usagold.com msg#: 130941)
Response to 968. Thank you for the excellent questions.

Some answers:

1. The title : European Central Bank gold sales further undermine euro credibility. I'm especially interested in the 'further'. Can you elaborate this please ?

MK: France and Germany's push to rewrite the stability pact already hurt the euro for the long term. It is the proclivity of politicians to run deficits. Once the euro-politicos broke the boundaries of the stability pact, it opened the door to greater deficits, a weaker currency, inflation, higher taxes -- the gamut. Even members of the ECB board (out of character) criticized the politicians for rewriting the pact because they understand the long term implications.

2. Don't you think the German refusal to sell gold is of much more significance then the sale of "only" 47 tonnes by the ECB ?

MK: Yes. But is the ECB sending a message that if you don't sell, we will? To the ECB's credit, it said that it was done with sales for the rest of 2005 CBGA year, but I think this was a test to see what the reaction would be. One has to ask if there is a conflict between the nations states view on gold and the ECB's? Before the 47-tonne gold sale, that was not a question. Now it is. We are groping in the dark here because the ECB, despite its signing of the CBGA and its implied transparency in gold transactions, conducted the sales then gave no indication as to why the sale was conducted in the first place and secondly how the gold was disposed.

Europe, as you know, is in the midst of defining itself. It is attempting to construct a union that would put it on the world stage as a viable contender to the United States, Russia, China and Japan. There is no question that Europe can attain its goals, but the Union is flawed and weakened by the lack of a real political union that can act decisively in the domestic and foreign arena. At the end of May, France will decide whether or not to accept the new constitution. If put to a vote today, the polls say that the constitution would fail by a wide margin.

It is not unreasonable for those being asked to join the union to question whether or not it is in their best interest. In Europe today, there are Federalists and Anti-Federalists just as there were at the founding of the American Republic. (I should point out that an anti-federalist is not necessarily against a federal government, he or she simply desires to limit the power of the federal government. There's a distinction there. Thomas Jefferson, for example, was an anti-federalist who believed that the power ran in a line from the bottom to the top -- the lowliest citizen to the president. There were others who believed differently.)

Is it reassuring to the Anti-Federalists that the union's states cannot stick with budget agreements made upon convergence? Wouldn't there be some who might say, "Wait a minute. If we transfer the power of government from our individual state to Brussels, will we not lose some control over our lives in the bargain? And are we transferring this power to a group capable of keeping our quality of life intact? Are we simply inviting ever larger budget deficits, currency printing and higher taxes?" These very same questions are what dominate the thinking of the British whenever the Blair government pushes for discarding the British pound and going with the euro. There is this question of giving up the power of currency issuance. If you say, "Yes, I will give it up," the follow-up is to "what" and under "which circumstances." To me that's a natural progression.

When the Federal central bank sells gold contributed by the various states upon convergence for reasons no one can ascertain, does that not send the wrong message? (I refer you to Senator Paxton's lucid reaction to IMF sales below). Once we transfer power (assets) to the Federal government, some will ask, do we lose control over it?

You are right. Forty-seven tonnes in the greater scheme of things is a small amount, but the fact that the ECB actually sold this gold out of the blue and then explained nothing is symbolically significant.

3. What is your opinion on Towncrier's message #130877 on this subject ? Perhaps a delivery of gold to certain 'preferred clients' gives the ECB MORE credibility as a Central Bank !

MK: Let me say first that Randy and I don't always agree and I do not demand agreement with me among the terms of engagement. We do not demand unanimity of opinion at USAGOLD-Centennial Precious Metals. We both enjoy a good give and take and have had many long and interesting discussions over the years. It is because we believe in the value of public discourse that we started this forum.

By preferred client, I assume you mean the national central banks. If it was distributed on a pro rata basis to all who contributed then I would say it gives the bank an aura of "fairness", but not necessarily "credibility" But why send gold back when its sole purpose in the first place was to give the euro credibility? Take away the metal and you take away the credibility. If it went to one bank -- let's say Germany or France -- the ECB would be accused of playing favorites. If the preferred clients were bullion banks meeting depositor demands -- or to keep the gold liquidity pipeline full -- I would say that it loses credibility.

In the end, I believe in free and unfettered markets as the best arbiter of human action. I believe in states' rights and the devolution of power. History has shown in the past, and I believe is about to show again that the more the federal-official sector interferes in natural economic processes the greater the problems down the road, and its always the taxpayers who are called upon to pay for the mess. Better to take a small hit now, then ratchet the problem proportionately worse through government, or quasi-government interference. Once again, I think Senator Paxton speaks for many in his response with respect to the IMF below.

4. You write : 'What might the gold price have done had the ECB kept its 47 tonnes in the vault ? Would gold have gone through the important $450 figure ? So, if I understand this correctly, your estimation is that this gold is thrown on the market?
Why do you think this ? What indications do you have that this gold isn't sold to other 'preferred buyers', but instead has reached the market ?

MK: If one assumes a gold shortage, one must also assume that the party needing the gold would have been forced to the open market with the consequent effect in the price. I never said the gold was thrown on the market. It might have been sold to preferred buyers. The real question is "Who are these preferred buyers?"

5. What would the market have done without those 47 tonnes ?

MK: See above.

5A: If this amount is such a problem, what will the impact of the IMF-sales be then?

MK: At the moment, I do not believe there are going to be IMF sales. These are being pushed for by the UK, Gordon Brown and his Treasury Department. The United States is opposed and with its veto power it can keep the gold from moving. We must keep in mind that it isn't the United States that has been a gold seller in recent years. The bulk of the gold liquidity has come from the European banks. Now that valve is shut -- or pretty much shut. That I believe is the source of the push for IMF gold. I do not go along with the discussion that the UK is being used as strawman for the U.S. The U.S. could very well be anti-IMF sales because of the strong production in this country and the power of Western U.S. senators with the White House.

If there are IMF sales, I believe the contributors should be offered their gold back on a pro rata basis [and] on a right of first refusal basis. Should that right of refusal be passed on, a natural market would be the Pacific Rim including China.

6. What's your opinion on the euro-concept in general ? Do you see this like A/FOA as the new reserve- and oil currency, or were A/FOA wrong on this subject according to you ?

MK: I believe the euro is a competitor to the dollar, but it will not be a replacement for gold holdings in the private portfolio. It is still a fiat currency and if it existence as a competitor to the dollar doesn't address some of the primary political problems associated with the European Union. I discussed this with FOA and Another a long time ago. Not much has changed. Machiavelli commented once that history repeats itself because the passions and beliefs that marked one era are present in all eras, therefore human political and economic institutions can be expected to make the same mistakes repeatedly. The euro, like the dollar, is a currency issued by human beings. It is subject to error. That is why gold, which is not issued by human beings, is the greater repository of wealth. I understand the value of the euro as a precursor to gold value, but I don't think its presence is necessary for gold demand to continue gathering steam. My quarrel with the euro is the same quarrel I have with the dollar, the yen and the Malaysian ringit for that matter. They are the spawn of human political institutions as such have two strikes against them before they get in the batter's box. By this I don't mean to offend anyone. The euro will play a significant role in the transition into a two or three currency reserve world.

But, back to the EU . . . . . Europe at the moment is a nation without a governing political document. It has a central bank that issues a currency without political protocols - essentially a currency without a country. I see that as a disadvantage, not an advantage. Until that is addressed, it will be a competitor but only in terms of default. Under current conditions, I could easily see the euro simply becoming Dollar Lite in international markets. But that's probably acceptable from the European point of view. It is not interested in sponsoring the chief reserve currency at this time, but more a shared responsibility concept with the dollar. I think this is a G-7 understanding already agreed to tacitly.

Isn't it odd to you that no one in Europe has bothered to ask what the ECB was hoping to accomplish by selling off gold that the various states contributed upon convergence? How did it get within the ECB's authority to do such a thing? These are questions that would be asked by an American congressman or senator, but devoid the political institutions to raise the question, most sit back waiting for someone else to ask the tough questions. In the United States it would become a matter of constitutional authority. In Europe there is no constitution, and that's probably why there isn't denouncing the ECB sales like Senator Paxton (NJ) did today when he lambasted IMF sales, as follows:

"A recent IMF report has recommended gold sales as a sound way of
financing the loans the IMF has extended to overburdened poor
countries that are not now in a position to repay," Saxton
said. "This is an especially attractive option for the IMF because
the gold on its balance sheet is greatly undervalued.

"However, the potential profits on IMF gold sales rightfully belong
to the original donor countries and their taxpayers. Thus, these IMF
gold sales would amount to a hidden appropriation from the donor
countries that were the original source of the gold.

"I believe Congress has an obligation to protect the taxpayers and
reject any proposed IMF gold sales. The Bush administration has
taken the right position in not supporting IMF gold sales and
deserves congressional support. There are better ways of financing
debt relief than drilling the taxpayers yet again."

7. What's your opinion on Sleeper's speech (http://www.bis.org/speeches/sp050218.htm) concerning gold, MTM,... and given in South-Africa, a land with a lot of in-ground reserves and a privately owned Central Bank ?

MK: Not familiar with it.
Thanks, 968. An interesting set of questions.
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I'm looking forward to your insights.
Thanks in advance for your precious time and for this exceptional meeting place !

MK (4/13/05; 13:40:58MT - usagold.com msg#: 131154)
TC - A Currency without a Country

I'm at the office right now, but I wrote a post the other day after reading Wolfgang Munchau' s editorial in FT on Monday which I saved on my home computer. It addresses some of the points you raise. I didn't post it upon completion because there were some areas I wanted to iron out, but I think I'll post it later in relatively raw form since so many, including Tim Congdon, are making themselves known on the subject.

The United States is a cohesive state -- financially troubled as it is -- which can act decisively on a range of domestic and international matters. It can dispatch its military in its best interest if need be. It can make military and economic promises to nation states which benefit its economy in the long run. It has the political institutions in place which act to reflect the collective will of the people at least at some level.

(And I'm just getting started here. There's also the issues having to do with poltical checks and balances which keep institutions like a central bank from running rampant. Greenspan must give better than lip service to the political sector. Remember, he was referred to recently by one Senator as being one the most political figures in Washington. There's a reason for that.)

Europe cannot do these things under its present structure.

Does that mean I condemn Europe and the euro to oblivion? No, it just means that as a realist (maybe I presume when I call myself that) I see what a defeat of the Constitution might mean.

I'll put up the post later. In the end though, a No vote by France and/or Netherlands in my view will create strong gold demand in Europe, and you might see that break from currency related trading only we have all been looking for.

By the way, the U.S. constitution governing its 50 states is sufficient to advance the usage of the dollar and all the nations that use it. A euro with a European government behind it would function as a real competitor.

There's another aspect to this even more important than what I've alluded to here that Wolfgang Munchau raises.

More later.

MK
Lost post referenced above
circa 4/20/05

Last week in response to some questions from Sir 968, I commented that though the euro might at times exhibit stronger appeal than the dollar in the international reserve sweepstakes, it is a still a fiat currency and subject to the same weaknesses exhibited by all fiat currencies. I also pointed out that if the political union is defeated by France in the upcoming end of May vote it would greatly undermine the single currency. Subsequent to that a round of posts here attempting to pick apart that argument fell short of addressing the issue.

The issue is not whether or not the euro is a more ethical currency. The issue is whether or not the currency will survive in the rough and tumble of Real Politic. The Duisenberg statements about a de-politicized currency came in the glow of euro introduction -- all the world seemed at Europe's feet and the future lay before it like an eternal spring. It was an attempt to make lemonade. Spin the euro weaknesses. Make them a strength.

But I am talking real politic/real economics in a nasty, competitive world where one's national interests need to be advanced and defended, and where political decisions, particularly with respect to the economy, do affect one's currency whether we like it or not.

So, gone are those halcyon days when Duisenberg baptized the euro/ECB and now we are left with a vital vote (as it is now commonly portrayed) on a constitution that a majority probably doesn't want (at least in Netherlands and France according to the polls) at a time when the European nation needs some political girding to legitimize the existence of its currency.

Along comes Wolfgang Munchau in this morning's Financial Times to tell another woeful tale of the euro -- one that sounds very similar to my own of a week ago. The article is by subscription only at the FT site, so I will quote the salient aspects:

"By voting No [on the Constitution], French voters would throw their own country and the EU into a protracted political crisis and thereby create the worst possible political climate for economic reform. . .

For the first time since the creation of the euro in 1999, we might be discussing what the European Central Bank and euro advocates have most dreaded: how long the euro might survive.

Without the prospect of eventual political union on the basis of some constitutional treaty, a single currency was always difficult to justify, and it might turn out to be even more difficult to sustain. I never thought it was possible to defend the euro purely on economic grounds."

End quote. . .

Now, I understand that EU's defenders might see Munchau's comments as coming from someone opposed to the rise of Europe, but, as one who has no problem with a rising Europe, I see no harm in dealing with the realities the lack of political union represents.

Beyond the discussion on the euro, there is another question to be dealt with here -- and a difficult one at that:

The citizens of France and Netherlands are about to cast the most important vote of their lifetimes. I don't think I would be stretching it to say that it is the most important vote in the history of modern Europe. Should French and Dutch voters endorse a constitution they might see as flawed and perhaps not in their best long term interest in order to sustain the drive toward union? Frankly, given the stakes, I would not relish having to cast that vote.

Munchau concludes like this:

"Europe is easy to caricature but difficult to comprehend. If you mess with this constitution, you take risks. The potential outcomes are assymetric. If you vote Yes, you get an imperfect constitution. If you vote No, you do not know what you get." End quote/

Does Europe end up in chaos out of a No vote? In my view, it won't be pretty, but chaos will be avoided. The euro will continue on but not perhaps in as formidable a fashion as it could have. I disagree with Munchau in that I find the unknown easier to deal with than a bad political document. As for the euro, I'll just say that it will make gold, the traditional European haven, look all the better given the dollar's on-going prospects. If the constitution goes down to defeat, eventually the Germans might yearn for their D-mark, and the French their franc, but finding neither one available, they will opt for gold.

And that process could begin as early as June 1, 2005.

MK (5/6/05; 16:16:17MT - usagold.com msg#: 131976)
The euro -- A currency without a country

Briefly. . . .

Gold has no aspirations. Gold does not want to rival the dollar. Gold doesn't particularly care if it is a reserve item or not. The euro has plenty of aspirations. It wants to be the main rival to dollar. It wants to become an international reserve replacing the dollar. That's the difference. . .

In order to do that it must recognize itself as a product. It must make itself appealing. The more appealing it is, the better its share of the international reserve market. But as much as it wants to be the belle of the ball it is still just a fiat currency and whereas other fiat currencies, like the dollar, have the power of the nation state behind it, the euro doesn't even have that. So what is a euro? What does it represent? In the end, that's what this boils down to doesn't it?

How is the euro going to garner its share of the reserve market? By putting on a pretty face and saying "Here I am?" That works for awhile but sooner or later the prospective suitor will look behind the pretty face to see what's really there.
That's why the constitutional vote in France is so important. Your post makes me think that you see my views as somewhat radical. They are not. The same position I outlined is being discussed in nearly every publication of substance in Europe at this very moment. And it should be. . . . .

Trichet's comments, as you outlined them, are ambiguous. How can something be "apolitical" and "multi-partisan" at the same time? Isn't that an oxymoron -- one of those self-cancelling statements often made by central bankers -- the sort of thing that Alan Greenspan raised to an art form. To me it reflects the overwhelming confusion circling around the euro, the European Union and the constitutional vote.

Trichet, like his predecessor, is playing the hand he's been dealt. He calls the ECB "apolitical" to spin the euro and hide its fundmental weakness, i.e. issuing a currency without a country. He calls the ECB "multi-partisan" to appease the millions in the Euro community who would rather deal with their own central bank staffed by their countrymen and responsive to their interests. In short, Trichet's job is making lemonade. His job is to make the ECB acceptable to as many Europeans as possible, so the light is bent through the prism Trichet is holding.

Let me ask you, 968: If the euro were put to a vote in Germany today, how would that turn out? Try to be honest with yourself. How many Germans would vote for the return of the D-mark? I would bet you a dollar if it were put to a vote, the D-mark would win!

All of these votes come down essentially to votes of national sovereignty, and in order to give up one's sovereignty, the citizen must know what he or she is getting in return. It stuns me that the greatest opposition to the Constitution is not the Gaullist right, but the socialists who believe the new constitution will deprive them of their mega-welfare state -- which they view as progressive. The Constitution at least at some level provides a framework through which the will of the people can be exercised. Europe [would] become a nation state with a national currency instead of loose confederation issuing what amounts to sophisticated bank scrip.

One last point, you are right gold is the original currency without a country and that is because Nature made it that way not a board of bureaucrats in Frankfurt. There is a restriction on its issue and a heavy cost. South Africa's recent problems come to mind. This is what makes gold valuable. Can you [say the] same about the euro? You cannot because it is a fiat currency, just like the dollar. We are all proficient enough students of history to understand what that means. This is why the euro has met with a cool reception among gold advocates. There simply is no more reason to trust it than there is any other fiat currency.

Enough for one day. Thanks for the opportunity to share my thoughts on this important matter. Should the constitution pass in France and Netherlands and the nation state put in place, then we shall discuss other, even more complex issues, but for now, the vote will be important enough to occupy Europe's attention and the attention of the world. . . .

We shall see how it comes out and how the euro fares should the constitution be defeated.

MK (5/27/05; 21:17:41MT - usagold.com msg#: 132629)
Invisible Hand, TownCrier

MK: This letter to the Financial Times from Mary Farrell, a senior research fellow at the United Nations University, hits in my mind at the essential questions faced by French and Dutch voters over the next few days. What she is driving at is that an oligarchy has advanced the concept of the European Union and the common currency without first attempting to acquire support of the European peoples.

She says:

"The European population may no longer be willing to go along with a project that it perceives as bringing no discernible benefit to society at large, and has a democratic deficit and legitimacy problems."

I believe Farrell's observations strike at the heart of the matter, and when she raises the spectre of "legitimacy" she hearkens back to the political philosophy of none other than Thomas Jefferson who himself drew on the writings of John Locke who believed that legitimate government proceeded from the will of the people. I was astonished during the past week to read of prominent European politicians saying that the constiutional vote should have never been put before the people.
How can the European Union and the euro ever gain legtimacy if it extends from the will of a European oligarchy intent on its own designs? It would never hold up. It would be weak from the outset.

This vote is an extraordinary event. How many times in the modern milieu has something so monumental come to a vote? I respect Mr. Chirac for pushing this vote and putting his own political career on the line as a result. If I were a Frenchman, I would probably vote against. But I am an American with a decidedly strong bias in favor of government based on the will of the people. It is difficult at this time to know which way the French and Dutch people will vote. The polls favor the 'No' vote at this time.

In another opinion piece in the Financial Times, Ralph Atkins writes that if the constitution is defeated, it 'might lead to the breakup of the eurozone. "Germany (for example) might say that a return to a national currency might provide more stability."

What would that mean for gold? In my view, it would mean that well-heeled European investors would return to gold as the asset of last resort and hope that they would see the day that the franc, the mark, the guilder returns. The socialists of course would fight that event with their dying breath.

Where the European Federalists made their mistake, in my view, is in not educating the people and reassuring them that the transmutation of their sovereignty would not translate to a lost vote. They took the citizenry for granted.
Mary Farrell goes to the heart of the matter. It comes down to sovereignty and what the citizen will be getting once he or she votes in favor of the constitution. It is because this trade-off is unclear, that the polls trend against. Lastly, she is correct in raising concerns about the future of the Union even if the vote turns out to be a "Yes".
___________

Europeans must face head-on the question of what kind of Europe is wanted in future
By Mary Farrell

Published: May 27 2005 03:00 | Last updated: May 27 2005 03:00

From Dr Mary Farrell.
Sir, The recent debate on the European constitutional treaty in your letters page reflects the mixed emotions towards the treaty, as much as the misunderstanding of the implications that might arise from non-ratification by the French and Dutch voters.

Certainly, a rejection by the two founding states would slow down the integration process as the governments set about finding a solution and a way forward. But sending out a message that a way forward will be found in the event of a No vote (as Charles Grant says in his May 23 commentary) or approaching the electorate for approval before entering into complex treaty negotiations (as Erik Jones advocates in his letter of of May 26) will not get to the root of the current malaise affecting European peoples.

The European Union has survived many serious crises throughout its history, finding eventual resolution in a consensual agreement among the governments. This time, we are witnessing the limits of an integration process that was constructed on elite support.

The European population may no longer be willing to go along with a project that it perceives as bringing no discernible benefit to society at large, and has a democratic deficit and legitimacy problems.
Very few people are going to read the lengthy treaty document, and no member state government has made the effort to initiate a public debate or even to explain the implications to its citizens. We should not be surprised that citizens are on the point of rejecting something they have not been directly involved in from the beginning, and their rulers have not even considered worthwhile to justify publicly and nationally.

In the past, popular support for the European project was implicit and based upon a shared consensus on the need for unity in order to avoid war. What is the contemporary rationale for the European project? Where is the European Union going? What kind of union do we, "the peoples of Europe", want?
These are the fundamental questions that have to be asked - and so far, these are precisely the questions that have been avoided by national governments and supranational bureaucrats, and the political elites that continue to assume implicit popular support for European unity. Unless and until the difficult questions about what kind of EU we want are faced head on, and this includes reflecting on the nature of the political community and the degree of federalism or inter-governmentalism that is desirable, there is unlikely to be any substantive resolution to the current divisions emanating from the grass roots of European society.

What worked in the past will not suffice today when the rationale for the European project is not as clear-cut as the vision that bound the countries together in the first 40 years of existence. On this reasoning, the European constitutional treaty is a red herring, taking attention away from the difficult questions European governments were not willing to address even during the European Convention debate.

Yet, the future of Europe is an urgent and necessary debate that has to be launched at all levels across Europe, and involving the people at every rung of society. Failure to engage in a wide-ranging popular debate will see the emergence of the limits to European integration that even opponents of the European project may not wish for.

Mary Farrell, Senior Research Fellow, United Nations University-Comparative Regional Integration Studies, Bruges 8000, Belgium

MK (5/27/05; 22:12:03MT - usagold.com msg#: 132631)

C-Man

I do believe I am being objective when I say that the euro will be in trouble if the constitutional vote fails. Yes, I do believe that we lost the Republic a long time ago, and that in essence is the basis for all the problems which have followed. Democracy, as we know it, is an untenable proposition. I do not wish this to be so, I simply recognize it as such and react accordingly. Similarly, if the European constitution fails, it will present a certain set of circumstances to which the international markets will react. If it passes, it will present a wholly different set of circumstances to which the international markets will react as well. What is best for the European peoples is something else again. Something they must decide for themselves. I am merely saying that one should not give up one's sovereignty without first knowing what will be received in return.

When the various American states voted on the U.S. Constitution they had a fairly clear idea what they were getting in return, and though the system remains imperfect, it at least provides the means by which the ordinary citizen can still be heard. Can the European voting on the constitution say the same? Maybe he or she can, maybe they can't, but the fact of the matter is that few in Europe know.

That is problem Chirac & Co. are up against. At least he had the courage to put it to a vote and not sneak it through the legislature as was the case in Germany.
Gold metal will not make the euro strong. It is not a panacea. The supra-nation state will. But perhaps, the nation state in Europe as defined by the constitutional document before the French and Dutch peoples may not be the nation state in their best interest. That's the dividing line. I believe the failure to explain how the new state will benefit the ordinary citizen is the reason why the constiution appears to be failing.

This is where the rubber meets the road. The euro will be affected whether or not its proponents want that to be the case.

MK (5/28/05; 07:25:44MT - usagold.com msg#: 132638)

Rights, sovereignty

Let me delve a little deeper into the issue of sovereignty and human rights. By doing this, I think I might be able to help Invisible Hand in his suspicions surrounding "sovereignty" and touch upon Cavan Man's point about "apathy" (which I didn't address in my previous post). It is amazing to me that Europe, at least as far as I can tell, hasn't discussed these issues in depth with respect to their constitution, particularly the rights/sovereignty questions.
The whole point about Jefferson/Locke/Smith et al is that they saw basic human rights as extending from Nature (God, the Deity) not at the good graces of the king or queen. ( So you are hitting on something there, Invisible Hand. ) Though this has come to be commonly accepted on both sides of the water, it was a revolutionary concept at the time. If one could read Jefferson's Declaration of Independence with a fresh set of eyes (and in the context of the times) the key phrases have to do with establshing a legal and philosophical framework for the colonies (states) separation from the king. i.e. Under what authority can this accomplished?

"When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,

--That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness."

Those last two points are the most important to our discussion. Americans continue to be stirred by these words, but we now read them without understanding the political context under [which] they were written. These words were the foundation of the modern Republic.

Jefferson concludes:

"We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That these United Colonies are, and of Right ought to be Free and Independent States; that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor."

Rights did not extend from the sovereign king and his good graces and majesty but from the Supreme Judge, Divine Providence, etc. What Jefferson, Franklin and the rest of the group intended was not just a sovereign nation but sovereign individuals. The first rights of these human and sovereign rights came as amendments to the constitution and still encompass the framework that has allowed the present form of government to last some 230 years and counting.

On the issue of citizen apathy, Cavan Man, I'm sure as a close student of history yourself, you recall that Jefferson envisioned an engaged, active and highly educated citizenry that understood that its liberty depended upon constant involvement in the political process. I believe that he would have said that if the citizenry becomes apathetic about the political process then it should be prepared to sufffer the consequences -- abdicate responsibility and you abdicate your future. He would say that the framework is present for making the political process work, it is up to all of us as citizens to insure our freedoms, a just society, economic well-being, etc. He was the original "you get the government you deserve" guy.

Jefferson was the founder of the anti-federalist party and likely would have been opposed to the European consitution had it failed to guarantee those basic human rights. He believed in the predominance of states rights over the federal government but he was not an anarchist as some claim. He believed in limited government and the onus of responsibility on the citizen's themselves.

These are thoughts that pass through my mind when I think of the formation of a nation state, the French and Dutch referenda, et al. Once again, I will emphasize that it is because European politicians did not do enough to make the people feel/understand that they were joining a grand nation state that the vote is in trouble. Perhaps the document itself is flawed. How many in Europe even know whether or not these basic rights are guaranteed? Inasmuch as it is book length, it is probably a document that is difficult for the ordinary French or Dutch citizen to embrace.

But make no mistake about it: This election fundamentally is about sovereignty and the ability to participate in the political decisions that will affect the ordinary citizens' lives. The 'No' vote draws its strength on both the left and right from the notion that the [would-be] federal state represents a threat to individual well-being. It appears that the tide has turned at the moment in favor of the individual states remaining the primary seat of power in Europe for this reason. As we have learned in both Europe and the United States though, elections can produce unexpected results. The vote could still go the other way. This one is going to be interesting.

MK (5/29/05; 08:58:17MT - usagold.com msg#: 132660)
George Will's Sunday column

"The European Union, which has a flag no one salutes and an anthem no one knows, now seeks ratification of a constitution few have read. Surely only its authors have read its turgid earnestness without laughing, which is one reason why the European project is foundering. Today in France, and Wednesday in the Netherlands, Europe's elites -- political, commercial and media -- may learn the limits of their ability to impose their political fetishes on restive and rarely consulted publics."

"Many Dutch regard the proposed constitution as a device for sweeping their little nation into a large, meddlesome entity of 450 million people, with consequent dilution of self-determination."

"If the French and Dutch reject the constitution, they will do so for myriad reasons, some of them foolish. But whatever the reasons, the result will be salutary because the constitution would accelerate the leeching away of each nation's sovereignty.
Sovereignty is a predicate of self-government. The deeply retrograde constitution would reverse five centuries of struggle to give representative national parliaments control over public finance and governance generally."

- - - - - -

Seems that Mr. Will sees some of the same things I do.

MK (05/29/05; 20:18:49MT - usagold.com msg#: 132676)
E-mail request. . .

"Mike, I read in our paper that in Germany, the parliament voted to ratify. There was no vote by the citizens. If this is true, how many of the other countries also had the decision made by the politicians and not the citizens. Maybe this is the first real test. Maybe you could comment on this at the forum."

Need I say more? If the EU hasn't completely blown itself out of the water, it will be very careful from here on out about taking their voters for granted. Somehow they thought they could slip this one by. They just got a rude awakening. Still Chirac did bring it to a vote and for that he should get credit. I think he is being blamed unfairly for this. Britain's foreign secretary, Jack Straw, is calling for a time of reflection in Europe. I think that would be a good idea. This is a lot to digest, but it is very clear that if all the pundits, politicians and power brokers can do is blame Chirac then they haven't learned a thing from this.

Dollar Bill (05/29/05; 18:54:34MT - usagold.com msg#: 132674)
.,.

MK, The Geo Will qoutes, If the dutch ect are worried about sovereignty, doesnt rejection of the eu make the dollar based new world order more likely?
Are they doing a frying pan into fire type action? Isnt loss of sovereignty the road we are on? That does not change if the eu just flat out disappears I am guessing.
I think it was immigration that spooked the French.
Isnt soveregnty on every front being diminished?
And no end in sight?

MK (05/29/05; 20:07:35MT - usagold.com msg#: 132675)

DB

You may be confusing a loss of power and a loss sovereignty.

Loss of power is when you wake up in the morning and discover that the other political party won and you are going to be sitting it out for the next four years.
Loss of sovereignty is when you wake up in the morning and find out that Congress just voted the United States into the European Union and by the end of next week you will need to exchange your dollars for euros.

Imagine how members of the German parliament feel tonight. They just approved of the constitution in behalf of their citizenry while the citizenry of the country next door just defeated the same arrangement by a significant margin. We may not see the complete effects of this election for some time to come.