By Robert Romano – A taxpayer revolt in Europe, which most recently struck in Iceland, has now swept into Finland as well. There, the True Finn party has come out of nowhere to take control of 39 seats in that nation’s parliament in the April 2011 election.
The party won on an anti-bailout message. This makes them the third largest party in the country, just slightly less than the National Coalition, with 44 seats, and the Social Democrats, with 42.
In the prior election, the True Finns had only polled with 4.1 percent of the vote, but now have risen to 19 percent of the vote. Their dramatic rise can solely be attributed to their message. True Finn leader Timo Soini believes that bankrupt sovereigns like Greece, Portugal, and Ireland should be allowed to go into default instead of being bailed out by other European Union (EU) members.
“[A] symbiosis has developed between politicians and banks: Our political leaders borrow ever more money to pay off the banks, which return the favor by lending ever more money back to our governments,” Soini writes in the Wall Street Journal. He says regular citizens are not the ones who have benefited from the bailouts, but faceless bankers.
“The money did not go to help indebted economies. It flowed through the European Central Bank and recipient states to the coffers of big banks and investment funds,” Soini noted.
Soini’s solution? Let them fail. “Insolvent banks and financial institutions must be shut down, purging insolvency from the system. We must restore the market principle of freedom to fail,” he boldly suggests.
And if German and French banks were to take losses on Portuguese debt, so be it. But taxpayers in Finland should not have to pay for it, Soini declares. “The party is over,” he recently said in an interview with the UK Telegraph. “Why should Finland bail anyone out? We won’t allow Finnish cows to be milked by other hands.”
This actually creates a bit of a conundrum for the European Union, which requires unanimous approval of all members states to make major financial decisions like the pending €78 billion bailout of Portugal. Unlike other member states, Finland allows approval of EU decisions to be left to its parliament.
With the strong showing of the True Finns in the election, and the Social Democrats demanding that private investors share the burden with taxpayers, now whether the deal goes through at all is strongly in doubt.
After all, as Soini notes, the whole point of the bailout is so that investors don’t have to take a haircut. So why would they agree to take losses on sovereign debt? In fact, it’s the only reason this conversation is happening at all. Soini is proposing the right course, not just for Europe, but for the U.S., Japan, and the rest of the world of over-indebted sovereigns.
It is quite possible that if Finland rejects the bailout of Portugal, that nation will likely default on its debts.
Default and restructuring would not be the end of the world, although that’s what the banks would have you believe. It might be the end of some or many of the banks and investment funds that bet foolishly on unsustainable sovereign debt. But the sky would not fall.
Instead, the peoples of Europe and elsewhere would be liberated. Soini correctly diagnoses the current existential threat to liberty: “Already under this scheme, Greece, Ireland and Portugal are ruined. They will never be able to save and grow fast enough to pay back the debts with which Brussels has saddled them in the name of saving them.”
In fact, the risk of default on Greek debt has risen to 68 percent, according to CMA, meaning the €110 billion of bailout loans to Greece are failing. And speculation has it that the country will be seeking another bailout next year, although the government has strongly denied the reports.
Greece would have been better off defaulting and restructuring. So would have Ireland, which recently went back on its word to voters to force bondholders to take losses on its own failed banks. Instead, these “states” are now slaves to their creditors, allowing the European Central Bank and the EU to run their fiscal policies.
If that’s what awaits the U.S. on the other end of this debt carousel, where our current $14.3 trillion national debt will spiral to over $26 trillion by 2021, then we should get off.
Sovereign defaults and debt restructuring, even across the whole world, will not end the world. But they will end the debt slavery that now threatens our very independence as a nation. The Nordic taxpayer revolt recognizes this, and it is a movement that free peoples everywhere ought to embrace.
Robert Romano is the Senior Editor of Americans for Limited Government.
