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October 17, 2009 (LPAC)-- The financial oligarchy controlling the European Union is demanding deep cuts in social welfare, in order to save the banks. The London Financial Times has leaked the content of a new European Union Commission-issued a report calling on EU member states to cut "age-related expenditures." The report says that in 12 EU member countries, welfare costs are unbalancing the budget. This is, of course an outright lie, since the budgets have actually been "unbalanced" by bank bailouts. Indeed, the No. 1 "country at risk" is the United Kingdom, which, the EU report says, has a "sustainability gap of 12.4% of GDP," i.e., it must cut its budget by an equivalent amount. Since budget cutting or raising taxes is not easy, "alternatively, the social protection system would have to be reformed to decelerate the projected increase in age-related expenditures."

The bank bailouts—the real cause of the deficit—is mentioned, but not questioned: "The fiscal costs of the crisis and of projected demographic development compound each other and make fiscal sustainability an acute challenge."

In Italy, Financial Stability Board head Mario Draghi has called for pension reform, provoking a rebuke from the government. The "behavioral" faction is pushing the same proposals, with a delphic line. Tito Boeri, the De Benedetti House economist who organized the behavioral circus in Trento this year, has called for cutting pension costs in order to distribute more money in unemployment checks.

In Germany, the head of the Junge Union (CDU youth organization), Philipp Missfelder, is expected to put up-front his call for welfare cuts at the coming JU Congress this weekend. Missfelder, who years ago had already demanded that hip-replacement operations no longer be performed on elderly people, is now demanding "more courage" from the new government: "sustainable systems" in order to "meet the demographic challenge."

The leading German economic institutes (the "Wise Men") are demanding Eur5-10 billion of cuts in the health sector, by implementing more "efficiency." Altogether, the state would have to cut Eur12 billion in each of the next six years in order to be in conformance with the Maastricht deficit limits. They even project a chance to cut a total of Eur100 billion. Because of the slow "upswing," these cuts should start in 2011. The credit crunch—which is now finally admitted exist—could be solved, according to them, by direct state participation in banks, when core capital is not sufficient.

Meanwhile, production and blue-collar jobs are collapsing. At the end of August, 4.4% fewer people were employed in production in Germany compared with August 2008. This is a new negative monthly record, topping what happened the last time in January 1995. Put that together with the fact that already only about one-third of Germany's Gross Domestic Product comes from production, anyway. At present, Germany's GDP is supposed to be down by 4.5% this year, which, even if it is still probably being underestimated, is a record collapse.