Friday, July 6, 2012

The European week in review - our so called union...


- Another bailout in Spain.
- Another Eurogroup meeting in Brussels.
- Another speech about shared debts in Cyprus.
- Another case of unconstitutional pay cuts in Portugal.
- Another debate about renegotiating bailout conditions in Greece.
- Another delay of VAT increase in Italy.
- Another frustration in Germany.
- Another threat from Finland.
- Another sign of utter indecisiveness in Holland.
- There is no Europe. It has never existed, does not exist and will never exist.

2 comments:

Anonymous said...

All eyes are on Germany, the largest contributor to eurozone financial firepower - and the country whose backing is crucial to a credible future for the single currency.

German Chancellor Angela Merkel has said that her country is committed to keeping the eurozone intact. To that end, the eurozone is inching towards a closer fiscal union, with shared responsibility for eurozone countries' debts.

But Germany will insist on a tough bargain - one with major political consequences which France, among others, might find impossible to accept.

Continue reading the main story
Rule-breakers lose sovereignty

Jens Weidmann

President, German Central Bank

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"In the event of a country not abiding by the budgetary rules, national sovereignty would be automatically transferred to the European level on a scale that can ensure compliance with the objectives.

"In a speech at the Petersen Institute, Jean-Claude Trichet, the former President of the ECB, described this aptly as 'federalism by exception'.

"One option, for example, could be the right to make tax increases or proportional cuts in expenditure - and not just the possibility of calling for them.

"In effect, national sovereignty would be largely retained and fiscal policy decision-making capabilities and room for manoeuvre would be preserved as long as a country in question complies with the limits on borrowing and debt."

Read Jens Weidmann's full speech

The president of the German Bundesbank, Jens Weidmann - a former economic adviser to Chancellor Merkel, and an increasingly influential player in the eurozone crisis - has been indicating the kind of bargain Germany would demand.

He articulates what many Germans regard as essential if any deal is to be done and in a speech this month Dr Weidmann spelled out what would happen to countries in the new eurozone who didn't play by its rules.

Anonymous said...

Imagine, then, the French response to that German idea of countries failing to follow strict spending rules handing over their national sovereignty.

And Hollande has a very different vision of how the eurozone should evolve - keen on seeing it as a club that, with the help of France's political leadership, sustains the financing of European growth.

Continue reading the main story
Find out more
Chris Bowlby presents Eurogeddon II on Analysis on BBC Radio 4 on Sunday, 1 July at 21:30 BST.

Listen: Eurogeddon II
Listen: Preparing for Eurogeddon
Download the Analysis podcast

So, while European leaders stress their determination to move towards a new kind of union to save the single currency, that only begins what will be the toughest of political as well as economic struggles.

"Over a three- to five-year time frame," argues David Marsh, "we will see this reduced to a Germanic core and we will have to ask ourselves whether France will be part of that core."

Unthinkable? Yes, many in Europe will say. The eurozone, just like the European Union, will muddle through this crisis, and a more united continent will eventually emerge.