Posted on 06/27/2012 6:24:36 AM PDT by Olog-hai
Europe's leaders convening in Brussels on Thursday for an European Union summit are under intense pressure to come up with a new plan to save the euro, but they seem as divided as ever.
Chancellor Angela Merkel used uncommonly stark language on Tuesday when she rejected the idea for common euro bonds by saying Europe would not share total debt liability "as long as I live."
But German media commentators have drawn some comfort from a blueprint for a radical revamp of the eurozone's architecture presented this week by the "gang of four" European presidents: European Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso, Euro Group President Jean-Claude Juncker and European Central Bank President Mario Draghi.
The ideas would entail a dramatic loss of national sovereignty through the establishment of a central authority with power to demand changes in individual members' national budgets, as well as a "medium term" move towards euro bonds, as well as a banking union with a single authority that would insure banking deposits and have the power to shut or recapitalize banks directly, with help from Europe's permanent bailout fund, the European Stability Mechanism. …
German commentators say EU leaders will have to grasp the nettle and agree to at least the basic framework of a complete overhaul of the euro system if they want to save the single currency. Many agree with Merkel that euro bonds are the wrong answer, and that American calls for Germany to throw money at the problem won't solve the crisis. All countries will have to accept a loss of sovereignty to make the currency work in the long term—and in the medium term, says one commentator, the European Central Bank should take a bigger role in tackling the crisis. …
(Excerpt) Read more at spiegel.de ...
Culminating in the historically popular:
"Next! Do you support this decision?"
"No."
[BANG]
"Next! Do you support this decision?"
"YES!!!"
Successful business negotiators do not give up real things in exchange for phony promises. We trade real things for real things and promises for promises.
The Euro is phony right down to the fake landmarks printed on it. The dollar, for all the problems with the Fed, at least shows real people and real landmarks.
Then I’m afraid you don’t understand the EU, or the German politicians who started the EU in the first place. Those politicians aren’t going to walk away from something they created, especially if it increases their power on the world stage. The CDU in particular are very passionate about a united Europe. I suspect the façade will eventually be stripped away (it already has in part, what with Ireland’s budget having been revealed to be reviewed by the Bundestag; a lot more of this kind of stuff will be openly seen in the future) . . .
OK . . . now imagine all of the above (plus those from other countries) united under a single command instead, like many “Europhilic” politicians want to happen.
This would be like having $500,000 in the bank and combining your bank accounts with your three bankrupt neighbors. What could possibly go wrong?
Germany, as the only financially successful country in the whole block isn’t going to take budget orders from Spain, Greece, Italy, and France.
If the interest rate structure is "out of whack," it is a result of central bank meddling. That can be cured by stopping the creation of money and allowing the market to set rates.
holding down national debt to 3 percent of GDP by itself would not allow the less-industrialized countries to catch up to the more-industrialized ones
Government debt does not spur any "catching up." If anything, it holds them back. Any GDP growth caused by fiscal deficits is illusory and will disappear at the next recession.
The monetary unit has nothing whatsoever to do with a country's economic development. True economic growth [i.e., capital growth] can take place anywhere the government doesn't siphon it away from the private sector.
I don't expect any of this to happen, but it's certainly economically possible. The Euro, whatever the reasons for its creation (and I agree largely with yours,) is not the problem. It functions as if the Euro-zone members had fixed exchange rates and that imposes a welcome discipline on governments.
We can see, even now, how drastically Ireland, Greece, Spain, and Portugal are cutting back on government spending. It isn't enough, but it never would have happened at all with national currencies. If allowed to, the Euro would function much as a gold standard and, ultimately, all Europe could be as stable and prosperous as Germany is.
That's theory, of course, but it's solid. Shame the Europeans aren't likely to follow it.
You sure got the central bank meddling bit right. Problem is, the fallout extended way beyond the eurozone’s borders.
Yep. Couldn't agree more.
A student of European history will note that when the greater populace gets nervous, and economic decline is apparent, they will look for relief from just such a man or maybe now, a woman. It’s a golden opportunity, and I would bet that the probable person nows sees the path.
If the EU has any sense, they will ease the strain or suffer the consequences. Just a thought.
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