Treasures from the threads - number forty-three

Comment to an article on the Euro crisis by Ambrose Evans-Pritchard in the Daily Telegraph this morning, linked here:

Ambrose: There was indeed an explosion in the credit markets as the Ted Spread today to 30.5; this reflects an evaporation of credit liquidity and trust in lending and shrinkage of available credit. The Christine Lagarde rebuke of the BaFin ban communicates the maverick nature of the German Ministry. The ban possibly may indicate some issue that BaFin does not feel comfortable disclosing to other State Ministries, Ministers, EUROFIN, or EUROSTAT. You relate: “The deep rift between Berlin and Paris has been exposed again, leaving it painfully clear the European Montary Union still lacks the fiscal and governing machinery of a viable currency union”. My reply is that the EU Finance Ministers May 2010 Summit took the eurozone out of a trade and currency union and into a region of global governance; a European Economic Government was announced by EU Finance Leaders and State Leaders; they effected a bloodless coup de etat; sovereign nation states are history. National sovereignty is a principle of a bygone era. Perhaps a Framework Agreement, but definitely future Summit Announcements, will announce governing machinery and mechanisms for coordinated economic, banking, financial, monetary and seigniorage policy. I refer to the EuroIntelligence article Euphoria Ends As Investors Suspect Another Shameless EU Confidence Trick, where France’s Finance Minister Christine Lagarde in Les Echos.fr May 11, 2010 article ”This Is Not Just An Emergency Plan — It Is A Historic Turning Point For Europe”, relates that this is a historical turning point for the euro zone. She said that there is a political determination now to build something new, to reinvent the European model. The original construction faults of the eurozone will be dealt with, but this will not happen overnight. The work starts soon (21 May) under EU president Van Rompuy. Lagarde listed among others a convergence of economic models, a reinforced stability and growth pact and improved functioning of the eurogroup. An excerpt with questions and answers is as follows: Is Germany ready for the euro area that changes its nature by being more integrated politically and economically? … “Germany has agreed to change its traditional position with focus on bilateral loans as we have seen in Greece, to defend us, with the creation of a stabilization fund for Europe, whose dimension is collective, is the key element.” Is this one ounce of federalism? … “It’s more than an ounce of European federalism, as the fund’s programs will purchase securities or offer loans.” Clearly historical facts show that at the May 2010 European Summit, the EU Finance Ministers announced a region of global governance, specifically a federal economic, political, and monetary government, with a EU Treasury which has the authority to buy ailing sovereign debt and to exercise seigniorage. Mr. Trichet is tasked as the EU’s Treasurer and Chief Banker. It is significant to note the optimism and sense of mission in the Les Echos interview, as Finance Minister Lagarde stated that “This is a historic turning point is extremely clear. This is not just a device concocted for emergency requirements. We wanted to build a system for the long term. Basically, there is a realization that we’re all in this together and we suffer the same blows. There is a determination to build a new building, to reinvent the European model. We must find the rules that we preserve such crises in the future. When you put 500 billion euros on the table, it still believes that will be satisfaction. This also means that there will be fiscal adjustment for everyone. “ She went on to highlight the pivotal role of incoming EU chairman: “The work cannot be done in one day. The work will begin soon after May 21, with the appointment of the new chairman of the European Union, Herman Van Rompuy.” Clearly we have a new building and reinvention of the European model — the European Monetary Union that Mr. Evans-Pritchard referred to is history, it is part of a bygone era: the age of European Economic Governmenance has arisen, it will be presided over by its Sovereign, Herman Van Rompuy, and its Seignior, Jean-Claude Trichet.

theyenguy

on May 20, 2010

at 06:28 AM