Thursday, September 29, 2011

My reply to John Redwood's morning post on German Democracy

German democracy, a crucial topic for all in Europe, for if that fails not even ordinary Germans will have a future say in how 500 million odd europeans will be governed, is the topic of John Redwood's first morning post today, to which I replied as follows:

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I believe you may have a problem with your intials of the various rescue funds. The EFSF was the original €440 billion fund of the Euro Group. The EFSM was the fund from the EU budget supposedly restricted to €65 billion to which all 27 EU members had to contribute, while the long term facility negotiated and published but not yet ratified will be called the ESM. (Of course in some countries, depending on the language, these initial may all move around or become something even more alien).
After the 21st July meeting of this year the EFSF was agreed to be amended with I believe a 20% voluntary private bank haircut and a provision for the ECB to go further than in the past. This change is slowly going through the 17 European national parliaments and passed tha halfway point yesterday with Finland, albeit laughably still have a parliamentary veto regarding collateral in force (envisioned in the 21st July agreement) most likely to scupper the whole arrangement by precluding the IMF from joining in future advances.
More importantly, on German democracy, as I have quite frequently discussed on my blog, is the ever more obvious fact that the entire EU, given Germany’s economic power, is now dependent on this last remnant of any democracy within the EU. Whoever is put in power in Germany decides the fates of some 500 million Europeans, the Treaties having already been trashed. Today it is likely the amendments to the EFSF will be carried, thanks to the votes of the opposition SPD and the Greens. Watch the leader of the SPD, given present polls he is the putative leader of the EU should Economic Governance of the Euro Zone be allowed to come into force. Nick Clegg, your Coalition partner party leader, is reported by the BBC to be about to urge that course today, following the example set by your own George Osborne.

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