Treasures from the threads Number 68 on the Euro sickness!

nonny mouse said...(In reply to a column by Roger Helmer On Conservative Home on the Euro, linked here):

>>The solution proposed by Angela Merkel - and now (it seems) meekly accepted by Sarkozy - involves a fiscal union with draconian powers and sanctions, ending forever the economic independence of the eurozone nations.
The solution proposed by Merkel is a bandaid. It basically reaffirms the Maastrict treaty provisions of punishing economies that borrow too much. The problem is that that punishment never happens - even Germany and France broke the rules without consequence and they would do so again if their national govenments wanted to because any rule can be rewritten when needed.
The problem is not that the proposals call for too much integration but too little. A single currency requires a single government. A single government requires a single democratic system.
What Europe has is a single currency with several governments that each have their own democratic system. That allows them to change the rules for their own national gain without accepting the responsibility.
A single currency requires the rich transfering wealth to the poor. We have a system that lets the rich get richer at the expense of the poor getting poorer. Those forces are what is destroying the single currency.
We have a Eurozone being run by 80 million rich voters and it ignores the needs of the 200 million other Eurozone citizens. It lacks the democratic underpinning that would make it work by allowing the non-German voters to overrule the German voters.
The Eurozone did not fail because of not applying the Maastrict rules. The existing Maastrict rules were working in Italy and Spain, yet these countries now risking the collapse of the whole system. Reaffirming the Maastrict rules when those rules were not responsible for the systemic failure fixes nothing.
What happened in Europe was that interest rates were raised because Germany had a little inflation.
Those interest rates made the recessions in Italy and Spain worse, which pushed up their deficits.
The right thing would have been for Germany to accept inflation because the Eurozone as a whole needed
economic stimulus, not economic contraction.
Merkel's rules imply punishing Italy and Spain for spending more to make up for having their interest rates raised. It would punish the wrong people and make Italy and Spain hurt even more to protect Germany.
Merkel's solution is the wrong one. The choice is between true political union or an end to the single currency. Germany will not (cannot?) accept either so the markets will decided for them, and we will get hurt by the fallout.
>>That is why Conservative back-benchers will not take kindly to a British policy of backing fiscal consolidation in the eurozone with no countervailing concessions to Britain.
I think one option is for full political and financial union, but without us in it. We would then move into the slow lane as part of the single market but not part of the federal europe. That would be the ultimate in repatriation - keep only the bits that truely matter to us. Accept the loss of influence as a price of keeping our own sovereignty.
I think another option is for the whole European project to go back to being a common market of nation states.
The third option is to ignore reality and for everything to collapse and do serious damage to the global economy.
I predict the third option is what will happen. God help us when it does.
I do not want to see the Conservative party tear itself apart over repatriation now when our whole economic system is about to be destroyed. Forget Europe. If it won't reform then it is dead. Focus on preparing for the coming storm, not irrelevant arguments over repatriation.
If the back benchers want to help then lets keep the message clear. A failure to reform will not work so we will not accept any such treaty change. It is not about demanding repatriation it is about demanding reformation of the broken European project.

Reply December 03, 2011 at 17:03