It's especially symptomatic of political elites who are adept at bartering and law, but know little about economic theory.
It's especially symptomatic of political elites who are adept at bartering and law, but know little about economic theory.
Gentlemen,
When considering the genesis of the EU as an economic and political entity I wonder about the contributory impacts of the Roman Empire (177AD), the Holy Roman Empire (1600), the Marshal Plan (1947), the European Payments Union (1950), the European Coal and Steel Community (1951), the European Economic Community (1957), the European Atomic Energy Community (1957), the European Commission, the Snake in the Tunnel (died in 1973) as well as many other European agreements, frameworks, organizations, and institutions.
- A map of the Roman Empire's maximal extent (AD 117) superimposed over today's Europe
- A map of the extent of the Holy Roman Empire (around 1600) superimposed over today's Europe
- A map of the European Union (2011) superimposed upon the globe
Why did recent statesmen such as Konrad Adenauer & Charles de Gaulle, Willy Brandt & Valery Giscard d'Estang, Helmut Kohl & Francois Mitterrand and their associated technocrats spend so many billable hours on the vision of the EU? Perhaps it was that some of these statesmen lived and soldiered through war and had truly seen a bit of what the human animal is about?
I also wonder about who today's key players are and who is aligning with who and who is selectively strengthening and weakening who...politics aka chess without rules as one of my friends was found of saying.
Germany is winning the debate on fiscal union, December 4, 2011 6:36 pm by Gavyn Davies, Financial Times, www.ft.com
Public finances in EMU 2011, Marco Buti, European CommissionThe leaders of the eurozone have finally reached crunch time. This is the week in which Angela Merkel’s “grand bargain” is due to reach fulfilment at the European summit. On one side of the bargain, the eurozone will be required to accept Germany’s demand for “fiscal union”. On the other side, Germany will agree to the provision of funds to help indebted countries to remain liquid while they reduce government deficits and debt ratios, and thereby regain market access. These provisions of liquidity will come from the EFSF, which will transform into the ESM in 2013, and potentially from the ECB.
This year's report comes at a time when doubts on continued steady output growth have emerged and the optimism of the Spring that the European economy is emerging into the post-crisis world has become more cautious. This optimism is moreover further muted by the risks associated with the Member States with high spreads on their bond yields, as concerns about solvency and sustainability persist.Given the difficult times that euro area has faced in recent years, and the central role that debt sustainability has come to play for a number of particularly affected countries, I trust that this year's report will provide a much needed addition to the debate of how to emerge from this crisis economically wiser than we went in.
Sapere Aude
I'd drop the quite unimportant Marshall Plan from the list and add the InterWar years efforts of left German and French foreign politicians at cooperation instead. They were the prototypes for Adenauer's integration policy.
The Montanunion (the coal and heavy industries treaty) was rather a weighted shackle that inhibited the French and German heavy industries in their development. It was more meant as a check against Germany (a price Germany paid for more useful forms of cooperation) than as a mutually beneficial cooperation.
Much of the current crisis and the German reactions to it has to be seen in the context of the German reunificaiton. The reunification process was a prototype for the economic and monetary union on European scale.
The feature of the reunification that we did not want to duplicate at all were the transfers from West to East.
Some Europeans want such transfers (often hidden through Eurobonds, asymmetric financing of public budgets by money printing and so on). That makes no sense for us. Such transfers would suck so much wealth out of our country that we'd be better off working much less and earn much less.
Interesting times
The buffet that comprises the EU’s most recent fiscal and monetary deliverables is in some ways reminiscent of the mind-boggling spread found at a Vegas Buffet. Prime Minister David Cameron of the UK has recently cast a historic veto, as the only EU member to do so, against a proposed tax and budget agreement to address the current European political and economic crisis. (1) This has exposed significant ideological differences internal to the UK, led to open speculation regarding a perception that, in so doing, the UK has undercut it’s ability to circumscribe German leadership of ‘the continent’ and led to further speculation that the UK veto has perhaps further weakened the UK’s ability to negotiate for pro City of London EU financial policy. (2) (3) (4) (5) (6) (7) Historically, Mr. David Cameron’s actions may be seen as faintly echoing Prime Minister Harold Macmillan’s (UK PM, 1957-1963) unsuccessful strategy to circumscribe the European Common Market, which later led to an unsuccessful attempt at a u-turn and the UK’s subsequent attempt to join the EU core nations. (8) The high stakes clash of ideas may also be seen as the UK’s embrace of high risk/high payoff financial tactics, techniques, and procedures such as ‘rehypothetication’ versus that of a German vision of austerity and prudence. (9) (10) (11) (12) This struggle, and the advocates of the differing visions, is partially visible at the global level by considering which nations are contributing funding to IMF and other efforts to resolve the crisis. (13) (14) This does not mean that the world is simple, black and white, since resolution is desired by all, but it does mean that as always methodology, and political appearances, matters. (15) (16) Nonetheless,winners are already being anointed. (17)
(1) UK alone as EU agrees fiscal deal, 9 December 2011 Last updated at 11:37 ET, BBC News, http://www.bbc.co.uk/news/world-europe-16115373
(2) Nick Clegg warns European veto 'bad for Britain' , 11 December 2011 Last updated at 12:41 ET, http://www.bbc.co.uk/news/uk-16129004
(3) Triumph und Zweifel in Grossbritannien, 11. Dezember 2011, Neue Zürcher Zeitung, http://www.nzz.ch/nachrichten/politi....13600699.html
(4) Europa lässt Großbritannien zurück, 09.12.2011, 10:48 Uhr, Handelsblatt, http://www.handelsblatt.com/politik/...k/5940698.html
(5) Toward a Gentler, Kinder German Reich?, by Dr. Tony Corn, November 29, 2011 - 8:32am, Small Wars Journal, http://smallwarsjournal.com/jrnl/art...an-reich#_edn7
(6) Franco-British Alarm of 1989 Comes True as Merkel Calls EU Shots, By Leon Mangasarian, December 07, 2011 6:01 PM EST, Bloomberg News, http://mobile.bloomberg.com/news/201...s?category=%2F
(7) Cameron Negotiates U.K.’s Isolation in EU, By Gonzalo Vina and Rebecca Christie, December 09, 2011 8:05 AM EST, http://mobile.bloomberg.com/news/201...2Fworldwide%2F
(8) Marsh, David, The Euro, 2009, Yale University Press, New Haven and London
(9) Shadow Rehypothecation, Infinite Leverage, And Why Breaking The Tyranny Of Ignorance Is The Only Solution, by Tyler Durden, 12/10/2011 13:10 -0500, Zero Hedge Blog, http://www.zerohedge.com/news/shadow...-only-solution
(10) The (sizable) Role of Rehypothecation in the Shadow Banking System, by Manmohan Singh and James Aitken, IMF Working Paper WP/10/172, http://www.imf.org/external/pubs/ft/wp/2010/wp10172.pdf
(11) German Vision Prevails as Leaders Agree on Fiscal Pact By STEVEN ERLANGER and STEPHEN CASTLE, Published: December 9, 2011, NY Times, http://www.nytimes.com/2011/12/10/bu...mc=rss&src=igw
(12) Does Math Support Euro Survival?, Lawrence Goodman
December 5, 2011, Center for Financial Stability, Inc., http://www.centerforfinancialstabili...uro_120511.pdf
(13) IMF Resources to Stem European Crisis Will Get Boost Without U.S. Backing, by Sandrine Rastello and Ian Katz, Dec. 10, Bloomberg Business Week, http://www.businessweek.com/news/201...ands-back.html
(14) China Can’t Use Reserves to ‘Rescue’ Countries, Fu Says, by Michael Forsythe, December 04, 2011, 7:16 PM EST, Bloomberg News, http://www.businessweek.com/news/201...s-fu-says.html
(15) Euro Crisis Pits Germany and U.S. in Tactical Fight, By NICHOLAS KULISH, Published: December 10, 2011, NY Times, http://www.nytimes.com/2011/12/11/wo...emc=rss&src=ig
(16) Euro in der Krise, Handelsblatt, http://www.handelsblatt.com/politik/...e/3732552.html
(17) Ein Zeichen inmitten der Euro-Krise, Deutschlands Finanzminister Wolfgang Schäuble erhält den Karlspreis, 10. Dezember 2011, 14:53, NZZ Online, http://www.nzz.ch/nachrichten/politi....13588386.html
Sapere Aude
CONTINENTAL SHIFT: Safeguarding the UK’s financial trade in a changing Europe, By Stephen Booth, Christopher Howarth, Mats Persson, Vincenzo Scarpetta, December 2011, Open Europe, http://www.openeurope.org.uk/researc...entalshift.pdf
Luck May Be Key Ingredient for EU Leaders’ Latest Blueprint to Save Euro, By Simon Kennedy, December 12, 2011 3:59 AM EST, Bloomberg News, http://mobile.bloomberg.com/news/201...s%2Feconomy%2FFirstly, the UK's level of influence on new European financial rules has decreased; regulation is now less geared to financial services growth but more towards curtailing financial market activity, irrespective of whether such activity is good or bad. There are at least 49 new EU regulatory proposals potentially affecting the City of London either in the pipeline or being discussed at the EU-level – while some are justified, very few of these are aimed at promoting financial services trade.
Russia added to oil traders’ risk lists, By Javier Blas, Last updated: December 13, 2011 10:13 am, Financial Times, www.ft.com“Luck is likely to be required,” said Joachim Fels, chief global economist at Morgan Stanley in London.
To have a chance of success, a deal reached after all-night talks on Dec. 9 to restore faith in the single currency requires investors to avoid dumping European debt, Standard & Poor’s to hold off on threatened downgrades, foreign countries to chip in rescue cash and the European Central Bank to soothe bond markets.
Politicians also have to avert the unforced errors that sank previous initiatives and turned a Greek deficit problem in 2009 into a threat to the international financial system.
After a year in which many unusual events hit oil prices – including the collapse of the 42-year long regime of Muammar Gaddafi in Libya – traders are not ruling out anything and have added Russia to their risk lists.
Russia is the world’s second largest oil producer and recent demonstrations in Moscow have spooked oil investors and traders. On Saturday, tens of thousands took to the streets in the capital to demand a rerun of elections, Russia’s largest opposition demonstration since Boris Yeltsin took on the Supreme Soviet in 1993.The International Energy Agency estimates that Russia oil output hit a post-Soviet high of 10.7m barrels a day in October. But at the same time [...Russian...] oil demand is also rising strongly, hitting nearly 3.5m b/d this year, up 5 per cent from 2010.
Sapere Aude
I think you are offering a good overview. In my humble opinion the British veto was in some ways unique. We have already had a couple of states using this card but never in such a situation and never against such political pressure, with one country so completely isolated. Remaing alone in among 27 member states is quite a feat of diplomancy.
Europe alone would have the (private) money to handle to crises on the bond market, the big problem is the lack of trust of potential private investors and the persons handling that money in certain economies and states. The fligth of Greek capital is just the worst instance of it.
During the Euro years a massive amount of captial, sometimes luring also considerable amounts of people, from the core of Europe, especially Germany flew into the countries with a better economic future and bigger captial gains at a just moderatly higher risk. This caused a lack of investment in, once again especially in Germany and meant painful reforms and a (relative) loss of income for the workers.
So the current adjustment after a phase of very cheap and plentiful credit is especially for former boom countries. Sadly the political freedom to follow Mr. Keynes is perceived to be almost non-existent although it was used considerably to lessen the impact of the 2008 crisis. Personally I would like the see an aggressive policy by the central bank. Even if monetary policy alone will not solve the crisis, it can not miss.
Germany had a lack of investment?Originally Posted by Firn
What's your expectation for investments?
We're capital investment central.
Capital export is in macroeconomic bookkeeping the other side of the coin for trade balance surplus - unavoidable (save for exceptions such as transfers).
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