Friday, December 02, 2011

David 'Two-Speed' Cameron and the EuroCop

Chancellor Merkel's glacial crawl towards the creation of an all-powerful EuroCop with powers to veto the budgets of Eurozone nations is beginning to make Prime Minister Cameron a bit nervous.  Cameron is on the outside, looking in, but is itching to give advice to the 17 European Union members of the Eurozone about how to manage their affairs.

But Merkel wants budgetary discipline uber alles:
No comments from the peanut gallery ...

German Chancellor Angela Merkel has said Europe is working towards setting up a "fiscal union", in a bid to resolve the eurozone's debt crisis.

She told the Bundestag that a new EU treaty was needed to set up such a union and impose budget discipline...

In her speech, Mrs Merkel promised "concrete steps towards a fiscal union" - in effect close integration of the tax-and-spend polices of individual eurozone countries, with Brussels imposing penalties on members that break the rules.


"We need budget discipline and an effective crisis management mechanism," she said. "So we need to change the treaties or create new treaties."

The German government has been pressing for changes to establish powers to veto national budgets in the eurozone that breach agreed rules.

If Merkel succeeds (and she has the clout of heading the major economy in the European Union powerhouse), then this will be a major leap forward in financial integration for the EU. Until now, political integration has far outstripped financial integration, and the  Eurozone crisis is partly the result of this lopsided development.

The UK has been playing an unusual role, hopping and skipping along the sidelines, shouting advice but reluctant to become a fully-fledged member in the Eurozone. This half in-half out posture has not prevented British leaders from proffering advice (often disregarded by Merkel and Sarkozy):

Britain is concerned about the possible impact of a two-speed Europe, in which it could be left on the margins along with other countries outside the euro.

Merkel seems determined to make things happen as she wants them to happen, even if it means bypassing the whole EU through a deal just between the Eurozone members, as she has hinted:

"So we need to change the treaties or create new treaties."
And this talk of a two-speed Europe is worrying Cameron, who faces insistent pressure from Tory Luddites to hold a referendum on continued membership in the EU.

3 comments :

  1. I will not pretend to be an Economist, I do not understand the problems, we must have proffessionals solve these problems.
    These proffessionals will be in the private and public sector and they must be responsible and held accountable for their actions and decisions. This, in my opinion, is what Occupy Wall Street, was/is all about.
    Merkel want to be able to force all EU countries to be fiscally responsible. Why should an older brother bail out an irresponsible younger brother and not have any input in the affairs of the younger brother.
    Cameron wants to give advice but the UK is not a role model.
    The USA let the private sector run wild, which has added , or started, the world problems, then the government bails them out, probably necessary, but then the CEO's and senior exs get huge bonuses or if they get fired they get millions of dollars in severence.
    Moving down from country to province, Ontario adopted the HST, all the PST auditors, @ 1200 were transfered from the provincial government to the fedreal government and were given severance pay of @ $ 50,000. NOT RIGHT
    I have rambled on but the problem is not restristricted to the EU, it is every country and all levels of government, they cannot spend more than they take in.
    We need a new breed of politicians Liberal party please listen.
    I have rambled on becausue I believe that this economic mess was caused by incompentence

    ReplyDelete
  2. Malcolm, it was caused by groupthink - because the economic ideology of easy money and easy credit and less regulation was popular and the elite made out like bandits, nobody in power bothered to actually check what was happening until the bottom fell out.

    This type of pattern is very human and will happen again - we need only read Barbara Tuchman's The March of Folly to understand exactly what happened, and why those in power marched on into the chaos despite the obvious signs of coming disaster and the voices raised in warning.

    But yes, we also missed the chance to punish those who brought the world's financial system to the brink. Partly this was because we set the foxes to guard the henhouse they had already despoiled.

    ReplyDelete
  3. I do not think we should be punishing people who make mistakes but we should not be giving them million dollar bonuses especially when employees lose their jobs, pay checks.

    The "foxes guarding the hen house", I agree but the liberal party appoears more focused on gaining power rather than fixing the system. The Liberal Party appears that it want to be the government, one of the foxes. Tell me again why I should vote Liberal.

    The Liberal party want to reinvent itself, why not stand up against this mismangement instead of focusing on be elected by playing political games.

    ReplyDelete

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