Britain stays out of EU financial crisis deal

[andyofborg]

I think there will be huge pressure on the 17 but the budgetary constraints will now need to be translated into actual national budgets. I'm not at all sure that what Germany have agreed to in terms of money being pumped in will in all cases convince ez17 electorates that the loss of national sovereignty, effectively to Germany, is worth the relatively small financial price Germany has agreed to.

 

Saying to people, give up sovereignty and you will be saved and we will do whatever it takes to do that is one thing. What is proposed is to give up sovereignty in exchange for some rather limitted short term sticking plasters which will offer no guarentee of preserving the EZ17 as a viable single currency. Also due to it's inter-governmental nature there is nothing to prevent greece or portugal or whoever if faced with the threatened sanctions simply disolving their government, forming a government of national unity or holding elections and then withdrawing from the treaty agreed by the old government without any legal way of sanctions then being enforced.

 

What all the fuss about the UK not signing up has masked is the proposed treaty is a pretty weak instrument to save the euro.

 

on it's own this doesn't solve the current crisis but assuming that we get through the current crisis without the collapse of civilisation then it puts the eurozone on a more stable footing, though while balanced budgets sound good and excessive borrowing should be frowned upon, the deficit limits seem random and are possibly unachievable in an economic downturn.

 

i doubt that withdrawing from the treaty once signed would be a feasible option, at least for a current euro country. i imagine any country trying that would be forced to leave the euro too with all the problems that would cause and i would imagine that sources of external credit would dry up. a non-euro country signing up could probably revoke the treaty but it would then no longer be allowed to join the euro and probably suffer trying to borrow money.

[andygardener]

on it's own this doesn't solve the current crisis but assuming that we get through the current crisis without the collapse of civilisation then it puts the eurozone on a more stable footing, though while balanced budgets sound good and excessive borrowing should be frowned upon, the deficit limits seem random and are possibly unachievable in an economic downturn.

i doubt that withdrawing from the treaty once signed would be a feasible option, at least for a current euro country. i imagine any country trying that would be forced to leave the euro too with all the problems that would cause and i would imagine that sources of external credit would dry up. a non-euro country signing up could probably revoke the treaty but it would then no longer be allowed to join the euro and probably suffer trying to borrow money.

 

Thats the issue though. If the plan is to give the markets confidence and thus reduce the borrowing rates and keep the EZ17 togther then the deficit limits will have to be adhered to and sanctions actually imposed if they are not. Looking at the current budget deficits in the EZ17 the target of -0.5% GDP maximum are unachieveable without huge spending cuts or tax rises - will the public of all 17 countries when the arbitary target is translated into an actual national budget accept it as a price worth paying for staying in the euro?

[I1L2T3]

Thats the issue though. If the plan is to give the markets confidence and thus reduce the borrowing rates and keep the EZ17 togther then the deficit limits will have to be adhered to and sanctions actually imposed if they are not. Looking at the current budget deficits in the EZ17 the target of -0.5% GDP maximum are unachieveable without huge spending cuts or tax rises - will the public of all 17 countries when the arbitary target is translated into an actual national budget accept it as a price worth paying for staying in the euro?

 

It looks like a recipe for more cooking of books to meet the requirements Greece-Goldman stylee.

 

EZ countries cooked them before to meet convergence criteria. They'll cook em again to make fiscal union all look fine. Then it'll all implode again.

[Guest sibon]

Thats the issue though. If the plan is to give the markets confidence and thus reduce the borrowing rates and keep the EZ17 togther then the deficit limits will have to be adhered to and sanctions actually imposed if they are not. Looking at the current budget deficits in the EZ17 the target of -0.5% GDP maximum are unachieveable without huge spending cuts or tax rises - will the public of all 17 countries when the arbitary target is translated into an actual national budget accept it as a price worth paying for staying in the euro?

 

They won't. Of course they won't. What you have seen today is simply the beginning of an orderly dismantling of the Euro as we know it. In ten years time, the Eurozone will be Germany, France, Benelux and maybe, just maybe the UK.

 

In the meantime, there is much work for the Eurocrats to do.

[andygardener]

It looks like a recipe for more cooking of books to meet the requirements Greece-Goldman stylee.

 

EZ countries cooked them before to meet convergence criteria. They'll cook em again to make fiscal union all look fine. Then it'll all implode again.

 

I'm sure they'd like to do that but when they cooked them to pull the whole thing together they had a loss less scrutiny, at least by anyone they were trying to borrow money from. Now even if european institutions turned a blind eye to falsification the credit rating agencies and IMF won't. Back of a fag packet accounts and adding a 0 here or there at the end of the tax take won't cut it this time.

[andygardener]

They won't. Of course they won't. What you have seen today is simply the beginning of an orderly dismantling of the Euro as we know it. In ten years time, the Eurozone will be Germany, France, Benelux and maybe, just maybe the UK.

 

In the meantime, there is much work for the Eurocrats to do.

 

I fear it won't be so orderly. If smoke and mirrors is going to buy enough time for an orderly dismantling then it needs to deliver a few years of stability. What has been proposed seems to me as likely as not to provoke civil unrest in the Eurozones failing states and a very disorderly disintegration of the euro.

 

As for the eurocrats, they have plenty of meetings to have and statements to draft but even if the UK had not vetoed a treaty change they are getting increasingly marginalised by Merkozy. Nobody was queing up to hear what Barroso's pronouncements would be at the summit. Both Germany and France favour intergovernmental agreements (or dictats if you're not Germany or France) over the commission. He who pays the piper calls the tune and the commision doesn't have it's own money so is pretty irrelevant whileever the current crisis continues.

[I1L2T3]

I'm sure they'd like to do that but when they cooked them to pull the whole thing together they had a loss less scrutiny, at least by anyone they were trying to borrow money from. Now even if european institutions turned a blind eye to falsification the credit rating agencies and IMF won't. Back of a fag packet accounts and adding a 0 here or there at the end of the tax take won't cut it this time.

 

The placemen are being moved in. Greek and Italian PMs both ex-Goldman.

 

European banks have 3-5 trillion euro of positions to unwind over the next 3 years.

 

European banking system could collapse

 

The European banking sector's problems are being exacerbated by a wave of asset sales as lenders look to dramatically shrink their balance sheets. UBS estimates eurozone banks could sell off between €3.7 trillion and €4.5 trillion of assets in the next three years.

 

Which of course translates to:

 

"The banks have between €3.7 trillion and €4.5 trillion of toxic assets they would like taxpayers to cover over the next three years"

 

They're getting the people in to make sure the taxpayers of Europe bail them out.

 

Don't make the mistake of thinking there is any kind of moral or ethical angle to this. It's institutionalised robbery of hundreds of millions of taxpayers.

[wednesday1]

I heard a few right wing nut jobs in the pub tonight saying what Smarmy Dave had done was brilliant. When challenged they didn't treally know what what they were on about, just so long as Britain was seen to be sticking two fingers up to Europe.

My instincts are, if they (and the Daily Liar) think it's right, it must be wrong!

[Mecky]

Calm down Mecky. We will still be part of the EU free trade area.

 

You think? I've always had the feeling to France and Germany love to gang-up on the UK as they have done in the past. Time will tell.

[grafikhaus74]

I heard a few right wing nut jobs in the pub tonight saying what Smarmy Dave had done was brilliant. When challenged they didn't treally know what what they were on about, just so long as Britain was seen to be sticking two fingers up to Europe.

My instincts are, if they (and the Daily Liar) think it's right, it must be wrong!

 

I'd seek out a pub with more intellectual clientele if I were you.