The Consequences of Brexit (part 2)

[unbeliever]

you are consistent anyway.

 

Why not just admit you have made a mistake.

 

Do you have anything to contribute other than various emphatic assertions that non-socialists are evil.

[NigelFargate]

You make good points. Would the IMF not be able to finally come up with a serviceable rescue package under the new drachma?

 

I am sure that some kind of rescue package would be cobbled together, but whether or not it would be serviceable once the currency speculators begin to hover is highly questionable.

 

There is no formal mechanism for leaving the eurozone. The possibility of any country leaving is not mentioned anywhere in the Maastricht Treaty - which, in considerable detail, set out how the single currency would operate - i.e. there is no equivalent of Article 50 in the Lisbon Treaty.

 

Euro membership has been an unmitigated disaster for Greece. None of the supposed key benefits of membership (in particular, economic growth and jobs) have materialised. The situation in Spain (in terms of economic growth and jobs) is not much better. When Spain entered the eurozone in 1999, it had an unemployment rate of around 18%, the same as it is today (and for many of the intervening years, it has been much higher).

 

The idea of the eurozone, in terms of economic growth, is that it would create a supply side shock, meaning that less competitive states would become more efficient due to trade and investment flows. In fact, some of the weaker and poorer member states have become even less competitive against Germany and some other Northern member states, leading to huge and persistent trade imbalances with these countries.

 

The irony is that most Germans never wanted the euro, but have done quite well out of it, because their exports are much cheaper than they would have been had they kept the D Mark.

[unbeliever]

I am sure that some kind of rescue package would be cobbled together, but whether or not it would be serviceable once the currency speculators begin to hover is highly questionable.

 

There is no formal mechanism for leaving the eurozone. The possibility of any country leaving is not mentioned anywhere in the Maastricht Treaty - which, in considerable detail, set out how the single currency would operate - i.e. there is no equivalent of Article 50 in the Lisbon Treaty.

 

Euro membership has been an unmitigated disaster for Greece. None of the supposed key benefits of membership (in particular, economic growth and jobs) have materialised. The situation in Spain (in terms of economic growth and jobs) is not much better. When Spain entered the eurozone in 1999, it had an unemployment rate of around 18%, the same as it is today (and for many of the intervening years, it has been much higher).

 

The idea of the eurozone, in terms of economic growth, is that it would create a supply side shock, meaning that less competitive states would become more efficient due to trade and investment flows. In fact, some of the weaker and poorer member states have become even less competitive against Germany and some other Northern member states, leading to huge and persistent trade imbalances with these countries.

 

The irony is that most Germans never wanted the euro, but have done quite well out of it, because their exports are much cheaper than they would have been had they kept the D Mark.

 

Yes this is generally my view of the matter as well.

[unbeliever]

It seems that the EU negotiators are under orders to see that the EU retains access UK financial services post-Brexit.

https://www.theguardian.com/business/2017/feb/01/eu-brexit-deal-city-leaked-report-european-parliament-article-50

Who'd have thought it¿

[harvey19]

You mention Australia.

If they reintroduced the £10 pom scheme the ships would be overflowing with people trying escape this hell-hole the tories (aka UKIP) have created.

 

My family and I have enjoy a good standard of living and I enjoy life.

The secret is to have a positive outlook on life and trust our elected leaders(Terrific Theresa will be remembered as one of the best Prime Ministers in the history of our country)

Don't you consider our lifestyles so much easier and more comfortable than previous generations ?

When you feel depressed just sing OUR National Anthem and swell up your chest with pride.

[NigelFargate]

 

I guess the prospect of a transfer union might also have concentrated potential donor states' minds a bit more closely on scrutinising the books of certain potential recipient states.

 

The "supply side shock" theory was always wishful thinking at best. I don't think many people would argue that Mississippi or West Virginia would have thriving stand-alone economies by now if only they hadn't been subsidised by the other states.

 

But of course a eurozone transfer union would have been politically quite impossible. The required goodwill (or whatever) can only come after a fully federal state has been established. Even then there tends to be much grumbling about it from the donor states, as within Germany itself for instance. In that sense I guess that the USA is a closer federation than is Germany.

 

[Or maybe it's just that the donor states in the USA tend to be relatively liberal, whereas in Germany they tend to me more redneck i.e. Bavaria. Or maybe I've got that wrong and there's just as much grumbling in the States?]

 

Though if the intra-eurozone debts are "restructured" far enough, it might amount to something like a de facto transfer union anyway.

 

Good points.

 

The 'supply side shock' theory underpinned the voluminous Cecchini report on the putative benefits of a Single European market (or on the 'costs of non-Europe). The report was supposed to provide the theoretical and empirical case for the SEM. It contained very ambitious forecasts for the growth in EU jobs and EU GDP, rather like the forecasts produced later to justify the adoption of the single currency. Both have subsequently proved to have been very wide of the mark.

 

The Maastricht Treaty might be regarded as the high water mark of the European federalist dream, as exemplified by the single currency project. What the Euro-federalists failed to realise however is that the European states cannot be moulded into a federation, partly because of the reasons you mention. Some years ago an American scholar did a detailed comparison of the similarities and differences between the US and EU political and economic systems and came to the conclusion that they were qualitatively and fundamentally different. Unfortunately, Euro-federalists such as Verhofstadt and his ilk just will not accept reality.

Edited February 10, 2017 by NigelFargate

[katerina]

looks like greece will be out next http://www.telegraph.co.uk/business/2017/02/07/eu-faces-crisis-imf-warns-greek-debts-explosive-path/ unless the eu keeps throwing money at them i hope the remoaners will say thank you for brexit when it all goes belly up:hihi:

 

We have been hearing of Greek problems for years and the EU keeps kicking the can down the road for another 6 months. Their debt to GDP is predicted to hit over 200% in a few years. Italy in trouble too and Brussels has ordered Spain for more austerity.

[NigelFargate]

We have been hearing of Greek problems for years and the EU keeps kicking the can down the road for another 6 months. Their debt to GDP is predicted to hit over 200% in a few years. Italy in trouble too and Brussels has ordered Spain for more austerity.

 

The critics' term for the acronym EMU (Economic and Monetary Union) used to be 'Even More Unemployment'.

 

Now it ought to be EMA ('Even More Austerity').

[unbeliever]

The critics' term for the acronym EMU (Economic and Monetary Union) used to be 'Even More Unemployment'.

 

Now it ought to be EMA ('Even More Austerity').

 

I like (as you may have noticed) EURO ('European Unemployment and Recession Organisation').

[chalga]

It seems that the EU negotiators are under orders to see that the EU retains access UK financial services post-Brexit.

https://www.theguardian.com/business/2017/feb/01/eu-brexit-deal-city-leaked-report-european-parliament-article-50

Who'd have thought it¿

 

Blows 'Project Fear' from the Daily Right Wing Rags and Bozo about the EU wanting to punish the UK out of the water.......who'd have thought it,still,it won't stop their spite towards the EU I suspect.