There are probably a bunch of good reasons for why Europe should have a single currency. I am pretty sure that if I had to conduct a business on the continent, the expensive hassle of converting currencies every few hundred kilometers would have made me a huge Euro booster. Added to such practical considerations is an idealism behind a we-are-all-in-this-together notion that probably made people feel all warm and fuzzy inside.
But there are also good reasons for separate currencies and defended borders but the best reason comes from the world of engineering. The reason a ship is divided into sections with bulkheads that can be tightly closed is that when things go wrong, it is highly advantageous to be able to seal off the problem area.
The Euro would have probably not gotten into so much trouble except that its introduction coincided with a bunch of other whacky neoliberal ideas that practically ensured that catastrophic hole-in-the-hull-style problems would arise.
ECB President Trichet Praised Ireland as the Model for the EU to Follow
By William K. Black
Ireland is not like Greece. It ran a budgetary surplus during its boom. It privatized and reduced work restrictions. Its budgetary crisis would be serious because it suffered from one of the worst bubbles (relative to GDP) in history and it lacks a sovereign currency. Ireland’s budgetary crisis is crushing because its political leadership, gratuitously, decided that a nation of four million people should bail out the creditors of Irish banks even though it had no legal or moral obligation to do so and was incapable of doing so. The Irish banks’ creditors were primarily foreign, particularly foreign banks. Absent the Ireland’s failed and quixotic attempt to bail out the German banks Ireland would not be in a sovereign debt crisis.
Ireland, along with Iceland, became the Cato Institute’s Exhibits A & B for the purported success of deregulation and desupervision. European Central Bank President Trichet shared the Cato Institute’s praise for Ireland’s policies, but he came to Ireland on May 31, 2004 to make another claim – the “Celtic Tiger” proved the triumph of Ricardo over the errors of Keynes. Trichet made clear that he was an anti-regulatory supply-sider.
Trichet began his address in the traditional fashion of any polite guest – he sought to find something in common with the audience and he praised them.
“Speaking about Ireland’s EU Presidency, and noting that the outgoing President of the European Parliament, Pat Cox, is also Irish, I cannot resist mentioning with pride my own Celtic roots as a native “Breton”!”
“[T]the process of transformation that [Ireland] began over four decades ago has become a model for the millions of new citizens of the European Union. The new Member States of the EU have had to confront economic challenges whose magnitude and long-term importance are similar to those that faced Ireland when you began your work. Thanks to Ireland’s economic success, to which you devoted your life, we can be confident that economic reform works.” more
Germans tiring of working for PIIGS
Published: 06 June, 2011, 09:56
As the EU prepares its next wad of cash to save Greece from financial collapse, Germans, the main sponsors of the bailout, question why they continue working to pay for Athens' – and others’ - mistakes.
Public anger is mounting in Greece over stricter austerity measures the government has promised to implement to get its hands on more EU aid. The country’s cabinet is to hold an informal discussion of the medium-term plan on Monday.
Meanwhile, European leaders have approved the next payment in its bailout for Athens, bidding to save the country and euro from a default.
But those who are to pay the price of the new aid package could soon take to the streets.
Top German lawyer Markus Kerber is suing the German government to stop it bailing out bankrupt neighbors.
“The euro's dead, long live Germany,” he says. “You can't save the euro by saving Greece, but on the contrary you have to get rid of Greece. Greece is no longer a worthy candidate, no longer a worthy member of the European monetary union.”
The nations labeled in derision by some as the PIIGS of Europe – Portugal, Ireland, Italy, Greece and Spain – must drop the currency now, before they drag down other members, warns Kerber.
Although Athens last year raised the pension age to 65 and curbed early retirement, other European countries believe that Greek workers work less.
German Chancellor Angela Merkel said the country should not expect to take frequent holidays and retire early and then wait for Germany to bail them out.
“We'll bail you out a second time,” she said. “But if you want cash in future, you must work longer. We can't have a common currency where some get lots of vacation time and others very little. That won’t work in the long term.”
The statement caused uproar in Greece, but they are not happy in the EU's cash capital Frankfurt either, believing the Greeks have had it too easy. more
The situation in Finland is especially telling. Absent the Euro, there is almost no reason whatsoever why Finland should even have to think about the various forms of economic mismanagement of Mediterranean Europe. But right now, their membership in the Euro means that one of the most well-run democracies on earth cannot even form a government.
Katainen Turns to Euro-Skeptics Amid Impasse
By Kati Pohjanpalo - Jun 7, 2011 5:00 PM CT
Finland’s inability to form a government almost two months after elections is forcing the head of coalition talks to return to bailout-skeptic parties as he approaches a June 10 deadline for reaching an agreement.
“I will try to find a new basis for the government by Friday,” Jyrki Katainen, who as leader of the biggest party since April 17 elections is heading government talks, said in an interview in Helsinki yesterday. “I’ll talk with everybody and I’ll try to find a majority government. It’s impossible to say right now what will be the outcome.”
The stalemate comes after Katainen last month ensured parliament approved a bailout for Portugal before starting coalition talks, a move he pushed through to prevent the euro- skeptic True Finns from blocking a rescue. His failure since to secure majority backing in coalition talks means it’s now an “open question” whether Finland can support additional aid to Greece, Katainen said.
The deadlock was “inevitable,” True Finns leader Timo Soini said in an interview yesterday. “The negotiations have failed two times.” Katainen “has one more chance,” he said.
If Katainen fails to find a majority, Social Democrat leader Jutta Urpilainen will head a new round of talks, after her party came second in the April elections. The Social Democrats, while backing Portugal’s rescue package, have said they want bondholders to share losses and are calling for asset sales and other conditions for any future aid.
‘Hold Its Breath’
“Europe will have to hold its breath for a little while longer, until these negotiations have been seen through,” Teija Tiilikainen, director of the Finnish Institute of International Affairs in Helsinki, said by phone. “The True Finns have managed to shake up Finland’s European Union stance.”
The northernmost euro member’s inability to form a pro- bailout government comes as Greece is seeking a second rescue package to avert a default. The size of that aid program hasn’t been decided yet, French Finance Minister Christine Lagarde told reporters in New Delhi yesterday.
Any package “will include privatization, voluntary private-sector involvement, an added rescue package that will be borne by the members of the euro zone, the International Monetary Fund, and clearly the guidance of the European Central Bank,” Lagarde said.
Support for the True Finns rose by almost 15 percentage points to 19 percent in the April 17 election, after Soini promised to prevent taxpayer funds contributing to more bailouts. Katainen’s pro-Europe National Coalition won 20.4 percent and the Social Democrats got 19.1 percent support.
The True Finns would be the country's second-biggest party if elections were held now, according to a YLE poll published June 1. The party enjoys backing from 20.6 percent of voters, compared with 21.5 percent for Katainen's National Coalition, the YLE poll showed. more
Insane economic decisions caused by delusions of Euro grandeur now mean that Russia is set to regain influence it lost at the end of the Cold War. Of course, this information comes courtesy of Stratfor--a company founded by career Cold Warriors in the wake of the end of USSR.
Russia Looks To Acquire Austria's Cash-Strapped Banks
STRATFOR | Jun. 20, 2011
The two largest state-owned Russian lending banks, VTB and Sberbank, are looking to either acquire or inject capital into several major Austrian banks ahead of Europe’s second round of stress tests in July.
The Russian business daily Vedomosti and the Financial Times initially reported on these banks’ intentions on April 15 and May 29, respectively.
However, what appears to be a simple financial transaction is in fact a strategic move by Moscow to build economic insight and influence within its periphery.
The opportunities for Russian banks to profit by recapitalizing cash-strapped Western European banks abound in the current dire economic climate, but it is not clear that Austrian banks are the most attractive among these options.
However, Austrian banks have traditionally held large amounts of their assets in Central and Eastern European countries; coincidentally these are also the nations that most vociferously oppose a resurgent Russia.
The acquisition of Austrian bank shares thus would allow Russia to be privy to financial and economic dealings of Central and Eastern European countries while evading the local reluctance to accept greater Russian influence. more
The elites, these masters of the universe, have thrown whole countries into chaos because they simply refuse to accept their house of cards financial schemes (that they thought so ingenious that their wealth should reflect the greatness in their minds) were all worthless bubbles and they refuse to write them off.
ReplyDeleteThey continue to wreck generations of people worldwide because they deny this. They move the problem around, pretending this wealth they created on paper and computers is real, and if only they can convince the people of the world to give them all the money written into these worthless financial schemes it can still become real and they can become great. Dangerous folly!
Where are the adults? Are all these masters deluded and incapable of seeing the chaos they have extending by not having their investments written down?
Yet they continue to pretend it will all work out, they continue to let ordinary people who had no part in any of these financial schemes bail them out.
At its root, this problem is stunningly obvious, yet they have created this massive interwoven curtain of banks, currencies, govts, and citizens that they try to hide behind, to disguise the truth.
The true choice is obvious--to be an adult and accept this obvious solution...or continue to be a child wrecking increasingly larger things and more people as if they were toys. They have stalled long enough that even they should be able to see this now.
They must do this, history will judge them with Hitler harshness if they do not.