Friday, 9 December 2011

saying No to Europe.

"interesting" comments from some European politicians.

Let us be absolutely crystal clear on a few things;
1) France and Germany have shown that they wish to implement a tax on the City of London that would be paid into EU coffers. As far as I am aware there is no other example of such a tax.
2) The treaty changes that were on the table will do nothing to change the course of the crisis, the idea that implementing a slightly stronger wording of deficit controls is going to change the solvency, competitiveness issues and lack of fiscal union is naive at best.
3) Even if this would work, there is no "bluff calling", if they are going to build a new version of the EU institutions that they are not legally allowed to use, it will take years not months.
4) Making a big fuss that the British are being obstructive is helpful, because it distracts both the markets and the electorates from the really big issue; the currency union doesn't work, the solution to fix it; fiscal union has no democratic support or legitimacy.

Parachuting in an army of Monti-style technocrats to run nations in the periphery, imposing German austerity, brings no guarantee of producing the reforms that will yield the vast improvements in competitiveness that are necessary for a country like Portugal or Italy to deal with the level of the euro. Regardless, the process will take years, look how long it took a rich developed nation (West Germany) to change a poorer one (East) when it had far more control, wealth and helpful global demand. It is easy to forget that German unemployment was at 12.5% in 2005.

Extremely high unemployment, a feeling of imposed austerity and loss of sovereignty and pride are a highly volatile and dangerous mix in Europe.

Imagine if China slowed down.


  1. Quite. All is sophistry and obscufation, sadly this points to Armageddon next year.

  2. I think next year could be brutal. Interesting to see how things are slightly swinging the other way in terms of media commentary though;