Europe Must Burn the Bridges and Create the Eurobond. US, UK Must Stop Myopic Opposition to Financial Transaction Tax

There is popular support for further European integration, as the Irish vote shows. Furthermore, that may be the only opportunity for the survival of the common currency in the form we know it today. Nonetheless the ECB must be given the authority, if it does not have it already, to devalue the euro and make the economies of the common currency more competitive.

Above all, they all must act fast. There must be a calculated decisiveness in their actions. Actually I tend to think that the two steps – eurobond and devaluation – must be taken together.

Irish Vote Yes in Fiscal Pact Referendum – SPIEGEL ONLINE.

The main stumbling block toward the eurobond is of course Germany although several other countries bordering the Baltic and North Seas are also opposed to the idea for obvious reasons: The eurobond would make borrowing to them more costly than with the national notes is today. But that is what unity is all about. Germany and the others can more than recoup their loses by keeping the huge common, duty free market to their products. The latter will most likely change very rapidly if the euro disappears in which case we may see intra-Europe commerce plummet.

This is actually the great opportunity for Germany to redress the wrongs of two world wars. Yes, Germany has paid huge reparations in the past but this would be a voluntary act, saving the continent’s economy, perhaps the world economy. It would be a reversal of roles: Germany saving the world economy that we screwed up; the opposite from 1939-45.

The exit of Greece from the eurozone is almost inevitable now, due to the country’s political atmosphere. The question now is whether damage control by the ECB, IMF, will be effective enough in dealing with the separation.

ECB chief calls euro ‘unsustainable,’ slams Spanish bank response – The Washington Post.

ECB President Mario Draghi said on Thursday that he believed the euro zone’s current structure  is unsustainable, and added that the region’s governments must surrender far more budget and regulatory power to a central authority if the currency union is to be saved.

As he spoke, the Irish did their part.

The eurozone crisis is affecting the U.S. tremendously but the greatest contribution we could offer to help, instead of sermonizing, is to cease the opposition to the financial transaction tax (FTT) – intended to diminish wild speculation in the financial markets. We triggered this global crisis and it is it the least we could do. But we do not support the (continental) European proposal because of Wall Street’s influence in Washington. I do believe the republican candidate Romney is also clueless in this regard and will cave in to the same forces. We, with the UK, stand alone on the rock of idiocy.

Regarding the FTT, the UK (that is the conservative government) is just being the little selfish twerp that it has been since taking office. UK’s GDP is much more dependent on The City than their continental neighbors are on their respective financial markets. And PM Cameron’s policies reflect that fact.

Our economic sluggishness today is in part caused by Europe’s crisis and Europe’s crisis is caused, in part, by our political surrender to the influence of money. Everybody will lose unless we have the courage to change.

Advertisements

The Two-Speed Europe

There is increased resentment on both sides of the English Channel and in Britain, many are comparing the Franco-German effort to save the euro to the German attempts to conquer the continent in 1914 and 1939, this time by economic means. This cartoon appeared in the British newspaper The Independent. Notice Merkel is at the helm while Sarkozy is the passenger. In its latest act of rejection to Europe, Britain has refused to contribute to the IMF euro-rescue fund and many Brits would like to leave the E.U altogether.

Cameron’s EU Veto Could Bring Down Conservative-Liberal Coalition

BBC News – EU veto: Cameron says he negotiated in ‘good faith’.

British PM David Cameron caved in to the Euro-skeptics and the City (the U.K.’s Wall Street) but his partners in government, the Liberal Democrats, who happen to be pro-Europe, are not happy about the vote in Brussels last Friday. The rift could split the government.

The Laborists are waiting in the wings, taking pot-shots at Cameron who indeed has placed Britain in the most isolated position the country has been since the fall of France in June 1940.

But in 1940, Britain had the empire. There is no empire today.

Without the LD, the conservatives would not have a majority in parliament.

The response of Europe to Cameron’s stubbornness was: “Don’t let the door hit you on the way out.” Without Europe, Britain would lose a great part of its standing in the world.

For the last three decades, British policy has been designed to prevent Franco-German dominance of the continent. But that is exactly what is happening now. And everybody is blaming the PM.

My prediction is that the Cameron government will not last very long in power.

On the other hand, if Germany agrees to the ECB buying more Euro debt, I believe the Euro would sail through calmer waters.

Britain Alone Worst Obstacle To Euro Rescue

‘Cameron Is a Coward’: European Politicians Slam British EU Veto – SPIEGEL ONLINE – News – International.

“We jumped into a rowboat… next to a supertanker” said David Milliband, former U.K. foreign minister under Labor, criticizing the posture taken by the Conservative PM in Brussels today.

Britain vetoed the 27-nation agreement today and the other 26 member nations had to reach an accord outside the framework of the E.U. Effective yes but it is not the same.

At the center of the British dissent is banking. The financial sector is a large portion of the U.K. GDP – larger than in Germany or France – and U.K. banking laws are modeled after their American counterparts, cut-throat and unregulated. The banking sector in continental Europe is more regulated and as long as anybody could do as they pleased, the U.K. would go along. But  the treaty proposed today, and adopted by the other 26, imposes supra-nationals controls which would affect the U.K. financial sector. British banks would be subjected to the stricter Franco-German norms that are the model in Europe.  Thereof the British veto.

But those supranational controls are the only way out of the crisis. Britain, or rather its conservative government, is being incredible selfish and short-sighted. If Europe fails, Britain sinks.

The euro crisis is affecting both the U.S. and China, two major traders with Europe. China just lowered the amount of cash Chinese banks have  to keep liquid to stimulate internal spending, even at the risk of worsening inflation. That is because Chinese manufacturing is slowing down due to a drop of demand abroad.

Many in Europe feel that the U.K. should leave the E.U. altogether and be like the Swiss. That would certainly benefit the euro rescue and the world economy.

France, Germany, Poland Join Forces to Save Europe. Britain Out

http://www.bbc.co.uk/news/world-16104089

New agreement signed today met objections from Britain and Hungary. Britain was then left out of the agreement, more isolated than ever.

This agreement is a step in the right direction: Tighter unity.

Will it calm investors? We will see today. But I am optimistic.

Debt Crisis Bring Former Foes — Poland and Germany — Closer Than Ever – NYTimes.com.

The greatest achievement of the European Union has been, without a doubt, peace – as British PM Chamberlain naively claimed after Munich in 1938: “Peace in our Time”.  And nothing exemplifies this more than the alliance of centuries-old enemies, Germany, France, and Poland in a bid to save United Europe.

During the XVIII century, Poland’s kings did not follow a line of succession but were elected by the nobility and that created weaknesses and internal divisions which were exploited by the countries’ powerful neighbors, Austria, Prussia, and Russia. By the end of the century, the 3 powers carved Poland.

A Polish state, under the name of Duchy of Warsaw was restored by Napoleon I, who also had a Polish mistress, countess Maria Waleska, but with the retreat of the French from eastern Europe in 1813, the Duchy was overrun and erased from the map.

Poland was restored by the Treaty of Versailles in 1919, invaded by the Soviet Union in 1920 (the Poles beat the attack with French help at the gates of Warsaw), invaded again by Germany in 1939, and was a battlefield between the retreating Germans and the Soviet army in 1944/45.

After 1945, Poland fell behind the Iron Curtain and then it enthusiastically re-joined Europe after the fall of Communism in 1990.

As a side note, the Polish Communist Party returned to power in free elections and then voted out again after a period of time.

The Failure of Leadership: British PM in Tuscany on holiday while London burns = Governor Christie in Florida while N.J. is buried during blizzard

http://www.nytimes.com/2011/08/14/world/europe/14looters.html?pagewanted=1&_r=1&nl=todaysheadlines&emc=tha22

Anybody wonders why some commoners may have lost the moral compass? It is not because our role models, our “leaders”, never had one to start with? They predicate austerity and sacrifice while they indulge in the most mundane and decadent pleasures.

Rarely a day passes when we do not see the face of a politician plastered on the newspapers with a new scandal. Or when is the week when we do not read about some powerful individual or organization short-changing society or influencing the political process to his/her narrow benefit?

The governor of New Jersey has a mansion, paid for with public funds, while thousands of New Jersians are losing their homes. Approximately $0.5 billion of the New Jersey budget go to expenses of both the legislative and executive branches.

People lose hope and without hope, they have nothing else to lose.

Leadership is being an example of what we predicate. It is going “over the top” first.