Labour and the Euro summit

dshart

pqrdef wrote: »

Strangely though, nobody wants to leave.


My point was, if we'd joined the euro we'd still have had control over the currency. We'd have been running the euro show instead of the Germans.

Its not that they don't want to leave but they have no choice now, that is why they have been forced to sign up to the Merkozy agreement.

And no we wouldn't have control over the currency, we may of had a say in it but not control, just as we do not have control over other decisions made in the EU.

pqrdef

CLAPTON wrote: »

I find this scenerio unlikely. I don't recall that when we were part of the EMU we suddenly became the natural leaders of europe.

The EMU wasn't a currency. The point is, if all the sterling business done in London has become euro business overnight, London would then have been the dominant centre for euro business.

julieq

The idea that we'd have had any control whatsoever over the Euro if we'd been in it is flying in the face of logic and history. The Euro is what it is because of the Germans - good and bad - and because the French want to be at the centre of a world power they will line up with the Germans. They wanted a stability pact until they couldn't sustain it themselves. and now they are enforcing a new sort of stability pact of precisely the kind they couldn't manage on other countries and enforcing central budgetary control. This has nothing to do with financial logic - allowing the ECB to print money would solve the problem pretty much instantly - it's about German public opinion which is no more rational or better informed than our own. Invoking the ghost of Weimar is nonsense when there is no chance at all of hyperinflation, this is about pub bores in Germany clucking about strong money.

To go by the reports over the last couple of days you'd think the solution is all done and dusted, and we're sitting outside a new golden age in the eurozone. In fact things look to be lining up to a long period of conflict and problems and we're far better off out of it. Remember we're a net contributor to the EU, and that brings with it a degree of power. I've not been impressed with Clegg's willingness to dismiss the decision to leave the table today which seems to be a stab in the back based on the views of the twittering classes. As we get past the next few weeks and find that the crisis is not resolved and there is still turmoil in the eurozone, I think Cameron is likely to be vindicated. You have to say that the eurosceptic view on the single currency has already been massively vindicated, though I wouldn't proceed from there to pull out of the single market.

IronWolf

pqrdef wrote: »

The EMU wasn't a currency. The point is, if all the sterling business done in London has become euro business overnight, London would then have been the dominant centre for euro business.

You aren't seriously suggesting we'd be better off in the Euro now are you??

London already IS the financial centre of the world, we don't need to be in the Euro and it would be crippling us right now if we were.

pqrdef

dshart wrote: »

And no we wouldn't have control over the currency, we may of had a say in it but not control, just as we do not have control over other decisions made in the EU.

It's cultural. Politicians and central bankers don't live in bubbles where they're immune to the opinions of people around them. In Frankfurt, if you work at the ECB, the bank's hardline monetary stance makes you a hero. In London, it would make you a hate figure. You'd be much more exposed to a different set of attitudes and arguments from those that prevail in Frankfurt.

And Britain is much less tolerant of the self-importance and pomposity that's par for the course in top European circles. Trichet was never insulted by the Commons or dragged before a select committee or grilled on Newsnight. If Britain had been in the euro, he would have been. The inadequacies of him and his position would have been exposed much sooner.

The British government wouldn't have been able to dictate euro policy by fiat, but Britain would certainly have made sure the euro show wasn't being run by German sockpuppets.

pqrdef

IronWolf wrote: »

London already IS the financial centre of the world

But it's too big for us. We've got banks in London whose balance sheets are bigger than our GDP - and they're a threat. The rescue of RBS needed to be a European problem, because we couldn't afford it. Another big rescue now would wipe us out.

We had the opportunity to get the financial muscle of Europe behind London. But we wimped out.

From where we are now, London can only decline, as we continue to slide down the economic league table, and our credit declines, and the pound declines, in importance as well as value. A vicious spiral is setting in.

CLAPTON

pqrdef wrote: »

But it's too big for us. We've got banks in London whose balance sheets are bigger than our GDP - and they're a threat. The rescue of RBS needed to be a European problem, because we couldn't afford it. Another big rescue now would wipe us out.

We had the opportunity to get the financial muscle of Europe behind London. But we wimped out.

From where we are now, London can only decline, as we continue to slide down the economic league table, and our credit declines, and the pound declines, in importance as well as value. A vicious spiral is setting in.

in which case why can't europe sort out the relatively trivial debt problems within the euro zone?

julieq

It's not easy to see how having won the argument on the single currency - which has quite clearly failed disastrously - and being a large net contributor to the EU, and being the heart of the financial services industry in Europe that we're likely to be marginalised or will decline. If we are out of the game, it's better that we are because whatever comes next in the eurozone is likely to be just as big a disaster. The next big crunch is the Germans holding the French to account and asking them to sort out their pensions crisis, which has been dodged for years.

Europe certainly is likely to decline, because it is putting itself into a position where it's not going to be able to compete globally, and it's got all of the eurozone countries nailed rigidly together. We have considerably more latitude, and I suspect the next complaint from the eurozone will be about the UK's ability to set its own financial policy and interest rates which they will see quite rightly as enabling us to be more competitive than them. But they're not going to chuck us out while we're a big net contributor to the EU and a net importer.

We'll have the financial muscle of Europe behind the UK base banks anyway because the risks are coming from the euro holdings and the eurozone is acting to reduce those risks. I personally think we should help out and contribute to the guarantees, but I also think the ECB should have a central role. Neither is politically possible.

I think that this idea that we're isolated and outside the process is pretty much spin and pressure being applied from the EU. Let the dust settle for a few weeks and then we'll have a far clearer view, in the meantime we are where we are.

pqrdef

julieq wrote: »

The idea that we'd have had any control whatsoever over the Euro if we'd been in it is flying in the face of logic and history.

Not at all. Of course it's only a what-if now, but you have to imagine a scenario where all the sterling-denominated bonds out there would have become euro-denominated bonds overnight, but still British. All the biggest non-U.S. banks in the world would have had the euro as their primary currency, and most of those would have been in London. Britain would have dominated the euro from day one.

It would have been almost like Europe joining the pound. So much so, the French and Germans would have been looking for an excuse to call the whole thing off.

The Germans were able to take charge of the euro and make it what it is only because they correctly sussed that the lukewarm British could be scared into staying out.

julieq

You can argue what you want on hypotheticals, but there is no chance whatsoever that the euro would have been a UK dominated currency. That is just bananas. German GDP alone is twice the size of ours, and more importantly the euro was constructed around a Franco-German Social Democratic philosophy of the state. Do you seriously think that the vote of the BoE on interest rate policy would have trumped the Germans supported by the French? Cloud cuckoo land stuff. And without control of interest rates you have no control of the currency.

What is now happening is that interest rate policy is set to the benefit of the German desire for a strong currency, and if you're in Eire or Spain or Greece you can go whistle - Sarkozy is already mumbling about removing the tax breaks Eire gives investing companies from abroad, and remember, the qualified majority means that the dominant countries are in an inordinately strong position to set the rules to suit themselves.

That means the peripheral countries can never grow and can never become competitive. Ultimately this will cause conflict and leave Germany carrying the can for the debt of the periphery anyway, which is the killing joke really. When you nail non-matched economies together rigidly you end up with the weaker parts dragging you down.