Labour and the Euro summit

CLAPTON

pqrdef wrote: »

Well something has to be done about trade imbalances. If you eliminate tariffs, and you eliminate floating currencies, the only thing left is cross-subsidy. The exporting countries have to give their customers the money to buy the stuff with.

That's how the USA works. It's how all countries stop their richer regions taking all the money and the poorer regions going bust. It's not clear to me that floating currencies are a better solution.

ah, an interesting point
people / governments would maybe behave differently if there was one world currency and no prospect of devaluation

may buy gold tomorrow?

julieq

Hyperinflation isn't going to happen. The bigger danger as things are in the Eurozone is deflation. Germany hasn't just been bankrupted by a major war and punitive reparations. What is driving policy is the received wisdom that a strong currency is a good thing on the basis it shows you as a strong nation, which is in the warp and weft of German attitudes.

Savings in themselves are fine, have no problem with them. But I do have a big problem with the commonly expressed idea that base rates should be set to "reward" the prudent. In fact that's the last thing you should do because it leads to the thrift paradox. You need money invested and circulating against the hazard of moderate inflation to drive growth.

pqrdef

julieq wrote: »

That ended last week, and I think that when that becomes clear it'll take no more than a couple of months of misery and recesssion to really set the cat amongst the pigeons.

Fiscal union is only for show. It's supposed to look like the eurozone is getting to grips, and it might even persuade some Germans that they aren't being taken for a ride, and those idle Mediterranean types are all turning themselves into industrious Teutons.

But every country will want to plead a special case, and will be supported by all the others that want to plead special cases. A zillion exceptions and get-outs will be buried in the small print, just as is always the way in Brussels. There are fiscal rules for eurozone states already, but they've never been observed and never will be.

In any case, off-balance-sheet borrowing is now so widespread and well-established that every government's deficit can be massaged to whatever figure is politically convenient.

julieq

pqrdef wrote: »

I'm not sure it is. Just better disguised, through pork-barrel rackets and the defence spending trough etc. Most US senators and congressmen are just people who go to Washington to sell their votes for federal spending in their constituencies.

Overall taxation in the US is far lower. That doesn't mean it isn't there at all. But the situation in the US overall is that there is a federal bank acting as a federal bank, and far lower long term state liabilities to social provision, which is what is dragging Europe down financially.

As I say, a big crunch is coming with French pension provision. Be fun to see what happens when that starts coming under German scrutiny. Or vice versa in fact.

Your argument appears to be that we'd have been better in the Euro than outside, that the point to join was before the crisis, and that it's wrong now to be isolated. I don't know anyone at all who seriously believes the first two points, and the second is a "wait and see" really, but on balance I think Cameron was right to leave negotations.

The calculation will have been whether the gang of 26 has the power to impose worse things than Cameron was being asked to sign up to, and he will have had excellent advice from the civil service. It's naive to think this was a sop to the back benchers, except in the sense that some Tory attitudes will have been a factor in the calculation. I listened carefully to what he said before and after the negotiations, and he was choosing his words very carefully in both cases. There is going to be a political firestorm for a week or two, let's see what happens after that.

julieq

Ah, ok, so you're arguing that we should be part of the agreement because no-one has the slightest intention of sticking to it anyway! Bananas.

julieq

Let's answer the point though. You're now claiming that the agreement will be completely fudged via exceptions and cheating and so it's worthless. Unfortunately the judgement on whether it's effective or not isn't being made in Brussels, it's being made in the markets. And markets are very difficult to fool long term particularly when the spotlight is on this agreement. So if it's a cheat it won't work and it's best to be outside that process. If it's imposed it'll fail in different ways. Either way it doesn't look very convincing, does it?

pqrdef

julieq wrote: »

Your argument appears to be that we'd have been better in the Euro than outside, that the point to join was before the crisis, and that it's wrong now to be isolated.

If we'd joined the euro when it started, history would have taken a different course. There may never have been a crisis. We can't know. But I don't think our situation in a more integrated Europe could have become as perilous as it currently is. We keep forgetting, we're on the edge of the cliff. The credit rating the markets are giving us is hardly justified.

julieq wrote: »

The calculation will have been whether the gang of 26 has the power to impose worse things than Cameron was being asked to sign up to, and he will have had excellent advice from the civil service.

He was in there on his own, no advisers allowed - though John Major is said to have once hidden a civil servant under the table.

Thrugelmir

Sir_Humphrey wrote: »

You need to join the reality-based community. You have to deal with how things are, not how you wish they are.

That's the heart of the issue. Do these ideologic driven politicians in Europe actually know what they are doing? Considering they are same ones that were happy to break their rules of the Stability and Growth pact when when it suited them.

Hard to see public servants in the UK accepting pension reform dictated by Brussels anymore than the current Government. That's where the concept will fail. In the finer detail.

IronWolf

pqrdef wrote: »

If we'd joined the euro when it started, history would have taken a different course. There may never have been a crisis. We can't know. But I don't think our situation in a more integrated Europe could have become as perilous as it currently is. We keep forgetting, we're on the edge of the cliff. The credit rating the markets are giving us is hardly justified.

There would have been a crisis, and our credit rating is entirely justified. The whole crisis is not caused by the members of the Euro, it is caused by the lack of fiscal union and the central bank not being allowed to step in. Notice how the US and UK have same large debts as Europe, yet there is no debt crisis for us. It's because we aren't in the Euro.

The reason we have a strong credit rating is because we have control of our monetary policy.

pqrdef

julieq wrote: »

You're now claiming that the agreement will be completely fudged via exceptions and cheating and so it's worthless.

Fiscal union won't solve the problem anyway, unless Merkel can throw a sop to German public opinion and then change course, which seems unlikely. Lack of fiscal union wasn't the cause of the problem. There's nothing here that will make bond-buyers think their money is safer.

People weren't looking at the deficit when they were buying Greek bonds at 3%, and Italian economic statistics aren't worth the paper they're invented on. Nobody cares.

Of course the whole plan is a nonsense, but that's nothing new where Europe is concerned. It's not the reason Cameron couldn't play along. He couldn't play along because that would have triggered a disastrous referendum. But that's the corner he's painted himself into.