No we really don't Noel. Muddy was giving you a hint of why some of the symptoms of monetary union can be ameliorated in similar economies. Certainly not in the EU. If you have not guessed at the consequence of fiscal union, it is not just britain who will oppose exporting 11 downing street to the office next to Junckers, and installing an unelected ideological nitwit and despot like Juncker in it. Much as Juncker wishes it were soOriginally Posted by noel
Thank you Muddy.It's so nice to have a conversation when people are polite and make points clearly.
So we need an EU fiscal union then? (lights blue touch-paper)
Many countries will oppose it, probably most. All the payers basically. A lot of others have reached their intrusion limit by EU, some of the eastern countries too.
The germans have made it clear, they will say "Nein" ,to anything that stops the one way flow of money trains back to der fatherland. They will oppose monetary union with every fibre,( unless it is run from Berlin and not on equitbale terms). They have after all already said "Nein" to paying Greek pensions even at a level way below theirs. Part of fiscal union right! Greek pensioners can starve as far as Berlin is concerned. They say "Nein" to paying italian unmemployment benefit. Their bed they can lie in it, screams Berlin as it ships another billion euros home. Southern italy is a long way from them anyway, too far to hear the cries of despair.
For sure, the Greek and Italian problems were not made in Berlin, and Berlin has a point in saying they were feckless. The problems were made at home. But the euro makes it impossible for them to recover, and Berlin refuses any help of any meaningful kind. It wants the advantages of the club, not the problems. Berlin always did want its cake and to eat it.
Indeed they said "Nein "to even less significant forms of recirculation or risk sharing like Macrons Eurobonds because German taxpayers might end on the hook for it. The delicious irony is: when it all goes tits up, as it must, the german taxpayer will be the last to be told they are already on the hook for it anyway when italy defaults. That will be Karma. I for one will cheer.
The founding fathers of the EU, said fiscal union would need to precede monetary union at least two decades ago. The junckers of the time ignored them, deciding to delay the "hard" decisions, and pressed on anyway. Nothing it seems can stop a ruinous ideology. There are too many rosy eyed remainers all the way across europe.
But also it doesnt work! It only goes part way. The partial fiscal union is what we see in the USin very similar economies and it only takes the edge of a few of the more ruinous symptoms. And like the EU it is unstable. Take the rust belt, as tax take and old world employer numbers fall, the cost of the social state is still there, so local taxes rise to balance budgets and professionals leave to better places, setting the downwad spiral in place. The mass migration is the problem not the solution. It prevents recovery where they are. Then you get idiots like Corbyn saying austerity is a choice, who ramp up spending on everything on borrowed monwy and when it finally blows up when there is nothign left. Not even a proper police service. Ask downtown detroit.
So no we dont need a currency union or fiscal union. And we dont need to be part of any club that tries to defy economic gravity, by repeating the failed experiment again. I listed the repeated failed currency unions in europe stretching back over well over a century. DO I have to do it again before people realise it is 100 percent? The euro will fail.
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