Brexit

[Derby Tup]

We’ve drifted way off topic. I don’t think the Brexit thread is the the place to discuss the tragic murder that happened recently in Northern Ireland. In fact I’m not sure a Fellrunning forum is really the place to discuss it at all

[noel]

All I can say is study currency unions and why they always fail. The euro was EUs decision so it certainly is EUs failure. You can't have a different opinion on that. It is a fact they always fail. It is also EU banking rules that have put Italian banks in an impossible position.

As for turning our back on it, the EU refused to negotiate with Cameron, and refuse to negotiate either withdrawal or trade. So remain and reform is a unicorn. It was also EU changed from a trading block to a non democratic superstate. They turned their backs on us.

I agree the that Euro was the EU's decision. It would be weird otherwise.

Some people have said currency unions fail without political union. Look at the pound: that's a currency union that has stood the test of time despite very different economic conditions existing (eg, in Scotland vs the city of London). I have previously made a similar case for the currency union of the United States, which is still going strong. Do you think that currency unions only work if there is an associated political union? I'm undecided on this, but am interested to hear your opinion.

Interestingly there are many anti-capitalists who make the same points as you to support that capitalism is at fault, not the EU. They point to massive unemployment in certain parts of some Southern European states and equate it to the situation in Argentina, which was nothing to do with the EU. I suspect there are Corbynistas saying that the situation is due to a failure of proper state economic planning. I suspect some of them even say they are talking exclusively in facts and get annoyed when other people question them on it.

It's a good point regarding turning our backs on the EU, or them turning their backs on us (as you think). Again this comes down to a point of perspective. So let's deal in facts here. Cameron asked for some changes to the way the EU works. They said "no". We said we're going to leave.

I agree remain and reform is a unicorn. Cameron tried it and failed.

Non-democratic superstate. That sounds like a point worth discussing. Why do you think that?

[Muddy Retriever]

Some people have said currency unions fail without political union. Look at the pound: that's a currency union that has stood the test of time despite very different economic conditions existing (eg, in Scotland vs the city of London). I have previously made a similar case for the currency union of the United States, which is still going strong. Do you think that currency unions only work if there is an associated political union? I'm undecided on this, but am interested to hear your opinion.

You've asked Oracle but I thought I'd put my two-penneth. It has been discussed before.

The biggest problem with the euro is that quite different countries with wildly diverse economies and cultures share the same currency. So it means that the southern European members are trading at an adverse exchange rate while for the northern ones like Germany it is favourable. Ah you might say, well how is it that currency unions in countries like the UK and USA manage despite having very diverse economic regions in the former and states in the latter?

The reason is that political union also incorporates fiscal union. So that there is an element of common taxation and common expenditure. This results in fiscal transfers from richer regions to poorer ones to smooth out the imbalances. So for example we have the same level of unemployment benefit and state pension in Sunderland as we do in London whether Sunderland can afford it or not. This article from a few years ago explains it very well. Even in the USA 17% of taxation is collected and distributed at the federal level. The state of Mississippi receives a net fiscal transfer of $6,000 per capita per annum.

https://blogs.lse.ac.uk/europpblog/2...l-integration/

In the UK the amount of common taxation and spending is much more than in the USA

Nothing like this exists within the eurozone. The EU budget is around 1% of the aggregate GDP of EU countries. Therefore there is very little to smooth out the imbalances caused by totally different economies using the same currency. It is a fundamental structural flaw of the euro that will not be overcome unless political and fiscal union happens.

[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)

[Oracle]

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)

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 so

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.

[Witton Park]

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)

Not "we" but perhaps that is what is missing in the Eurozone, and there lies the problem with the EU.

Before the Euro, we had the beginnings of a single market and we also had the customs union.

Once we had the Euro and added all the new countries it all began to fall down.

Lack of fiscal transfer as discussed.

It is the start of a two-tier Europe and this is where the project will probably crumble.

Without that fiscal transfer, the Euro will fall, and it needs to be at least 10 fold what it currently is, which is something I doubt the wealthier Euro nations will stomach and the non-Euro nations won't want to pay for.

Those outside the Euro would just be more disadvantaged trading with the Eurozone and by being in the CU as the policy would have to be geared towards the Eurozone.

The "ideal model" would probably be for more integration in the Eurozone, but then a loser EFTA style arrangement for the non-Euro nations.

[Oracle]

Can you really see the Germans signing up to their money being used to bail weaker economies as it will in a fiscal union? Every time the issue is raised in any guise the answer is always a resounding no. Merkel has said it repeatedly in several contexts. Germany leaving the euro might save it.

Not "we" but perhaps that is what is missing in the Eurozone, and there lies the problem with the EU.

Before the Euro, we had the beginnings of a single market and we also had the customs union.

Once we had the Euro and added all the new countries it all began to fall down.

Lack of fiscal transfer as discussed.

It is the start of a two-tier Europe and this is where the project will probably crumble.

Without that fiscal transfer, the Euro will fall, and it needs to be at least 10 fold what it currently is, which is something I doubt the wealthier Euro nations will stomach and the non-Euro nations won't want to pay for.

Those outside the Euro would just be more disadvantaged trading with the Eurozone and by being in the CU as the policy would have to be geared towards the Eurozone.

The "ideal model" would probably be for more integration in the Eurozone, but then a loser EFTA style arrangement for the non-Euro nations.

[Witton Park]

Can you really see the Germans signing up to their money being used to bail weaker economies as it will in a fiscal union? Every time the issue is raised in any guise the answer is always a resounding no. Merkel has said it repeatedly in several contexts. Germany leaving the euro might save it.

as I said, I doubt whether the wealthier EU nations would sign up to it.

[Muddy Retriever]

So we need an EU fiscal union then? (lights blue touch-paper)

Certainly the eurozone needs a fiscal union. The problem is that there appears to be little enthusiasm for it among the member states. As Oracle and WP have said it is unlikely that Germany will wear it. Mrs Merkel has to answer to her electorate and while the West Germans could tolerate a mass transfer of wealth to their fellow Germans in the east to achieve unification they don’t feel the same way towards Greeks and Italians. By the same token the Southern Europeans don’t want their lives controlled by the northern states.

And therein lies the nub of it. The idea of the nation state as opposed to a supranational organisation remains resilient and not just here in the UK. Fiscal transfers are accepted between richer and poorer regions with scarcely a grumble because rightly or wrongly there is a perceived shared identity. This doesn’t exist between the nation states of the European Union. I think the resistance to the idea of a political and fiscal union is why the EU didn’t set it up before they launched the euro in the first place.

[noel]

Certainly the eurozone needs a fiscal union. The problem is that there appears to be little enthusiasm for it among the member states.

You're right there is little enthusiasm for a fiscal union among the member states, and am I right in saying it would take a unanimous decision? So is it scaremongering to say that the EU is moving towards a superstate? Or are there other moves afoot to which you leavers are against?