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Top officials from the EU and ECB are secretly at work on a "master plan" to create an entirely...
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Sunday, June 3, 2012, 8:23 AM ETTop officials from the EU and ECB are secretly at work on a "master plan" to create an entirely new Europe, reports Welt am Sonntag. The proposals won't be unfamiliar to anyone following the debate - banking union, fiscal union, political union. "We have to deliver after two years of crisis, finally an answer," says a senior EU official.
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This news story has 36 comments:
We are so screwed. :(
‘According to the newspaper "Welt am Sonntag" work Van Rompuy, Barroso, Juncker and Draghi on proposals for four areas: structural reforms, the banking union, a fiscal union and political union. So far, the work of the master plan is almost unnoticed by the public. These are the proposals that are brought together in the back rooms of the EU institutions, in itself. In the end, would create an entirely new Europe.”
Angela Merkel will not let the ECB (in effect, the Bundesbank) print money to soak up the debts of Spain, Greece or Italy. To do that would not simply be to fly in the face of her own electorate’s wishes, it would contravene the constitution which was enforced upon Germany by the post-war settlement. In other words, it would be both undemocratic and illegal within the terms of the German nation state.
Nor will Merkel or Germany sign-up for a reconstructed political entity that would involve wealth redistribution on an epic scale to redress imbalances arising from a flawed currency zone design and divergences in relative competitiveness. Since the most urgent problem to be remedied is the disparity between the poor, indebted states and the rich, thrifty ones, a fiscal and political union would simply turn to fiscal transfers as it would be expedient and avoid the task of rebuilding dysfunctional economies.
Fiscal transfers (meaning Germany pays for everybody) would be an accepted, perhaps automatic, mechanism, thus creating more or less permanent dependency of the less productive on the more productive. Germany would be better served going it alone rather than being pillaged under the guise of political union and fiscal transfers.
No doubt. LOL.
1) 57% of the German public favors the euro. http://bit.ly/JELq6l
2) The same public that critcizes Merkel for bailing out the EU's weak sisters threatens to replace her (her party) with the opposition that's even more socialistic, pro-EU and pro-euro than Merkel is.
Translation: The probablity of Germany leaving the euro anytime soon is virtually zero.
If the eurozone dissolves, it's not only Germany's export business that would be savaged. So would German finances. All the debt from other EZ countries that German banks own would instantly lose maybe 40% of its value. Some portion of these financial assets would lose 100% of its value since one or more of the former EZ nations will certainly chose to default if the eurozone dissolves. And that's not even including the credit default swaps that German banks have sold.
Like the other EZ nations, Germany also wants to have its cake and eat it too.
This article in Reuters might be a better read: http://reut.rs/M0BoAS
The Irish made the right choice, and the others will eventually wise up and follow suit.
Don't tell me, show me.
Until the Germans recognize they will go down with the ship like everyone else, the chances of getting something done are slim to none.....and Slim just left town.
Europe is making several of the same mistakes the U. S. Fed made in the 1930s.
yet here we are debating it. There's a mole in the ranks :)
All these countries want centralization and autonomy at the same time and want to issue debt and have someone else pay for it. Kind of like us I guess.
It's investors that are whining for the Germans to allow money printing / transfers, Eurobonds, etc. to these other countries--this isn't in Germany's long-term self-interest. It's like saying if your customer can't afford your product any more, you should keep producing and give it away--why? They should continue to hike German wages and living standards and pour surplus into real assets (rather than periphery sovereign debt). PIIGs need to default and deflate (through inflation?) down to lower living standards.
These mercantilist countries always accumulate huge surpluses and then piss them away in non-productive investments.
Acting smug, is not going to win any new friends, nor is it the spoonful of humility they so desperately need to swallow. The endemic mentality has made Germany not only their own worst enemy.
To even suggest Germany would have to pay for everyone else is inaccurate. Although they did create the ECB, they raided it's coffers several times, passing the bill on to the periphery, a matter of public record. Germany is now bitter that Draghi is against their most one-sided monetary policy, having used the ECB as their "personal cash register" to shore up the Bundesbank several times, also a matter of public record.
Now comes Germany's time to pay, and they have a fit like a 5 yr old not getting his chocolate bar. Germany has quickly forgotten their own four (4) defaults over the last 100 yrs, walking away from their debt, and being reset to zero (0). Had this debt forgiveness not been approved, Germany would be in the same position in which Greece now finds itself.
Pinch yourselves, your little experiment in economic terror waged against the periphery is coming to an end.
Never trust a country that can't pay their own debt, yet continues to wag the finger of "moral superiority" at the rest of the world, while continuing to bite the hands which fed them, AND rebuilt them from the ground up.
Germany is hardly a "German" success story, rather a "US" success story.
Not sure why you are so bitter against Germany and also go back 100 years in judgement.
Don't whip out the "US Card", GERMANY is the topic. For once in your ramblings, do try and keep up with the rest of us. You keep getting your personal ideologies mixed up with Policy issues.
"WE" are bitter at Germany because they are obviously getting another pass for some strange reason.
Having personally sent them out of meetings, (literally with tears in their eyes many times, grown men, imagine..) for the last eight (8) months, I do not understand their propensity to ignore any logical solution to this crisis, other than austerity, which is purely bred of fear for another Weimar situation and they just refuse to pay their bills now, and call it "austerity."
We understand their lack of education, fielding one of the weakest secondary education systems in Europe, however this is no excuse for not being up to speed in Quantitative Economic theories, still embracing the same curriculum they have been teaching since the 1970's.
The 9 Trillion Euros in Government Debt they (Germany) have currently, is 75% of the EU Total Debt. With a Debt/GDP of over 185%, their balance sheet resembles that of Japan.
Germany must accept their subordinate roll in the Union, and learn to submit to the European Supervisory Authority they agreed to, when they became a member state of the EU.
This IS NOT the "Union of German States", rather the European Union, and the Rule of Law applies.
I predicted civil unrest in Germany's streets weeks ago, and we have seen several hundred arrests in Frankfurt's Financial District in these last weeks.The next correction was mentioned last October, why people keep ignoring it is puzzling.
Even Mr. Soros has given his warning. Remember the last warning he gave? Oh, yeah, how did that currency short turn out for him?
Oh, yeah he made, $1.1 BIL USD within minutes. Euro is next, and he is being more than fair offering his warning this far out.
Once the Occupy kids quit playing around with flash mobs at McDonald's, and start with bank runs, Germany will fall quickly indeed.