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Top officials from the EU and ECB are secretly at work on a "master plan" to create an entirely...

Top 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.
Comments (36)
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Wait, wasn't the Euro already a bit part of a "master plan"?

     

    We are so screwed. :(
    3 Jun 2012, 08:25 AM Reply Like
  • Stone Fox Capital
    , contributor
    Comments (6559) | Send Message
     
    NK... this plan would take years to get approval.
    3 Jun 2012, 09:55 PM Reply Like
  • madmax3536
    , contributor
    Comments (46) | Send Message
     
    diabolical European agenda my suspicion with an end game but I can't prove my thesis yet
    4 Jun 2012, 04:38 AM Reply Like
  • CautiousInvestor
    , contributor
    Comments (3059) | Send Message
     
    ‘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.
    3 Jun 2012, 09:20 AM Reply Like
  • Tricky
    , contributor
    Comments (1583) | Send Message
     
    Indeed, I get a kick out of statements like "the majority of European countries are for fiscal union".

     

    No doubt. LOL.
    3 Jun 2012, 09:51 AM Reply Like
  • Tack
    , contributor
    Comments (14051) | Send Message
     
    One cannot apply simplistic logical analysis to the behavior of the public, even the German public. Take these nonsequiters into consideration:

     

    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.
    3 Jun 2012, 12:33 PM Reply Like
  • RSI Raistlin
    , contributor
    Comments (400) | Send Message
     
    The sad thing for Germans is that their hands are tied. If they do nothing and the euro splits the D Mark would automatically be one the strongest currencies in the world if not the most. Their export buisness would be destroyed.
    3 Jun 2012, 12:36 PM Reply Like
  • The Last Boomer
    , contributor
    Comments (950) | Send Message
     
    The most urgent problem here is to alleviate the financing costs of the peripheral countries and to get some economic growth in the periphery so they can service their debt. Maybe Germany needs to accept higher inflation that will help the periphery grow and alleviate the debt burden.
    3 Jun 2012, 01:19 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2674) | Send Message
     
    Exactly. No one mentions that, and its one of the most important points to understand. German benefits greatly from having economies weaker than itself in the common currency, because they drive the value of the currency lower than what the market would pay for just a German currency. It makes more sense economically for them to bail out everyone and continue to export, rather than kick out the PIIGS and watch their export driven economy collapse.
    3 Jun 2012, 02:20 PM Reply Like
  • SanDiegoNonSurfer
    , contributor
    Comments (3211) | Send Message
     
    "If...the euro splits the D Mark would automatically be one the strongest currencies in the world if not the most. Their export buisness would be destroyed."

     

    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.
    3 Jun 2012, 03:25 PM Reply Like
  • Gtarras
    , contributor
    Comments (413) | Send Message
     
    If it is only an electorate issue, then magic of financial engineering will get them there, lol. Just like LTRO allowed to go around pure money printing.
    3 Jun 2012, 08:58 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4097) | Send Message
     
    You are getting the pressure on Merkel quite wrong - the SPD/Green Party/Piraten are all in favour of stimulus. She is actually losing ground in Germany and even her own party. That is why they are more willing to give in.
    3 Jun 2012, 11:29 PM Reply Like
  • Richard93
    , contributor
    Comments (817) | Send Message
     
    T P you are right short term these folks assume some good will occur. The problem is how, they have not stopped the train coming down the track yet, no band-aid will work yet.
    3 Jun 2012, 11:49 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4097) | Send Message
     
    Let us see what the bankers are coming up with. Probably more useful than the politicians doing their thing. I do not see Europe going down but it is time something significant happens.
    4 Jun 2012, 12:00 AM Reply Like
  • Richard93
    , contributor
    Comments (817) | Send Message
     
    T P Greece is the Canary in the coal mine. Once it really goes it will be an avalanche of trouble do to the fact they have to get back to smaller govt principles. they have done so little it will be a house of cards hit by a leaf blower. It seems they either don't get this fact or they are ignoring this fact. They have messed up for so long they are out of time. Will they understand this? It does not seem so to me. They should have been working on real solutions 4 years ago. we have a few years to not mess up like they keep doing. Best Wishes
    4 Jun 2012, 01:29 AM Reply Like
  • SanDiegoNonSurfer
    , contributor
    Comments (3211) | Send Message
     
    I don't think the text here (I'm reading it in German) supports the conclusion that there's agreement for any sort of master plan. It just points out the obvious -- that short-term crisis interventions aren't enough. Then it speculates on the various sorts of more comprehensive solutions that might potentially be more effective. That EU leaders are discussing how to form "a more perfect union" shouldn't surprise anyone. Ireland's referendum on the fiscal union treaty passed -- 60-40, I think. So even in Ireland, there's clear majority support for deeper integration.

     

    This article in Reuters might be a better read: http://reut.rs/M0BoAS
    3 Jun 2012, 11:02 AM Reply Like
  • untrusting investor
    , contributor
    Comments (9973) | Send Message
     
    Good link. The types of changes in the EU as discussed in these articles will be highly contentious and as such a low probability of success since they involve national sovereignty and loss of national fiscal control. But even if they could succeed, they would take many many years to agree upon and implement. Certainly no ST fix for markets and out-of-control sovereign debts.
    3 Jun 2012, 01:36 PM Reply Like
  • thibaud
    , contributor
    Comments (165) | Send Message
     
    Thanks, v helpful. Closer integration is really the only way out for the EZ nations now. The choice for the weaker nations is sovereignty and economic ruin, or diminished sovereignty and a chance at economic recovery in the next few years.

     

    The Irish made the right choice, and the others will eventually wise up and follow suit.
    4 Jun 2012, 03:18 AM Reply Like
  • Ray Merola
    , contributor
    Comments (3745) | Send Message
     
    More talk from Europe. I'm tired of talk.

     

    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.
    3 Jun 2012, 03:19 PM Reply Like
  • Barry Crocker
    , contributor
    Comments (454) | Send Message
     
    "secretly at work"

     

    yet here we are debating it. There's a mole in the ranks :)
    3 Jun 2012, 05:23 PM Reply Like
  • Richard93
    , contributor
    Comments (817) | Send Message
     
    Barry I think the mole is an ECB person on Draghi's staff all in the attempt to push Germany to do what the rest want.
    3 Jun 2012, 10:47 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    Large scale change like this does not happen overnight and what the EU lacks is a lot of time to convince people what they are giving up and gaining in return so my expectation is that this is good bureaucratic masturbation but it will not happen. Which is what we have seen for a couple of years already. My sense is that Greece will leave or not get invited back to the table. If this triggers a crisis then perhaps all the integration will take place.

     

    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.
    3 Jun 2012, 06:50 PM Reply Like
  • RSI Raistlin
    , contributor
    Comments (400) | Send Message
     
    I truely believe it'll take a catastrophe like war for the european nations to unite to the point they are talking about here. They made so many mistakes when the euro was implemented (like for instance a debt to gdp limit with no teeth that was not verifiable) A few grizzled old men in a room cannot change the course of europe. I see it in my little state of Rhode Island. 39 cities and towns (39 little fiefdoms, including one that is 1 square mile) No way to unite even trash pickup to increase efficiency. Thats communties with a few hundred years of history......how will entire nations do it?
    3 Jun 2012, 07:01 PM Reply Like
  • brachiosaurus
    , contributor
    Comments (237) | Send Message
     
    Merkel will go down in history as the most destructive force in Europe since Hitler.
    3 Jun 2012, 08:36 PM Reply Like
  • klarsolo
    , contributor
    Comments (706) | Send Message
     
    Godwin's Law proven correct again
    3 Jun 2012, 09:13 PM Reply Like
  • Value Doc
    , contributor
    Comments (764) | Send Message
     
    I actually don't blame Merkel. It's true that German exports might be hurt by a strong D-mark, but that sort of goes to the questionable logic of mercantilism, doesn't it? That's like saying the Chinese will be hurt by a stronger RMB. In reality, the export industries will be hurt, but the rest of the economy (and consumers) will benefit by higher consumption / living standards.

     

    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.
    3 Jun 2012, 09:44 PM Reply Like
  • dividend_growth
    , contributor
    Comments (2896) | Send Message
     
    The problem is that bank runs are imminent, but grand plans take years to hammer out and requires dozens of national referenda.
    4 Jun 2012, 01:32 AM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (11423) | Send Message
     
    They need a central body that can do fiscal easing and can backstop weaker countries and extract some sort of cost for doing it. It is crazy they didn't do this in the initial framework.
    4 Jun 2012, 01:45 AM Reply Like
  • madmax3536
    , contributor
    Comments (46) | Send Message
     
    hmmm, Let me try to understand this , the Euro-zone members can have a common currency but not a common sovereign bond, top tier i.e. Germany members get the benefits of collective competitive currency but no common collective obligation, is that skinny? And the rest of the world has traded on the premise?
    4 Jun 2012, 04:46 AM Reply Like
  • Dr. V
    , contributor
    Comments (1179) | Send Message
     
    We HOPE bank runs are imminent, starting with Deutsche Bank (leveraged @ 60:1) as all German Industrials majors bank there, Germany will collapse within one (1) hour, and will finally be exposed. Come clean now Germany, the end is right 'round the corner anyway. The problem is the endemic behavior of Germany, and their lack of ability to accept blame, and take accountability for their egregious actions against the periphery for the last ten (10) years. They keep getting a pass.

     

    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.
    4 Jun 2012, 07:19 AM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    Never trust any country that cannot pay their own debt and either defaults or inflates it away. That brings a lot of countries into the docket for judgement including the US.

     

    Not sure why you are so bitter against Germany and also go back 100 years in judgement.
    4 Jun 2012, 08:50 AM Reply Like
  • madmax3536
    , contributor
    Comments (46) | Send Message
     
    perhaps a reckoning is coming for many major paper printing nations?
    4 Jun 2012, 09:06 AM Reply Like
  • Dr. V
    , contributor
    Comments (1179) | Send Message
     
    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.
    5 Jun 2012, 06:14 AM Reply Like
  • Richard93
    , contributor
    Comments (817) | Send Message
     
    Dr. V may the fireworks happen sooner rather than later say I. It will just prolong the agony both in the markets and on main street. The riots and wars to come will be the most intense sense the Mongol Hordes . With all kinds of weapons NBC attacks every where. Which will cause all kinds of problems for those who are left afterwards. So I wish the EU will get its act together before like WWW2 its to late. Best Wishes
    4 Jun 2012, 08:06 AM Reply Like
  • Dr. V
    , contributor
    Comments (1179) | Send Message
     
    Sir Richard, I am inclined to agree.

     

    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.
    5 Jun 2012, 10:36 AM Reply Like
  • Richard93
    , contributor
    Comments (817) | Send Message
     
    Tomas thank you for the honest and heart felt reminder. I truly believe this could happen maybe not next week in most areas. But this could by next spring do to bad weather conditions and so many at wits end. I see this happening in the future soon with massive wars to amplify Peoples struggle to have a good life. To many areas in World are like this or border line. Mexico, Central America is shake at best, South America still a mess, And Africa with the Middle East have not changed for the better yet. There are enough people in this world aloud could fix these Problems given a chance. I am a realist and an inventor who will have success down the road hopefully soon. I and people I don't know now could make major changes for the good given an honest chance, Hope and Pray for the good and try to do what you can for the better you may make a larger impact then you will ever know. It matters we are all in this together. Best Wishes
    6 Jun 2012, 05:17 AM Reply Like
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