Commission will shortly make proposals for eurobonds and a financial transaction tax

Scofflaw

Proposed by Barrosos during a speech to the Parliament - full text below:

Speech by President Barroso to the European Parliament during the debate on the economic crises and the euro

European Parliament plenary session
Strasbourg, 14 September 2011


Mr. President,
Mr. President of the Council,
Honourable members,
I welcome this opportunity to debate the measures that are urgently needed to respond to the turmoil in the euro area and on the global markets.

We are confronted with the most serious challenge of a generation. This is a fight for the jobs and prosperity of families in all our member states. This is a fight for the economic and political future of Europe. This is a fight for what Europe represents in the world. This is a fight for European integration itself.

We must acknowledge the reality – our citizens, the markets, and our partners in the world have not yet been convinced that we are capable of taking on that fight and winning it decisively.

In the cacophony of criticisms, counter-criticisms, magic bullets and miracle panaceas that are proposed on a daily basis, the truth has been drowned out - that solid, feasible and concrete proposals have been made. That they have been agreed upon. But they have taken too long and have not yet been fully delivered. So my first concern is implementation – implementation of what we have agreed.

That is why it is now imperative that we demonstrate our joint resolve to act upon our decisions without delay. Now is the time to prove our full commitment to the principles of solidarity and responsibility.

All Euro area member states have made commitments and are making efforts to put in order their public finances and to implement the economic reforms that are a pre-condition for growth. All of these member states must now demonstrate in a convincing way that they are serious. It is not enough to make plans. It is action that counts.

And those Euro area member states that are providing the assistance so crucial for the survival and the stability of the euro, must show even more clearly that they are determined to deliver support to countries that implement their programmes, as they have agreed.

They must acknowledge that this is also to their advantage. Supporting the euro is not just an act of solidarity towards others. It is an act of self-interest.

None of this is easy and we in the European institutions must recognise that.

We must make the case and persuade our citizens why they should give their support.

National politicians need to do much more to explain the benefits that the euro brings. And we in the European institutions have a special role to play: we must do more together to make the case, and I count on you to do so in your countries.

Honourable members,
Reassurance for our citizens, for investors and for our world partners can only come from the conviction that a comprehensive approach is being delivered in the short term, the medium term and the long term.

So what is needed now, in the short term?
First of all, the implementation of the package agreed on 21 July by all Euro area Heads of State and Government, the President of the European Commission and the President of the European Central Bank, in the presence of the IMF.

It is an important package which includes measures to increase the flexibility and effectiveness of the EFSF that will help to ensure financial stability.

It foresees lowering the lending rates, extending the maturities and allowing the Facility to do more than it can today: in particular to intervene also in a precautionary way and to intervene on the secondary markets. So these decisions are important, they were important, but they are not yet implemented and the obstacles raised by some in implementing the crucial decisions already in the days and weeks following the meeting exacerbated the extraordinary developments in the sovereign bond markets during August. And of course, the fact that there were also difficult moments on the other side of the Atlantic creating doubts regarding the situation of the United States of America, was also a major factor aggravating the general very negative investor sentiment.

These reflected also an unabated concern among investors that the Euro area is incapable of responding effectively to its own crises because it takes too long to enact its own decisions. So we have to recognise that sometimes there is a real problem between the speed of the markets and the time we take for democratic decisions. Markets are impatient and democracies are usually slower.

The Commission works tirelessly throughout the summer to support the work necessary to implement the decisions. Both Commissioner Rehn and myself came to Brussels to drive forward this work.

Therefore I expect all Euro area Member States to make good on their promises and urge them to ratify the 21 July agreement by the end of September.

Last weekend the Greek government has taken significant steps to deliver on their commitments. I urge Greece to finalise these efforts together with the Troika. The perspective of recovery and growth should be made a national cause.

Another urgent priority is the 6-pack on reinforced economic governance. I talked about the delivery gap. It is now almost one year since the Commission put forward ambitious proposals to strengthen governance of Euro area economies.

After all the talk, we are now very close to what the Commission originally put on the table. You, the European Parliament, have played a decisive role in keeping the level of ambition of these proposals. I salute you for that. I would now ask the co-legislators to adopt this package as a matter of urgency.

Honourable Members,
Part of the leadership we must provide means being honest with our citizens that we are addressing also the structural problems Europe faces. The crisis that we are facing is the result of competitiveness problems.

Within the European Union and also in the euro area, some member states have been lagging behind others, which has led to greater imbalances. The same type of imbalances have also built up worldwide. This has resulted in an accumulation of debts and deficits that are simply not sustainable and have been further aggravated by the financial crisis.

So to tackle the crisis, we must correct the excessive deficits and debts in a determined and sustainable way. This is the only way to create a Union of stability and growth and it can only be done convincingly through the Community method.

We have a duty to learn the lessons of the crisis and to focus on the creation of growth and jobs.

At the top of the agenda are the need to build a strong economy and not use fiscal or monetary stimulus to live beyond our means. We must look at the reforms needed to correct these imbalances so as to create growth and jobs for the future. Growth is key and we must use all instruments available to promote growth and in the European Union we have some instruments from the agenda 2020 to the single market act to promote sustainable growth.

Europe needs to reform to deliver the good jobs, the better healthcare and the comfortable retirement that all Europeans aspire to. The purpose of reform is to strengthen our social market economy; to deliver a fair society where everyone has a chance in life and nobody is left behind; and to equip all Europeans with the skills, talents and opportunities to prosper in the global economy. Our impulse for reform must go hand-in-hand with our sense for fairness and social equity.

A sound economy means also we need sound financial markets. They have to return to their original function of a service industry for the real economy.

The development of their profits must reflect the real economy. We have presented a whole series of proposals to this end, including on short-selling and over-the-counter derivatives. In the next weeks we will go further with proposals to tackle insider trading and market manipulation among others, as well as measures to address concerns over Credit Rating Agencies. As I promised, the European Commission will very soon propose a Financial Transaction Tax.

When it comes to the governance of the Euro area, I am convinced we need deeper and more results-driven integration. And let me be clear: this has to be within the Community system.

A system based purely on intergovernmental cooperation has not worked in the past and will not work in the future. After all, this is why the Community method and the European Union institutions were created by the member states in the first place.

The Economic and Monetary Union cannot function properly only on the basis of decisions taken by unanimity. Because if a eurosceptic fringe can determine the position of one Member State and one Member State can block decisions, the result is that we are not credible. This is not about institutional positioning or power. It is about efficiency and delivery. Markets and investors will trust us only when we will be able to show that we are able to deliver on our commitments in a real determined way.

Moreover, the independent work of the European institutions further strengthens the credibility of our economic and budgetary policies. It is only through the European institutions that the European interest of all Euro area member states can be counted. It is only through the European institutions that we will avoid a fragmentation of the Single Market and a disconnect between the 17 members of the Euro area and the European project of the 27 members that are our European Union. We must keep the Euro united and we must keep the Euro open.

If we want to ensure democratic legitimacy for decisions taken at European level, full unequivocal respect for the role of this House is crucial. If we want European citizens to take ownership of European integration, renationalising Euro area decisions is not the way to do it.

We, the European Commission and the European Parliament, are the community institutions par excellence. And it is our duty to defend the collective European interest jointly.

We must show that the Community actors are strong, united and able to deliver. Delivering also means that we need a better spirit of partnership and confidence between us the European institutions and the Member States, their governments and national parliaments.

Honourable Members,
The signal I receive time and time again from our global partners, including in the G20 is that the world expects more integrated Europe. In the age of the globalisation everybody expects Europe to be stronger and united.

We are a valued partner in global fora and debates and we have a significant influence on global issues such as trade and climate change because in those matters we are able to act together, united.

But the fact is that our way of taking and implementing decisions in the economic and monetary union is consigning us to punching below our weight. Only by acting together and maximising the benefits of our interdependence will Europe reach its true potential and be able to act as more than the sum of its parts.

The conclusion I draw is crystal clear - The only right way to stop the negative cycle and to strengthen the euro is to deepen integration, namely within the Euro area, based on the Community method.

This is the way to go. It is also the only way for the Euro area to really play the role that investors and global partners expect it to play.

What we need now is a new, unifying impulse - "un nouveau moment fédérateur", let's not be afraid of the word, moment fédérateur is indispensable.


Dear members,
The road to recovery is long and it is painful for millions of our citizens and businesses.

But it will not be made less painful by continued procrastination or by presenting as quick fixes ideas that will necessarily take time.

It has become clear that we need an even greater integration of our economic and budgetary policies.

There has been much debate on the need for Eurobonds. Today I want to confirm that the Commission will soon present options for the introduction of Eurobonds. Some of these options could be implemented within the terms of the current Treaty, and others would require Treaty change.

But we must be honest: this will not bring an immediate solution for all the problems we face and it will come as an element of a comprehensive approach to further economic and political integration.

Let us not confuse these projects of deeper integration with immediate necessities. Ideas that would require substantial Treaty change are not going to be a substitute for Greece doing its homework or for Euro area countries strengthening their fiscal surveillance. We must avoid compounding the dissatisfaction in public opinion by being seen as failing to deliver overnight what we already know takes time.

What we need now is Greece to fully carry out its reform programme, is the 6-pack to be adopted and is member states to ratify the July 21st agreements. What is our credibility on deeper integration if we cannot deliver the 6-pack and the 21 July agreement? Only by proving ourselves in this way can we regain the market and public confidence necessary to even aspire to longer-term goals to a more ambitious Euro area and to a stronger Europe.

The Commission will continue to play its role to the full, putting the key proposals on the table that shape both the immediate and the long term response. Proposals that are ambitious and should reflect the interest of all.

What both the citizens and the investors want is political determination and economic discipline. To deliver this, we need more, not less Europe.

Deeper integration is part of the solution. It will happen – not overnight – but in a solid, democratic process with a participation of this Parliament.

I believe that, with courage and wisdom, the European Union will – as was the case in the past – come out of the crisis stronger. It is certainly our duty to work for that.

OK - a lot of that is Barroso sucking up to the Parliament and trying to persuade them to get on board - but there are some interesting take-home points:

1. the Commission will make eurobond proposals

2. the Commission will make financial tax proposals

3. the Commission favours making economic decision-making both more integrated and 'more democratic' - which means less intergovernmental, and more European, presumably with Parliamentary involvement.

Should put several cats among several different groups of pigeons. Germany doesn't like eurobonds, the UK (in particular, the City) doesn't like the idea of a financial transaction tax, and lots of people are going to object to "un nouveau moment fédérateur".

cordially,
Scofflaw

paul71

I would love to know what the definition of a financial transaction tax is.

A financial transaction is any legally binding contract between 2 people/legal entitities, for which consideration is given and received, so buying a newspaper is a financial transaction. I accept that it is an exageration to think the EU is considering this but what are they talking about.

Any bank transfer? Are they proposing taking 1c for every direct debit I pay for rent/electricity/visa/phone bill.

Are they excluding the above but only talking about a stamp duty on every money transfer between different banks in different EU states. Does this mean that a food importer in Germany paying Irish food producers will pay extra?

Scofflaw

paul71 wrote: »

I would love to know what the definition of a financial transaction tax is.

A financial transaction is any legally binding contract between 2 people/legal entitities, for which consideration is given and received, so buying a newspaper is a financial transaction. I accept that it is an exageration to think the EU is considering this but what are they talking about.

Any bank transfer? Are they proposing taking 1c for every direct debit I pay for rent/electricity/visa/phone bill.

Are they excluding the above but only talking about a stamp duty on every money transfer between different banks in different EU states. Does this mean that a food importer in Germany paying Irish food producers will pay extra?

In the context, it would be a Tobin tax, which has been discussed quite a bit at the EU level. The details of what gets taxed will no doubt be in the proposal, but usually one is talking about 'financial transactions' in the sense of taxes being levied on certain transactions being made by the financial sector:

Taxing the banks: a global and an EU approach

The Commission supports the idea of a Financial Transaction Tax (FTT) at global level, and will continue to work for this within the G20. If ambitious global objectives are to be achieved, in areas such as development aid and climate change, international partners will need to agree on global financing tools. A Financial Transactions Tax would tax every transaction based on its transaction value, resulting in substantial revenues. The Commission believes that a well-implemented, internationally-applied financial transaction tax could be an attractive way of raising the necessary funds for important global policies.

At European level, the Communication suggests that a Financial Activities Tax (FAT) should be considered. A Financial Activities Tax would target the profits and remunerations of financial sector companies. In this way, it would tax the corporations, rather than each actor involved in a financial transaction (as is the case with the FTT). Following in-depth analysis of possible options for taxing the financial sector, the Commission is of the opinion that the FAT would be the best instrument for an appropriate taxation of the financial sector and the need to raise new revenues in the EU.

Source: http://ec.europa.eu/commission_2010-2014/semeta/headlines/news/2010/10/20101007_en.htm

cordially,
Scofflaw

hatrickpatrick

God Almighty.
More ripping of hard won sovereignty from the hands of the Irish people. :mad:

hatrickpatrick

hatrickpatrick wrote: »

God Almighty.
More ripping of hard won sovereignty from the hands of the Irish people. :mad:

The phrase "Broken Record" comes to mind....

hatrickpatrick

Rojomcdojo wrote: »

The phrase "Broken Record" comes to mind....

I wouldn't have to keep saying it if they didn't keep trying it.
You could easily have called Michael Collins a broken record for repeatedly demanding an end to British Rule. :rolleyes:

jc84

So how is this financial transaction tax gonna work, are we gonna get taxed every time we use our cards or a direct debit goes out??

hmmm

jc84 wrote: »

So how is this financial transaction tax gonna work, are we gonna get taxed every time we use our cards or a direct debit goes out??

It'll be more like stamp duty on shares.

hatrickpatrick

Please bear in mind that I'm not necessarily opposed to this tax measure being adopted by individual member states at their own discretion. It's the idea of ceding more decision making power from the Dail to a centralized EU body in which the entire population of Ireland only has some of the votes which irritates me.
We are a sovereign nation. Irish citizens run the Republic of Ireland. If it's being run by every nation in Europe collectively, it is no longer a Republic.

Tax should only be decided by each individual states' parliament. The EU as a whole should have absolutely no say whatsoever in such matters regarding individual member states.

uncle_sam_ie

Just wait til the slaves get wind of this. http://www.zerohedge.com/news/guest-post-secret-eu-plans-create-euroteams-leaked

Scofflaw

jc84 wrote: »

So how is this financial transaction tax gonna work, are we gonna get taxed every time we use our cards or a direct debit goes out??

No, the tax would be applied to transactions in the financial sector, such as bond dealings.

hatrickpatrick wrote:

Please bear in mind that I'm not necessarily opposed to this tax measure being adopted by individual member states at their own discretion. It's the idea of ceding more decision making power from the Dail to a centralized EU body in which the entire population of Ireland only has some of the votes which irritates me.
We are a sovereign nation. Irish citizens run the Republic of Ireland. If it's being run by every nation in Europe collectively, it is no longer a Republic.

Tax should only be decided by each individual states' parliament. The EU as a whole should have absolutely no say whatsoever in such matters regarding individual member states.

A financial transaction tax at an individual state level makes little sense. Out of interest, would you object to a multilateral tax agreement to have such a tax?

cordially,
Scofflaw

hatrickpatrick

Scofflaw wrote: »

No, the tax would be applied to transactions in the financial sector, such as bond dealings.



A financial transaction tax at an individual state level makes little sense. Out of interest, would you object to a multilateral tax agreement to have such a tax?

cordially,
Scofflaw

As long as the government of Ireland entered into it completely voluntarily, I would still oppose the tax itself but I wouldn't be opposed to the principle of its very existence, if that makes sense. I simply don't accept that we should cede any sovereignty with regard to tax, that's all I'm saying. If the Irish government says it doesn't happen here, then it doesn't happen here.

jimmycrackcorm

I'm slightly amused by the long drawn out response to the financial crisis. Everyone denies the problems as long as they can; Suggestions such as the euro-bond are fought off and only at the last hurdle, do they take substance.

It's probably just as well that problems such as Greece are so inter-meshed in the EU so as to illicit a better integrated resolution. These problems were inevitable when you have a half-arsed currency and economic integration

I suspect that the Greeks know this so well and their version of Vincent Browne is on every night telling them they have Germany by the balls.

Scofflaw

hatrickpatrick wrote: »

As long as the government of Ireland entered into it completely voluntarily, I would still oppose the tax itself but I wouldn't be opposed to the principle of its very existence, if that makes sense. I simply don't accept that we should cede any sovereignty with regard to tax, that's all I'm saying. If the Irish government says it doesn't happen here, then it doesn't happen here.

So if it's a measure that requires unanimity in the EU - as it is, as far as I know, being a tax matter - then how is it being done through the EU different from doing it multilaterally outside the EU? The effect is identical, and the principle of one nation one vote is identical.

Sometimes - quite often, in fact - the EU is simply a permanent framework through which multilateral decisions are made and implemented.

cordially,
Scofflaw

Scofflaw

jimmycrackcorm wrote: »

I'm slightly amused by the long drawn out response to the financial crisis. Everyone denies the problems as long as they can; Suggestions such as the euro-bond are fought off and only at the last hurdle, do they take substance.

It's probably just as well that problems such as Greece are so inter-meshed in the EU so as to illicit a better integrated resolution. These problems were inevitable when you have a half-arsed currency and economic integration

I suspect that the Greeks know this so well and their version of Vincent Browne is on every night telling them they have Germany by the balls.

Probably! It's funny that there is supposed to be this huge rush to federalisation, yet we can see that relatively reasonable 'federalist' suggestions are resisted tooth and nail despite their urgency.

It's almost as if national governments wanted to retain as much national autonomy as possible...

cordially,
Scofflaw

Armin_Tamzarian

hatrickpatrick wrote: »

Irish citizens run the Republic of Ireland.

Well, I guess we should congratulate ourselves on a job well done.

cyberhog

Barroso wrote: »

Europe needs to reform to deliver the good jobs, the better healthcare and the comfortable retirement that all Europeans aspire to.

Here we go again, more "Yes to jobs" BS.

Barroso wrote: »

The Economic and Monetary Union cannot function properly only on the basis of decisions taken by unanimity. Because if a eurosceptic fringe can determine the position of one Member State and one Member State can block decisions, the result is that we are not credible. This is not about institutional positioning or power.

Oh, pull the other one, Barroso. Anyone with a modicum of intelligence knows that's exactly what this is about.

"in ten years, we will have a structure that will resemble far more what one describes as political union..." The German finance minister, Wolfgang Schäuble

http://www.finfacts.ie/irishfinancenews/article_1021232.shtml

Barroso wrote: »

The conclusion I draw is crystal clear - The only right way to stop the negative cycle and to strengthen the euro is to deepen integration, namely within the Euro area, based on the Community method.

This is the way to go.

A fiscal union hasn't stopped unemployment soaring in the United States which now has the highest poverty rating amongst first-world nations.

The number of the poor has swelled to almost one in six Americans last year, attributed mostly to the soaring rate of unemployment, while the number without health insurance rose to 49.9 million, the highest in more than two decades.

http://www.ibtimes.com/articles/213375/20110914/census-nearly-1-in-6-americans-poor-poverty-numbers-highest-in-52-years-rise-in-unemployment-decline.htm

Ireland has gotten through difficult times before and we can do it again without having to surrender control over fiscal policy to Europe.

Scofflaw wrote: »

Should put several cats among several different groups of pigeons. Germany doesn't like eurobonds

Schäuble hinted they would back eurobonds if greater sovereignty is transferred to Brussels.

“I rule out eurobonds for as long as member states conduct their own financial policies, and we need different rates of interest in order that there are possible incentives and sanctions to enforce fiscal solidity,” he said.

http://www.irishtimes.com/newspaper/frontpage/2011/0815/1224302451047.html

Scofflaw

cyberhog wrote: »

Schäuble hinted they would back eurobonds if greater sovereignty is transferred to Brussels.

“I rule out eurobonds for as long as member states conduct their own financial policies, and we need different rates of interest in order that there are possible incentives and sanctions to enforce fiscal solidity,” he said.

http://www.irishtimes.com/newspaper/frontpage/2011/0815/1224302451047.html

That's a rather unique take on that statement, which appears everywhere under the heading "Germany, France rule out eurobonds".

cordially,
Scofflaw

Victor

hatrickpatrick wrote: »

Irish citizens run the Republic of Ireland.

Irish citizens ran the country into the ground.

View

hatrickpatrick wrote: »

God Almighty.
More ripping of hard won sovereignty from the hands of the Irish people. :mad:

Well, 10/10 for melodrama but what exactly is it about his speech that you believe will effect sovereignty in Ireland?

the groutch

this seems very much like taking control of our tax policies through the back door, the ones that we were promised wouldnt be effected by the Lisbon Treaty, and many people were stupid enough to believe

Scofflaw

the groutch wrote: »

this seems very much like taking control of our tax policies through the back door, the ones that we were promised wouldnt be effected by the Lisbon Treaty, and many people were stupid enough to believe

Sorry - what does? The proposed transaction tax?

cordially,
Scofflaw

cyberhog

Scofflaw wrote: »

That's a rather unique take on that statement, which appears everywhere under the heading "Germany, France rule out eurobonds".

I wouldn't rely on headlines to provide the full picture, Imho it's a logical interpretation of his statement.

The Irish Times picked up on this last December.

Chancellor Angela Merkel has dismissed the eurobonds idea and will tell this week’s EU summit that pooling sovereign borrowing would cost Germany €17 billion annually.

However, finance minister Wolfgang Schäuble said yesterday the proposal might be palatable in Berlin in exchange for fundamental changes in how the EU does its business.

...

Mr Juncker told German television that “Wolfgang Schäuble’s consideration of the proposal” was very close to his own position.

http://www.irishtimes.com/newspaper/finance/2010/1213/1224285403970.html


From The BBC

"I rule out euro bonds for as a long as member states conduct their own financial policies and need different rates of interest in order that there are possible incentives and sanctions to enforce fiscal solidity."

So, although Mr Schaeuble is viewed as an opponent of the euro bond idea, that is not a "no, nay, never" from Germany. It is a conditional yes.

http://www.bbc.co.uk/news/business-14526257


And The Economist

For Mr Schäuble, tougher rules are a necessary condition for Eurobonds and closer political union.

http://www.economist.com/node/21528639

Scofflaw

Fair enough. The problem will turn out to be, though, that the other member states would like eurobonds without giving up the necessary degree of fiscal independence.

cordially,
Scofflaw

meglome

hatrickpatrick wrote: »

God Almighty.
More ripping of hard won sovereignty from the hands of the Irish people. :mad:

hatrickpatrick wrote: »

I wouldn't have to keep saying it if they didn't keep trying it.
You could easily have called Michael Collins a broken record for repeatedly demanding an end to British Rule. :rolleyes:

Would it be so much to ask to go one week without any bullshít about the Lisbon treaty or 'sovereignty'. You have an issue with sharing control for mutual self interest, the majority don't. The word sovereignty is used around here like estate agents use the word spacious, it means whatever they want it to mean.

Armin_Tamzarian wrote: »

Well, I guess we should congratulate ourselves on a job well done.

I laughed.

View wrote: »

Well, 10/10 for melodrama but what exactly is it about his speech that you believe will effect sovereignty in Ireland?

It's the way I imagine eastenders (never seen it though).

the groutch wrote: »

this seems very much like taking control of our tax policies through the back door, the ones that we were promised wouldnt be effected by the Lisbon Treaty, and many people were stupid enough to believe

I can't see why an EU transaction tax would be an issue. If only certain countries were to implement the tax it would leave them at a disadvantage to other countries that didn't. It has to be an all or none to make it work so I have no idea what this has to do with the Lisbon treaty.

Nody

cyberhog wrote: »

Schäuble hinted they would back eurobonds if greater sovereignty is transferred to Brussels.

Except it got ruled out by German court already

The court also ruled out the possibility of pooling the debt of countries in Europe.

cyberhog

meglome wrote: »

The word sovereignty is used around here like estate agents use the word spacious, it means whatever they want it to mean.

That is nonsense.


Wolfgang Munchau of the FT has read the fine print of the German court ruling and he points out that the court ruled out eurobonds because they would impinge upon the sovereignty of the German state.


He writes:

As an advocate of eurozone bonds, I have to admit their prospect looks grim after last week’s ruling of the German constitutional court. The court upheld the European financial adjustment facility, the crisis mechanism. This was, undoubtedly, good news. But after I read the whole ruling, which ran to 29 tightly written pages, I realised that this judgement was not a victory for the eurozone at all. On the contrary, it categorically rules out any policy option beyond what has been agreed so far.

...

The Bundestag is not precluded from giving money to Greece, but it cannot empower a third party, such as the EFSF or ESM, let alone a hypothetical European Debt Agency, from usurping sovereign power. Sovereignty can be delegated in small slices, but not permanently.

A eurobond is, of course, a permanent mechanism. It also involves a permanent loss of control. Its size is very likely to be substantial. There would not be any point in issuing a small eurobond – it would not resolve the crisis. And unless member states were to transfer some of their sovereignty to Brussels, all the inherent risks in the structure would come from non-compliance by national governments or parliaments. In other words, a eurobond perfectly matches the conditions set by the constitutional court for an arrangement that violates the German constitution.

http://www.ft.com/intl/cms/s/0/e39dcac6-dae9-11e0-a58b-00144feabdc0.html#axzz1Y5aX3iz8

Head The Wall

hatrickpatrick wrote: »

As long as the government of Ireland entered into it completely voluntarily, I would still oppose the tax itself but I wouldn't be opposed to the principle of its very existence, if that makes sense. I simply don't accept that we should cede any sovereignty with regard to tax, that's all I'm saying. If the Irish government says it doesn't happen here, then it doesn't happen here.

The govt entered into the bank bailout voluntarily, by your logic you fully support it so as the govt said so. Crazy thinking

RichardAnd

Head The Wall wrote: »

The govt entered into the bank bailout voluntarily

I'm not as sure of that as I once was...

Scofflaw

cyberhog wrote: »

The word sovereignty is used around here like estate agents use the word spacious, it means whatever they want it to mean.

That is nonsense.

Wolfgang Munchau of the FT has read the fine print of the German court ruling and he points out that the court ruled out eurobonds because they would impinge upon the sovereignty of the German state.

He writes:

http://www.ft.com/intl/cms/s/0/e39dcac6-dae9-11e0-a58b-00144feabdc0.html#axzz1Y5aX3iz8

Ah no - the German courts use sovereignty very specifically. That they do so in no way prevents it being used in these forums with whatever meaning the poster ascribes to it.

cordially,
Scofflaw

meglome

RichardAnd wrote: »

I'm not as sure of that as I once was...

As I have said before it's much more likely FF's Anglo buddies looked for the blanket guarantee than the EU did. And even with the history reinterpretation by Lenehan I haven't seen anything to convince me otherwise.

RichardAnd

meglome wrote: »

As I have said before it's much more likely FF's Anglo buddies looked for the blanket guarantee than the EU did. And even with the history reinterpretation by Lenehan I haven't seen anything to convince me otherwise.

Well the way I see it, we like to believe this is a democratic state but in order to do that, one must believe that a coterie of the most wealthy men in the country do no have huge, if not total influence over the state's government.

Now that's something that might drag the thread off topic so I'll leave it at that but I'm reminded of a quote from the genius that was Bill Hicks:

I think the puppet on the right shares my beliefs. I think the puppet on the left is more to my liking. Hey, wait a minute, there's one guy holding out both puppets!

cyberhog

Scofflaw wrote: »

Ah no - the German courts use sovereignty very specifically. That they do so in no way prevents it being used in these forums with whatever meaning the poster ascribes to it.

cordially,
Scofflaw

As have I. eurobonds = a loss of sovereignty. And since we are discussing eurobonds in this thread I reject the insinuation being bandied about that the term is being misused.

What I find strange is how some posters here can be of the opinion that legitimate concerns about eurobonds are just "melodrama"

View wrote: »

Well, 10/10 for melodrama but what exactly is it about his speech that you believe will effect sovereignty in Ireland?

If we pool euro zone debt individual countries will have no control over their spending. As far as I'm concerned that is an intolerable violation of sovereignty.

cyberhog

last week, Merkel called for radical "no taboos" treaty negotiations.

Merkel made a plea for "more Europe" and said that to make Europe strong and lasting, "treaty amendments can no longer be taboo in order to bind the EU closer together."

http://www.spiegel.de/international/germany/0,1518,784953,00.html

Make no mistake about it folks, centralising power and control is the real agenda.

Scofflaw

This isn't AH, people - large Simpsons pics are not part of the discussion.

moderately,
Scofflaw

Scofflaw

cyberhog wrote: »

As have I. eurobonds = a loss of sovereignty. And since we are discussing eurobonds in this thread I reject the insinuation being bandied about that the term is being misused.

What I find strange is how some posters here can be of the opinion that legitimate concerns about eurobonds are just "melodrama"

If we pool euro zone debt individual countries will have no control over their spending. As far as I'm concerned that is an intolerable violation of sovereignty.

Eurobonds by themselves have no such necessary implication - all they are is a way of jointly purchasing and jointly backing debt, but the purchasing would be undetrtaken in response to the needs of the individual countries, in turn dictated by their spending.

What it would involve is a debt brake or some other hard limit on the amount of debt any participating country can rack up, but as long as spending is within those limits, it would remain under the control of the individual country.

So I'd have to call "melodrama" on that one, rather than "legitimate concern", because the claim of "no control over spending" is without substance - and I'm not sure what enormous value the ability to spend the country into really deep debt has.

cordially,
Scofflaw

Scofflaw

Expecting heavy opposition from the UK:

WROCLAW, Poland—European Union finance ministers wrestled Saturday with ways to strengthen the region's banks as well as calls to have them pay for the fallout of the crisis.

The European Commission is set on proposing a financial transaction tax in the coming weeks, amid opposition from powerful members, such as the U.K.

"The commission proposes, but the council and parliament dispose," said Polish Finance Minister Jacek Rostowski, who was chairman of the meeting Saturday, in his final remarks.

He said EU leaders are "very much divided on this," and a tax on the trading of shares, bonds, foreign exchange and derivatives isn't expected to be a crucial element in strategies to stabilize the economic crisis.

Instead, leaders are focusing on ways to cut the interdependence between European governments and the 27-member bloc's banks, which has led to a "viscous cycle," said Marek Belka, head of Poland's central bank.

...

Still, the dialogue on a financial transaction tax has only just begun, said European Internal Market Commissioner Michel Barnier. He called the tax "politically right" and "financially practical."

The U.K. is Europe's biggest financial center and says it would only support such a tax if it is implemented around the world for fear that it could lose businesses key to its economy.

But U.S. Secretary Timothy Geithner, who was in Poland Friday to join the ministers, said the U.S. wouldn't back a financial transaction tax, according to European officials.

Belgian Finance Minister Didier Reynders agreed that it would be better to implement a financial transaction tax on a global level, "but if it's impossible, we will do it maybe in the EU and, if that's impossible, maybe the euro zone."

As the Polish Minister says "The commission proposes, but the council and parliament dispose".

cordially,
Scofflaw

Cork boy 55

Eurobonds we got there in the end :rolleyes:

View

cyberhog wrote: »

If we pool euro zone debt individual countries will have no control over their spending.

Nobody, to the best of my knowledge, has proposed the idea that "individual countries will have no control over their spending".

There would be obvious problems of practicality (never mind legal ones) with such an idea (27 member states, probably 200-300 laender/regions, around what? maybe 5000+ communities/counties and that's before you start factoring in indirect government spending such as stand-alone government bodies, quangos etc....). And the legal ones are huge - internal sovereignty is a very real concept in most member states, even if we ignore it.

cyberhog

Many reputable sources have warned about the threat posed by eurobonds.

Bloomberg

Euro bonds would violate a central tenet of the currency bloc: Each country is responsible for its own finances.

...

according to economists at the Brussels-based think-tank Bruegel.... a unified finance ministry could easily exert the control over individual countries’ finances that many in Merkel’s party desire.

http://www.bloomberg.com/news/2011-08-16/on-euro-bonds-europe-s-politicians-lag-behind-the-market-view.html



EUobserver

EU monetary affairs commissioner Olli Rehn has questioned whether euro countries are really prepared to accept the loss of national fiscal power that would come with the introduction of eurobonds

...

Speaking on Monday (29 August) of the “rather high expectations” surrounding eurobonds - which would lead to the mutualisation of eurozone debt - Rehn warned it would mean “substantially reinforced fiscal surveillance and policy coordination”.

“This would have unavoidable implications for fiscal sovereignty, which calls for a substantive debate in euro area member states to see if they would be ready to accept it,” he told the European Parliament’s economic and monetary affairs committee.

http://euobserver.com/19/113449

The Globe and Mail

But many experts and prominent European officials - even within Germany - say pooling the combined borrowing power of all euro zone members may ultimately be the only way to save the common currency. Doing so, however, would mean a fundamental transfer of budget power to Brussels plus potentially divisive constitutional battles in several member countries.

...

Analysts also warned that the creation of euro zone bonds would mark a profound change, forever shifting control of member countries' budgets to Brussels.

https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20110816/RBEUROCRISISMCKENNAATL



Warren Coats, IMF (retired)

The Eurobond proposal is not for the financing of the EU budget (comparable to the federal budget in the U.S.), but for the financing of individual country budgets (comparable to states in the U.S.). This is why advocates of Eurobonds couple their proposal with the need to increase EU control over member countries’ budgets. Such control would be comparable to federal government control over state budgets in the U.S. This seems both politically very unlikely in Europe and, in my opinion, undesirable.

http://wcoats.wordpress.com/2011/08/27/european-debt-crisis-causes-and-cures/


The Peterson Institute for International Economics

.... since eurobonds imply taxpayers’ commitment, euro area leaders must make preparations that are inherently political in nature...the euro area must establish the institutional capacity to preemptively reduce or overrule irresponsible fiscal decisions by individual member states. Such a step would require a dramatic pooling of fiscal sovereignty among euro area members....

http://www.piie.com/realtime/?p=2333


Those of you who try to brush aside these legitimate concerns are doing a great disservice to this country.

Scofflaw

Those of you who try to brush aside these legitimate concerns are doing a great disservice to this country.

Nobody's trying to brush aside any concerns, or to claim that eurobonds involve no loss of sovereignty, given that they've always been raised in the context of closer fiscal integration - only to point out that your original claim of "no control over their spending" is ridiculously over-dramatic.

So a long series of quotes showing that nobody else has suggested participating states will have "no control over spending" either doesn't back up what people are disagreeing with - rather the reverse. So if you'd like to climb down from the ceiling and talk about how much sovereignty is involved, rather than talking in absolutes, then a discussion is possible. But in the presence of absolutes meaningful discussion is kind of impossible.

cordially,
Scofflaw

cyberhog

Scofflaw wrote: »

Nobody's trying to brush aside any concerns,

O rly?

hatrickpatrick wrote: »

God Almighty.
More ripping of hard won sovereignty from the hands of the Irish people. :mad:

Rojomcdojo wrote: »

The phrase "Broken Record" comes to mind....

meglome wrote: »

Would it be so much to ask to go one week without any bullshít about the Lisbon treaty or 'sovereignty'.

Scofflaw wrote: »

your original claim of "no control over their spending" is ridiculously over-dramatic.

My claim may seem far-fetched (to you) at this moment, but let's not forget only a few years ago some people warned about an impending financial crisis and they too were accused of being "ridiculously over-dramatic"

Scofflaw wrote: »

a long series of quotes showing that nobody else has suggested participating states will have "no control over spending" either doesn't back up what people are disagreeing with - rather the reverse.

Read between the lines much?

A couple more links for you to peruse.

George Osborne, George Soros, some eurozone leaders and many economists (if you think their views are still worth hearing) argue that the eurozone's salvation requires the adoption of a fiscal policy of "all for one, and one for all".

...

- the survival of the eurozone requires tax and spending policy for all eurozone members to be determined centrally, by a eurozone super finance ministry.


...

Europe's people might conclude that surrendering control of tax, spending and borrowing powers is a hideous prospect, but the alternative - a collapse of the eurozone - might be worse.

Always one for a resonant phrase, this is how Mr Soros puts it:

"If the euro were to break up, it would cause a banking crisis that would be totally outside the control of the financial authorities.

"So it would push not only Germany, not only Europe, but the whole world into conditions very reminiscent of the Great Depression in the 1930s, which was also caused by a banking crisis that was out of control."

http://www.bbc.co.uk/news/mobile/business-14526257

...the potential for moral hazard is obvious as long as spendthrift countries can finance heavy domestic spending with eurobonds at others’ expense.

...

An eventual establishment of a large independent euro area budget with control exercised by an elected euro area parliament is so unlikely as to be a political fiction for the foreseeable future.

...

Europe has discussed a beefed-up version of its traditional, but until now virtually unenforceable, Stability and Growth Pact, in which countries could be sanctioned over loose fiscal policy. But such a step would not be adequate if all debt issued is jointly guaranteed.

...

Eurobonds, in short, must be anchored in the political possibility of transferring fiscal competences from the national to the euro area level (thereby aligning the economic benefits and democratic responsibilities related to eurobonds) since they would lack the ability to credibly sanction fiscally wayward members.

http://www.piie.com/realtime/?p=2336

Scofflaw

My claim may seem far-fetched (to you) at this moment, but let's not forget only a few years ago some people warned about an impending financial crisis and they too were accused of being "ridiculously over-dramatic"

Which doesn't make ridiculously over-dramatic claims anything other than ridiculously over-dramatic. There isn't even a proposal on the table, and the screaming and wailing has already begun....

amused,
Scofflaw

View

Cyberhog, none of the quotes you have provided shows that our sovereignty will be affected. It is our Supreme Court's view of what does, or does not, affect our sovereignty that counts not people randomly quoted by newspapers. And, the Supreme Court judgment in the Crotty case was much narrower than might be concluded from the government's practice of doing "catch-all" referenda on EU Treaties.

Indeed, the EU (or more specifically its institutions) does already issue bonds. If they start issuing more bonds, or differently named bonds, it is unlikely that our Supreme Court would have a problem with them per se. They might have problems with any other proposed Treaty changes that might be associated with them but that would depend on what those proposals are...

hatrickpatrick

Armin_Tamzarian wrote: »

Well, I guess we should congratulate ourselves on a job well done.

Victor wrote: »

Irish citizens ran the country into the ground.

Yeah, we f*cked up. I get that. I accept that. Everyone accepts that.
But it's not an excuse to take our democracy away from us. We made huge mistakes, we deserve a chance to learn from them before control over our country is completely ripped from our hands.

View wrote: »

Well, 10/10 for melodrama but what exactly is it about his speech that you believe will effect sovereignty in Ireland?

Irish people vote for an Irish government and that government should set Ireland's tax rates. Not any government from any other nation. The Irish government should make the laws Irish people have to follow, not have them imposed on us by foreigners.
We have control over who we vote for. We don't have control over who the French of the Germans vote for. Therefore every bit of sovereignty we cede to European integration is another loss of a piece of control over Ireland.

The Irish people should run this country - no one else.

Scofflaw

Therefore every bit of sovereignty we cede to European integration is another loss of a piece of control over Ireland.

The Irish people should run this country - no one else.

The problem with that is that external issues have an effect on Ireland whether we like it or not - so we trade nominally complete control over Ireland against an input at the European level, because the 'complete control' over Ireland we trade really is only nominal.

Ireland in particular does this because we're a small open economy on the periphery of Europe. Those characteristics, in turn, mean:

1. small - in the absence of the EU framework of legal equality, we're back to power politics, and we're an absolute minnow in the power politics of Europe. In the EU, we're still a small player, but at least on a level playing field.

2. open - we're always going to be affected by European trade regulations and market legalities. The only option that doesn't involve that is a return to the disastrous autarky of the early Republic.

3. on the periphery - without the EU's conscious effort to treat the Member States equally, our peripheral location make us the equivalent of any other offshore island.

Sure, sometimes the EU fails to honour in a way that's entirely satisfactory the commitments that make membership positive for us - but even then, we have channels of recourse that are massively superior to hanging about the Court of St James hoping the Brits will throw us a couple of scraps when they're talking to the other great powers. If the EU didn't exist, it would be in Ireland's interests to invent it.

cordially,
Scofflaw

cyberhog

Scofflaw wrote: »

Which doesn't make ridiculously over-dramatic claims anything other than ridiculously over-dramatic. There isn't even a proposal on the table, and the screaming and wailing has already begun....

amused,
Scofflaw

Im neither screaming or wailing I'm raising legitimate concerns about what the implementation of eurobonds could mean for us. I'm sorry you cannot accept it as such and feel you have to denigrate my views.

cyberhog

View wrote: »

They might have problems with any other proposed Treaty changes that might be associated with them but that would depend on what those proposals are...

That's the point of the links I provided. To highlight that those "no taboo" treaty negotiations that Merkel made a plea for would most likely entail "transferring fiscal competences from the national to the euro area level " as eurobonds would otherwise be impracticable.

German Finance Minister Wolfgang Schäuble wants to forge a new European Union treaty, the mass-circulation daily Bild reported Friday.

Shifting greater powers over economic and financial policy to Brussels is necessary, he said according to the paper, "even though we know how difficult a treaty change will be."

http://www.spiegel.de/international/germany/0,1518,783994,00.html

Scofflaw

cyberhog wrote: »

Im neither screaming or wailing I'm raising legitimate concerns about what the implementation of eurobonds could mean for us. I'm sorry you cannot accept it as such and feel you have to denigrate my views.

I'm not denigrating the view that eurobonds would involve making more decisions at the European level, I'm pointing out that the claim we'd have "no control over spending" is ridiculous hyperbole.

cordially,
Scofflaw

cyberhog

Scofflaw wrote: »

I'm not denigrating the view that eurobonds would involve making more decisions at the European level, I'm pointing out that the claim we'd have "no control over spending" is ridiculous hyperbole.

cordially,
Scofflaw

You call it "ridiculous hyperbole", but you feel an instinctive and defensive need to respond. hmm? In my opinion, You are being very flippant about the real implications of eurobonds. You say in a rather innocuous fashion "eurobonds would involve making more decisions at the European level" Olli Rehn, on the other hand, isn't quite as nonchalant about what eurobonds would mean for euro countries.

Rehn warned it would mean “substantially reinforced fiscal surveillance and policy coordination”.

“This would have unavoidable implications for fiscal sovereignty

Then we've had the German Finance minister demanding greater centralisation of fiscal policy in exchange for agreeing to eurobonds.

Shifting greater powers over economic and financial policy to Brussels is necessary

In my view, it is logical to surmise that the kind of fiscal integration required to make a practical reality of eurobonds will not be possible if individual countries continue to control their tax and spending policy.


The question you need to ask yourself is

If states no longer bear the ultimate burden of financing themselves why should they be allowed to make their own taxing and spending decisions?

http://blogs.independent.ie/independent_blog/2011/09/economic-solutions-political-impediments-and-the-circus-that-we-call-europephilip-pilkington-conflicting-messages-coming-ou.html

The fact of the matter is, eurobonds won't work unless a central finance ministry gets to decide what can be spent in high-debt countries.

There would be no nice way of looking over the shoulders of the stragglers but no way of avoiding it either. Intrusive powers for an external authority to compel wayward governments to toe a safe fiscal line would be a prerequisite., but would that prove acceptable on the ground? The seepage of sovereignty would be huge.

http://www.irishtimes.com/newspaper/world/2011/0915/1224304144096.html

Scofflaw

cyberhog wrote: »

You call it "ridiculous hyperbole", but you feel an instinctive and defensive need to respond. hmm?

I'm afraid I have a strong dislike of hysteria, so I do tend to respond to it.

cyberhog wrote: »

In my opinion, You are being very flippant about the real implications of eurobonds. You say in a rather innocuous fashion "eurobonds would involve making more decisions at the European level" Olli Rehn, on the other hand, isn't quite as nonchalant about what eurobonds would mean for euro countries.




Then we've had the German Finance minister demanding greater centralisation of fiscal policy in exchange for agreeing to eurobonds.




In my view, it is logical to surmise that the kind of fiscal integration required to make a practical reality of eurobonds will not be possible if individual countries continue to control their tax and spending policy.

The question you need to ask yourself is

http://blogs.independent.ie/independent_blog/2011/09/economic-solutions-political-impediments-and-the-circus-that-we-call-europephilip-pilkington-conflicting-messages-coming-ou.html

The fact of the matter is, eurobonds won't work unless a central finance ministry gets to decide what can be spent in high-debt countries.

http://www.irishtimes.com/newspaper/world/2011/0915/1224304144096.html

Again, none of those references back up your claim that a central finance ministry would have to take complete control of countries' taxation and spending decisions. All they say is that greater central decision-making would be needed, which I'm not disagreeing with - I'm disagreeing with your step from "greater" to "complete".

It's highly unlikely that the eurozone governments will agree to have "no control over their spending" in order to have eurobonds - if that's the price of having them, it's simply too high. Therefore, one or the other won't happen.

Sadly, this is an absolutely standard problem with debating a European issue - the question that should be under debate is "how much loss of national control are eurobonds worth", but instead we're going round in circles because you are claiming that eurobonds will mean "no control over spending", and claiming that by disagreeing with you I am arguing that we're not giving up any control.

I'm not arguing that, and I don't think you really mean that there will be no national decision-making on spending, although perhaps you really believe that.

On top of that, neither of us yet know what the eurobonds proposal will be, because the Commission has yet to put forward a proposal, let alone have it modified by the Council and Parliament - yet already you're objecting to them on the basis of a supposition about what's involved. Why not wait and argue over what's actually proposed, instead of letting your knees do your thinking?

Anyway, coming back to a worthwhile question:

If states no longer bear the ultimate burden of financing themselves why should they be allowed to make their own taxing and spending decisions?

Because taxation and spending decisions, along with legislature, are the heart of government policy, and are at the heart of democratic choice in a representative democracy. If national governments have no control over taxation and spending, then democracy is hugely reduced. The price of eurobonds, set at that level, is clearly too high.

So if that is the price, then eurobonds should obviously be rejected - but if that is the price, they will be in any case. So, if there are going to be eurobonds, it is much more likely it will be by virtue of something like a debt envelope, with government policies coordinated to the extent of ensuring that those debt envelopes aren't breached.

As I keep saying, though, we don't know what's involved yet.

cordially,
Scofflaw