'Future of Euro' Article in Irish Times

K09

Makes for a frightening read!...
http://www.irishtimes.com/newspaper/finance/2012/0106/1224309889708.html

Is the meltdown scenario put forward by Dan O'Brien really a possibility? Why would the break up of the Euro have such an adverse effect? I imagined countrys would just revert to their national currency but maybe I'm being very naive.

Solair

The aspect of this crisis that is most worrying is how the EU and the USA are engaged in navel gazing and in-fighting or are running around like a bunch of headless chickens!

I have seen no leadership whatsoever, just people running around frightened of banks and markets and desperately trying to appease them.

IF, and it's a big IF, the EU members and the USA pulled together, tackled the problem at its root i.e the runaway financial services sector, we would be able to solve this.

We need to do something like quantitative easing, debt write downs and the financial services sector needs to be absolutely put back in its box. It's a monster that has grown out of control.

Europe and America's politicians do not seem to realise that they hold almost all of the trump cards. They can legislate, they can change the paradigm and they can solve this. It's a bit like the Matrix, they're too busy playing the game and tweaking mundane things to realise that if you step outside the mess and look at the bigger picture and cooperate, you can change everything!

At the end of the day, the financial markets can only operate like this because political systems allow them to. Money only exists because a central bank decides how much to issue.

They have all the control levers available to them to bring everything back into line, but they are either unable or unwilling to use any of them.

In Europe, I think this is largely down to lack of expertise and quasi-incompetence at the top. Most of our political leaders are just normal people with no specialist financial services sector knowledge and I get the sense that they're being bounced and bullied into taking up ridiculous positions.

I am also concerned that FAR too much of the expert advice is coming from the very people who are causing this crisis. There's too much bank/trader-influence at Civil Service / Hired-in Expert level.

In the USA, Wall Street simply seems to buy both parties and there's no political alternative to voting either Democrat or Republican. So, they're sort of screwed.

I am very worried that in Europe at least, this whole mess could end up having serious political consequences with a rise of the ultra-right in some countries prone to that e.g. Austria and France.

I don't think Ireland necessarily has this risk, it's more likely to see a rise of independents and Sinn Fein, but it's other countries that tend to turn xenophobic and right wing when they're pushed that I would be VERY concerned about.

I think in Greece and Spain there's a serious chance of a complete collapse if they aren't careful. E.g. in Spain, if the economy really falls flat on its face, I could see Catalonia and the Basque Country and other Autonomias pushing to leave (more than usual). They're already blaming each other for the crisis.

European politicians are being grossly irresponsible if they allow a situation to develop where we could be facing similar politics to what caused WWII!

We (Europeans) have a big decision to make here. What is more important? 60+ years of peace, stability, good standards of living, good health, enlightened politics and social democracy ?

Or, propping up a very badly broken, and completely corrupt financial services sector that will probably just lurch from crisis to crisis bleeding us dry in the process even if we do manage to patch it up...

That's basically the choice. So far we seem to be putting the financial lobby ahead of pretty much everything that post-WWII Europe and the EU supposedly stands for and I don't think there's anything radical or crazily socialist about saying that.

This situation is fundamentally wrong on so many levels that it's just frightening.

(Apologies for the long rant, but seriously this stuff is really starting to become utterly ridiculous!)

McDave

My read is that DO'B was not saying there *will* be a meltdown. He was pretty much putting money down on there being a *recession*.

If you look at the scenarios at the end of the article, he reckons the probability of a meltdown at 25%. He does suggest a high probability of 'sliding towards the abyss', but explicitly states in this scenario that meltdown will be avoided.

It's also worth pointing out that about 6 months ago DO'B felt the chance of a Euro collapse was in the region of 40%. So clearly he's modified his position since then in favour of the Euro. At least as far as 2012 is concerned!

Admittedly though he has over the last year become more pessimistic compared to a high level of optimism that the EZ would pull through. And he's not alone in that sentiment. The FT's Wolfgang Munchau has similarly drifted from a sceptical optimist to an outright pessimist through 2011.

FreudianSlippers

McDave wrote: »

My read is that DO'B was not saying there *will* be a meltdown. He was pretty much putting money down on there being a *recession*.

If you look at the scenarios at the end of the article, he reckons the probability of a meltdown at 25%. He does suggest a high probability of 'sliding towards the abyss', but explicitly states in this scenario that meltdown will be avoided.

It's also worth pointing out that about 6 months ago DO'B felt the chance of a Euro collapse was in the region of 40%. So clearly he's modified his position since then in favour of the Euro. At least as far as 2012 is concerned!

Admittedly though he has over the last year become more pessimistic compared to a high level of optimism that the EZ would pull through. And he's not alone in that sentiment. The FT's Wolfgang Munchau has similarly drifted from a sceptical optimist to an outright pessimist through 2011.

I still don't see the Eurozone going anywhere fast. That being said, a lot will hinge on a completely unpredictable factor: Greece.

Solair

FreudianSlippers wrote: »

I still don't see the Eurozone going anywhere fast. That being said, a lot will hinge on a completely unpredictable factor: Greece.

I think there are probably far too many vested interests in keeping it going to allow it to fail. However, I would be more worried about Italy and Spain than Greece, Portugal and Ireland. They're absolutely enormous economies and they're both teetering very much on the brink at the moment.

The currency policies are utterly daft for those economies and it's almost like the ECB approach is that the Euro must be exactly the same as the old DM, rather than allowing it to be a currency that's actually reflective of the entire Eurozone, which is not all identical to Germany.

We also need to repair / reboot the banking system. This endless sticky-plaster approach is just costing vast amounts of money, rewarding totally corrupt and failed business models with unlimited and unprecedented levels of state support and prolonging the crisis.

McDave

FreudianSlippers wrote: »

I still don't see the Eurozone going anywhere fast. That being said, a lot will hinge on a completely unpredictable factor: Greece.

I'm confident the EZ will pull through.

Greece is unpredictable alright. However, with the haircuts, it's being manoeuvred into a scenario where most losses accruing from a disorderly default are factored into the accounts of loss-holders.

That's not to say Greece's exit will be without consequences. But IMO those consequences will not be systematic for the EZ overall, which will be able to absorb the pre-distributed worst effects.

Let's hope it doesn't come to that. But let's not fear its coming to pass either.

FreudianSlippers

McDave wrote: »

FreudianSlippers wrote: »

I still don't see the Eurozone going anywhere fast. That being said, a lot will hinge on a completely unpredictable factor: Greece.

I'm confident the EZ will pull through.

Greece is unpredictable alright. However, with the haircuts, it's being manoeuvred into a scenario where most losses accruing from a disorderly default are factored into the accounts of loss-holders.

That's not to say Greece's exit will be without consequences. But IMO those consequences will not be systematic for the EZ overall, which will be able to absorb the pre-distributed worst effects.

Let's hope it doesn't come to that. But let's not fear its coming to pass either.

I don't necessarily disagree. But I think perhaps you take me up incorrectly; Greece may be the end of the eurozone as we know it. Their constant unwillingness to cooperate shows they want the EZ to pay them to participate; we haven't done that and I don't think we should be punished for being good.

McDave

FreudianSlippers wrote: »

I don't necessarily disagree. But I think perhaps you take me up incorrectly; Greece may be the end of the eurozone as we know it. Their constant unwillingness to cooperate shows they want the EZ to pay them to participate; we haven't done that and I don't think we should be punished for being good.

I can't disagree with that sentiment. Other than to say there could be major improvements to the way the Euro works in the short to mid term:

- which involve giving real meaning to the existing Maastricht criteria
- the exit of Greece
- but which doesn't constitute a Euro Mark 2.

To my mind the end of the Eurozone as we know it will be marked by a development like Eurobonds. That may come to pass too. And sooner rather than later. But until then, it's my reckoning that changes to the Euro will be more or less in line with existing legal criteria. Although I suppose I should wait until I see the draft proposals!!!

later12

FreudianSlippers wrote: »

Greece may be the end of the eurozone as we know it.

I'd doubt that. The EA could sustain a Greek exit by itself.

It could actually be a welcome move, if it precipitated the introduction of a real European treasury and fiscal policy referendum so as to inhibit sovereign contagion.

I'm pretty sure one look at the chaos in the sacrificial Athenian lamb would be enough to glue Europe together with some decent conviction.

FreudianSlippers

later10 wrote: »

I'd doubt that. The EA could sustain a Greek exit by itself.

It could actually be a welcome move, if it precipitated the introduction of a real European treasury and fiscal policy referendum so as to inhibit sovereign contagion.

I'm pretty sure one look at the chaos in the sacrificial Athenian lamb would be enough to glue Europe together with some decent conviction.

That's what I meant by as we know it... I'm not saying it's a bad thing - just that it would certainly be the end of the current Eurozone politics and may be like a necessary amputation.

stackerman

It may, or may not, be the end of the Euro (not gona get into that now)

I'm just glad, that AT LAST we have some reporters, talking about how serious things MAY be.

I believe, that things will get very bad, but for now I'm just glad that the info is slowly getting out.

Amberman

McDave wrote: »

I'm confident the EZ will pull through.

Greece is unpredictable alright. However, with the haircuts, it's being manoeuvred into a scenario where most losses accruing from a disorderly default are factored into the accounts of loss-holders.

That's not to say Greece's exit will be without consequences. But IMO those consequences will not be systematic for the EZ overall, which will be able to absorb the pre-distributed worst effects.

Let's hope it doesn't come to that. But let's not fear its coming to pass either.

I think you underestimate the Greek issue. It has to do with pan European bond markets. Let me explain.

If the ECB takes a hit on its Greek debt, it in effect is bailing out Greece and breaking the law and if it doesn't take a hit, it has created a two tier bond market where everyone is subservient to the ECB which means others in the future will push bond prices up even further, even at the core, making debt dynamics even worse.

Also, the holders of the Greek debt are hedge funds who bought the debt at deep discounts from Euro banks starting in OCtober, with the intention to trigger CDS contracts and be made whole at 100c on the Euro.

They have a blocking vote.

There are other issues, but this is a complete and utter mess of Europes own making.


Damned if they do, damned if they don't...a true policy trap.

McDave

Amberman wrote: »

I think you underestimate the Greek issue. It has to do with pan European bond markets. Let me explain.

If the ECB takes a hit on its Greek debt, it in effect is bailing out Greece and breaking the law and if it doesn't take a hit, it has created a two tier bond market where everyone is subservient to the ECB which means others in the future will push bond prices up even further, even at the core, making debt dynamics even worse.

Also, the holders of the Greek debt are hedge funds who bought the debt at deep discounts from Euro banks starting in OCtober, with the intention to trigger CDS contracts and be made whole at 100c on the Euro.

They have a blocking vote.

There are other issues, but this is a complete and utter mess of Europes own making.


Damned if they do, damned if they don't...a true policy trap.

Thanks for this. Whatever happens, a lot of people are going to lose a lot of money over Greece.

What I do see though is a concerted effort to distribute as much of the losses as possible among the private sector, and minimising potential losses to EZ taxpayers, and pushing potential crystallisation of losses to the public purse out a few years until the EZ's financial architecture has been more fully revised.

analyst2

There were, of course, those of us who long ago came to see that the dream of building a politically united Europe had all the makings of a tragedy, doomed eventually to end very badly, and to carry what remained of European democracy with it. But I have to confess that not even in our worst nightmares did we foresee that it would end quite like this. And even now the end game has hardly begun.

Scofflaw

analyst2 wrote: »

There were, of course, those of us who long ago came to see that the dream of building a politically united Europe had all the makings of a tragedy, doomed eventually to end very badly, and to carry what remained of European democracy with it. But I have to confess that not even in our worst nightmares did we foresee that it would end quite like this. And even now the end game has hardly begun.

Considering that much of the current problem is the outcome of creating a monetary union without a political or even fiscal union, I'm not sure how valuable that 'analysis' is. And I would have to add that in my worst nightmares I could certainly see Europe ending very much more badly.

cordially,
Scofflaw

analyst2

Scofflaw wrote: »

Considering that much of the current problem is the outcome of creating a monetary union without a political or even fiscal union, I'm not sure how valuable that 'analysis' is. And I would have to add that in my worst nightmares I could certainly see Europe ending very much more badly.

cordially,
Scofflaw

I agree, and it's all part of the same piece. The Euro crises means that all our money is being poured into a bottomless pit of debt as those political leaders, many of whom have been the architects and/or colluded with the architects of this disaster, try to avoid catastrophe. Their efforts will prove fruitless and, ironically, will mean the final stages of this tragedy are likely to be even worse, when countries like Ireland have seen all of their money gone into the bottomless pit.

Politically, Europe can never be united in any meaningful sense, and now that democracy is scorned openly, it can't be long before the whole thing comes to a head. As I said earlier, the end game has barely begun, but it has begun and it remains to be seen how bloody the end will be, when it comes.

stringed theory

analyst2 wrote: »

Politically, Europe can never be united in any meaningful sense, and now that democracy is scorned openly, it can't be long before the whole thing comes to a head. As I said earlier, the end game has barely begun, but it has begun and it remains to be seen how bloody the end will be, when it comes.

This seems like wishful thinking on your part. I would like to hear from a prophet of doom who likes the European Union, the euro, the idea of political union etc. but who, after analysing the situation, regretfully concludes that there may be unsolvable problems ahead.

analyst2

stringed theory wrote: »

This seems like wishful thinking on your part. I would like to hear from a prophet of doom who likes the European Union, the euro, the idea of political union etc. but who, after analysing the situation, regretfully concludes that there may be unsolvable problems ahead.

Lets hope you hear soon from the person you mention, although how you claim anyone wishes for catastrophe seems unclear, and I certainly do not wish for it.

As so often in these types of discussion, it seems to come down to accusations that someone with a different viewpoint either "likes" or "dislikes" the EU. On the balance of evidence, the end game has started, and whether or not any of us personally likes, or not. the EU, is irrelevant.

Scofflaw

analyst2 wrote: »

Lets hope you hear soon from the person you mention, although how you claim anyone wishes for catastrophe seems unclear, and I certainly do not wish for it.

As so often in these types of discussion, it seems to come down to accusations that someone with a different viewpoint either "likes" or "dislikes" the EU. On the balance of evidence, the end game has started, and whether or not any of us personally likes, or not. the EU, is irrelevant.

That is, I think, the point of the response - the "balance of evidence" only appears to show that "the end game has started" to people who already dislike the EU. I'm not sure you can find general agreement that that's really the case outside generally eurosceptical outlets.

cordially,
Scofflaw

K-9

Scofflaw wrote: »

That is, I think, the point of the response - the "balance of evidence" only appears to show that "the end game has started" to people who already dislike the EU. I'm not sure you can find general agreement that that's really the case outside generally eurosceptical outlets.

cordially,
Scofflaw

Time magazine has been pretty critical, don't know if it's classed as Euro sceptic. From my reading, just scathing of the slow political response, and criticising political agreements held as political triumphs by politicians, but not really addressing the core problems.

Scofflaw

K-9 wrote: »

Time magazine has been pretty critical, don't know if it's classed as Euro sceptic. From my reading, just scathing of the slow political response, and criticising political agreements held as political triumphs by politicians, but not really addressing the core problems.

Oh, I don't think there's nothing to criticise, not by a very very long way - the response has been slow and heavily politicised, resulting in repetitive, inadequate, and often apparently irrelevant 'solutions'. In a sense, that's hardly surprising, since the eurozone governance is actually an intergovernmental mechanism - the best one can say is that it's going better than climate change.

But "end game"? As in, presumably, the end of the EU, and (apparently) European democracy too? Where does that come from except the standard "end of the world" reflex humans apparently carry in their DNA?

cordially,
Scofflaw

analyst2

Scofflaw wrote: »

That is, I think, the point of the response - the "balance of evidence" only appears to show that "the end game has started" to people who already dislike the EU. I'm not sure you can find general agreement that that's really the case outside generally eurosceptical outlets.

cordially,
Scofflaw

I only speak for myself and have no idea what groups of "people" may or may not think and, in any case, am suspicious of those who either "like" or "dislike" the EU.

To some, the EU has become almost like a religion, an article of faith and belief. If they believe one side of it, we see them rush to defend the indefinsible, and no matter what evidence is available they will ignore it if it doesn't fit in with their belief. On the other "side" are those who look for any opportunity to rush to deride the EU and seem to take joy and pleasure at its difficulties.

For myself, I hope I am neither of these things and hope I am able to look at the evidence, and weigh up the possibilities. I don't come here, or anywhere, to seek "general agreement" as there is no guarantee that "general agreement " will get it right in what will happen to the EU, and to the constituent countries of the EU, in the coming months and years.

If it is your view that the end game has not begun, and that there is no threat to the continuance of the EUro, and/or the EU, then you may well be proved correct. I come to a somewhat different view, based on the evidence available, and hope I am proved incorrect. However, personal hopes will have little to do with what happens.

Scofflaw

analyst2 wrote: »

I only speak for myself and have no idea what groups of "people" may or may not think and, in any case, am suspicious of those who either "like" or "dislike" the EU.

To some, the EU has become almost like a religion, an article of faith and belief. If they believe one side of it, we see them rush to defend the indefinsible, and no matter what evidence is available they will ignore it if it doesn't fit in with their belief. On the other "side" are those who look for any opportunity to rush to deride the EU and seem to take joy and pleasure at its difficulties.

While that's true of some, it's not really relevant to any argument, and has become a standard shorthand dismissal of positions different from one's own.

analyst2 wrote: »

For myself, I hope I am neither of these things and hope I am able to look at the evidence, and weigh up the possibilities. I don't come here, or anywhere, to seek "general agreement" as there is no guarantee that "general agreement " will get it right in what will happen to the EU, and to the constituent countries of the EU, in the coming months and years.

If it is your view that the end game has not begun, and that there is no threat to the continuance of the EUro, and/or the EU, then you may well be proved correct. I come to a somewhat different view, based on the evidence available, and hope I am proved incorrect. However, personal hopes will have little to do with what happens.

Presuming "end game" to mean the end of the EU, the question would be what evidence makes you believe that to be currently in motion.

cordially,
Scofflaw

stringed theory

The EU is something unique, a "work in progress" with no real historical precedent, a confederation of sorts that has brought together countries as different as Finland and Cyprus, for reasons of enlightened self-interest and without the least threat of force.
I don't see how you would reliably identify the evidence needed to forecast its future. How do you weigh up the nostalgic longings of nationalists, or the jitters of fund managers, for example, against the sheer determination of so many to drive the European project forward, over sixty years, and to find the solutions that are needed?
Emotions weigh heavily in almost all analyses, especially in newspapers which are really highly selective in what they choose to look at.

The Corinthian

First of all, one must remember that the Euro, or Eurozone, and the EU are not actually one and the same. Even if the Euro were to completely collapse, be consigned to the dustbin of history, this does not somehow imply that we would, by consequence, decide to dissolve the EU.

Certainly the EU would be politically weakened for years, perhaps decades, to come. But that this would mark an "endgame" for the EU really is simply Eurosceptic wishful thinking - it makes absolutely no sense whatsoever.

And that is if the Euro were to completely collapse. My guess is that there is a good chance that Greece will be forced out at this stage. After this it comes down to the other PIIGS nations and whether they are seen as stable enough to neither the storm. Of these only Italy is a real worry, and only a worry in so far that if borrowing rates are too high her debt will become unsustainable. Indeed, it is only Italy's sluggish economy that is if concern - if you look at her other fundamentals, most are actually better than Germany.

As for Ireland, Portugal and even Spain, these are lesser concerns. No one objective is even talking about default or leaving the Euro.

So if Greece leaves the Euro, attention will once again turn onto Italy. If Italy and the EU can calm that attention, then the crisis will be over and what will mark this is an increase in the value of the Euro. If not and Italy is forced to leave, this may further cause a number of other countries to do likewise, but you'll still see a majority of the Eurozone (huddled around Germany and France) still in. Either way the Euro will likely survive and appreciate once this period of uncertainty has passed.

But what does this mean for the EU? Some bad blood between some member states, certainly. A return to the strategy drawing board where it comes to integration, just as we saw with the failure of the EU constitution.

But other than that? Nothing.

The EU/EEC has simply been of far too much benefit to European nations over the last 60 years for anyone to really want it to end. And even in a worst case scenario the Euro will still have enough solvent countries with an interest in a common currency to survive.

The Corinthian

stringed theory wrote: »

The EU is something unique, a "work in progress" with no real historical precedent, a confederation of sorts that has brought together countries as different as Finland and Cyprus, for reasons of enlightened self-interest and without the least threat of force.

No exact historical precedent, but plenty of real ones that come fairly close one way or another. The Polish–Lithuanian Commonwealth is not a bad one, Belgium is another, the Dutch Republic yet another, but probably by far the best is Switzerland - the EU actually strongly resembles the old Swiss Confederation.

Scofflaw

The Corinthian wrote: »

First of all, one must remember that the Euro, or Eurozone, and the EU are not actually one and the same. Even if the Euro were to completely collapse, be consigned to the dustbin of history, this does not somehow imply that we would, by consequence, decide to dissolve the EU.

Certainly the EU would be politically weakened for years, perhaps decades, to come. But that this would mark an "endgame" for the EU really is simply Eurosceptic wishful thinking - it makes absolutely no sense whatsoever.

And that is if the Euro were to completely collapse. My guess is that there is a good chance that Greece will be forced out at this stage. After this it comes down to the other PIIGS nations and whether they are seen as stable enough to neither the storm. Of these only Italy is a real worry, and only a worry in so far that if borrowing rates are too high her debt will become unsustainable. Indeed, it is only Italy's sluggish economy that is if concern - if you look at her other fundamentals, most are actually better than Germany.

As for Ireland, Portugal and even Spain, these are lesser concerns. No one objective is even talking about default or leaving the Euro.

So if Greece leaves the Euro, attention will once again turn onto Italy. If Italy and the EU can calm that attention, then the crisis will be over and what will mark this is an increase in the value of the Euro. If not and Italy is forced to leave, this may further cause a number of other countries to do likewise, but you'll still see a majority of the Eurozone (huddled around Germany and France) still in. Either way the Euro will likely survive and appreciate once this period of uncertainty has passed.

But what does this mean for the EU? Some bad blood between some member states, certainly. A return to the strategy drawing board where it comes to integration, just as we saw with the failure of the EU constitution.

But other than that? Nothing.

The EU/EEC has simply been of far too much benefit to European nations over the last 60 years for anyone to really want it to end. And even in a worst case scenario the Euro will still have enough solvent countries with an interest in a common currency to survive.

Yes - if the EU dissolved for any reason other than a general European war or a total collapse of the global economy, it would be almost immediately re-created.

cordially,
Scofflaw

stringed theory

The Corinthian wrote: »

No exact historical precedent, but plenty of real ones that come fairly close one way or another. The Polish–Lithuanian Commonwealth is not a bad one, Belgium is another, the Dutch Republic yet another, but probably by far the best is Switzerland - the EU actually strongly resembles the old Swiss Confederation.

My understanding of Swiss history is that the cantons came together for defensive reasons, against the Habsburgs. More like a mini NATO than a mini EU. Poland and Lithuania came together to resist the Russians, Belgium was created out of old Austrian territory by the Congress of Vienna. And the Dutch? Well, they're Dutch.
I think the EU is in a different league, not only due to its size, but because of a fundamental idealism involved, underpinned by the rule of law. In this, if not in any other sense, it does have similarities with the US in its foundation (though I wonder what would have happened there if they'd needed referendums).

The Corinthian

I don't want to drag the thread off into historical revisionism, but I never suggested that any of the examples were exactly the same, only that they share, often strong, similarities with the present EU.

Popeye Doyle

If I may contribute something to the discussion on historical precedents, I think it's worthwhile pointing out that throughout the history of the EEC/EU, economic challenges have provided the impetus for closer integration at key stages.

The original formation of the European Communities in the 1950s was, amongst other things, borne out of the need to rebuild and strengthen the post-war European economy after the devastation of the Second World War. Interestingly, after this initial spurt of institution building and some initial steps taken towards creating the common market, very little was done throughout the 1960s and early 70s, a period of relative economic prosperity.

The prolonged economic crises of the 70s and early 80s however, coupled with the desire of European leaders to create an economic power-bloc that could avoid domination by either the US or Japan, provided the spur for a renewed drive to integrate, which ultimately resulted in the Single European Act in 1986 and the completion of the common market. Another economic downturn in the late 80s and early 90s was followed by the 1992 Maastricht Treaty, and another dramatic surge in integration, as the foundations for the present day EU and Eurozone were laid.

European integration over the noughties, another period of prosperity, has been problematic, despite Nice, Lisbon and all the rest. So now that we are faced with another economic crisis, it's interesting to note that, in Germany at least, the attitude amongst political elites is that the ultimate solution to the challenge is further integration, and indeed progression towards full political union. The fiscal treaty is a step towards this. This is borne I believe not only of the need to deal with the immediate sovereign debt crisis and all the attendant issues there, but in the longer-term to position Europe to deal with the potential threat of Chinese hegemony and the uncertainty surrounding the future worldwide role of the US.

I don't think therefore the future of the EU or indeed the eurozone is in doubt. I think there will be an EU/Eurozone, it's just a question of who is going to be in it. Certainly Germany, Netherlands, Finland, Austria, Luxembourg, and possibly Sweden, now appear to the core member states, who seem happy to move towards even greater sharing of sovereignty. After that, provided their respective fiscal and/or political difficulties do not cause catastrophic destabilization, Belgium, Italy, France, Spain, Portugal and some of the eastern Europeans I suspect will be keen to stay close to the core (even if not in the eurozone).

Then you have the problem children. There appears at the moment no question that the UK will be an outsider; Hungary seems to be backsliding towards authoritarianism; the Czech Republic seems intent on isolationism (so long as Vaclav Klaus is President at least); and lord knows what's going to happen to poor old Greece.

So that leaves ourselves. We're going to have to make some big decisions in the coming years about what the country's place in Europe and the world is going to be. We may well have to accept that it's in for a penny, in for a pound from now on, if we want to remain in the eurozone, we need to be prepared to share sovereignty even further. If we don't want that, we need to come up with a properly thought-out alternative strategy as to how we're going to survive in the world economy. Either way, I suspect when it comes to the EU, to a certain extent, gone will be the days of having our cake and eating it too.

McDave

Popeye Doyle wrote: »

If I may contribute something to the discussion on historical precedents, I think it's worthwhile pointing out that throughout the history of the EEC/EU, economic challenges have provided the impetus for closer integration at key stages.

[...]

I largely agree. IMO the Eurozone is here to stay, and the majority of continental EU members want to be inside a single currency that works.

Even at this stage, the EZ will go the extra mile for Greece, although it may prove too unrealistic in the end. But even if Greece is forced out, any other country which demonstrates its political commitment to the EZ and shows evidence of budgetary discipline are certs to stay in.

Ireland's decision to stay in or out is IMO a purely political one. I don't see any sensible economic vision that is for us an alternative to EZ membership. Our exit would in all likelihood result in us falling back into the orbit of Sterling. I don't think a standalone currency is at all feasible for us. I think most Irish people see it this way. So if push comes to shove, if there is a vote we will elect for continued EZ membership.

FreudianSlippers

I wholeheartedly agree and, without being hysterical, the issue effectively boils down to who we want to be: European or British.

The Corinthian

McDave wrote: »

Our exit would in all likelihood result in us falling back into the orbit of Sterling. I don't think a standalone currency is at all feasible for us. I think most Irish people see it this way.

I think it's irrelevant how Irish people see it, the currency markets will see it that way and that is that. You can't trade in a currency that no one will accept, after all.

The Irish Pound or Punt, was in reality linked to either the ECU/Euro or Sterling for all but twenty years of its existence. I think it frankly delusional, given the present economy, debt rating and past history, that anyone would believe that we could introduce a viable independent currency.

The irony is that even were we to leave the Euro, our trade with the Eurozone and Euro-based debt would likely mean that we would end up linking any Punt Nua to the Euro, rather than Sterling.

analyst2

Scofflaw wrote: »

While that's true of some, it's not really relevant to any argument, and has become a standard shorthand dismissal of positions different from one's own.



Presuming "end game" to mean the end of the EU, the question would be what evidence makes you believe that to be currently in motion.

cordially,
Scofflaw

Evidence?

Greece has unemployment approaching 25%, Athens is burning as Greeks revolt, the economy has shrunk by over 20%, and over 200000 greek businesses are bankrupted by the crises.

France ( whose banks will teeter and fall if Greece defaults) in trying to pressure Germany to keep bailing them ( and everyone else ) out), but Germany's finance minister says it is throwing good money after bad into a "bottomless pit" and the German people will not stand for more of their money being spent in this way.

One of the most remarkable, and crucial, features of the EU has been, to date, a willingness to sacrifice national interest to the common good, and to see the National interests of both France and Germany once more to the fore, at the expense of the common good of the EU, must give us all cause for concern.

Ask yourself this;

On a scale of 1 to 100, where would you put the chance of Greece defaulting in the next year?

On a scale of 1 to 100, where would you put the chance of Ireland defaulting within the next 3 years?

Ditto for, Spain, Portugal and Italy.

On a scale of 1 to 100, where would you put the chance of France in very serious trouble if any of its banks are undermined or bankrupted by any of these possible defaults?

No one can predict with any certainty, but to assert that there is no or little threat to (1) the Euro and (2) the EU seems to be a brave prediction, and let's hope you ar right and the Euro, and the EU continues unimpeded, and that National interest gives way once again to the common good.

The Corinthian

analyst2 wrote: »

No one can predict with any certainty, but to assert that there is no or little threat to (1) the Euro and (2) the EU seems to be a brave prediction, and let's hope you ar right and the Euro, and the EU continues unimpeded, and that National interest gives way once again to the common good.

No one can indeed predict with any certainty, but at least some of us are making reasoned attempts at prediction. Reading over your few contributions to this thread, including your last post, you are contributing little more than FUD (Fear, Uncertainty, Doubt) to the debate and little by way of actual argument.

Indeed, even were Greece, Ireland, Italy, Spain and Portugal to leave the Eurozone, you've failed to explain how this would result in the end of the Euro, let alone why this would then result in the end of the EU.

Would you care to contribute a reasoned argument please? FUD gets very tiresome after a while.

analyst2

The Corinthian wrote: »

No one can indeed predict with any certainty, but at least some of us are making reasoned attempts at prediction. Reading over your few contributions to this thread, including your last post, you are contributing little more than FUD (Fear, Uncertainty, Doubt) to the debate and little by way of actual argument.

Indeed, even were Greece, Ireland, Italy, Spain and Portugal to leave the Eurozone, you've failed to explain how this would result in the end of the Euro, let alone why this would then result in the end of the EU.

Would you care to contribute a reasoned argument please? FUD gets very tiresome after a while.

If you find the facts which have been reproduced fearful, and create uncertainty and doubt, then I agree witn you. However, burying our heads in the sand and only reproducing facts which do not include anything anyone might find fearful, uncertain or creating doubt, would lead to a very one sided and sterile discussion.

I have reproduced some of the evidence which was asked for by another poster. I have looked at many threads here on boards in the last few days and find many of them tirsome, and it never occurred to me to post in any of them to tell others that I find either the subject of the thread or their individual posts tiresome.

The Corinthian

analyst2 wrote: »

If you find the facts which have been reproduced fearful, and create uncertainty and doubt, then I agree witn you.

I think you misunderstand what FUD means. FUD or Fear, Uncertainty, Doubt is disinformation tactic where false, irrelevant or otherwise dubious negative information is used to attack an position. As a result the critical flaw in your argument has been how you use your 'facts' to arrive to your conclusions:

1. Bad things are happening in the EU/Eurozone
2. Something happens
3. The EU/Eurozone collapses

It's the second step, that connects your 'facts' to your 'conclusions' that you are missing. At no stage have you actually deduced or even extrapolated how step 1 will lead to step 3 and have instead concentrated on throwing enough mud (step 1) in the hope that some will stick and the reader will make a similar leap of faith (to step 3).

However, burying our heads in the sand and only reproducing facts which do not include anything anyone might find fearful, uncertain or creating doubt, would lead to a very one sided and sterile discussion.

But fearful of what exactly? I put forward one or two scenarios that in a 'worst case' certainly did not paint a rosy picture of the EU or Eurozone, but certainly I could not see how your proposed 'endgame' could come about. And apparantly neither do you.

I have reproduced some of the evidence which was asked for by another poster.

That is false. You were asked specifically for relevant information and instead regurgitated more irrelevant information.

I have looked at many threads here on boards in the last few days and find many of them tirsome, and it never occurred to me to post in any of them to tell others that I find either the subject of the thread or their individual posts tiresome.

No one has called the subject of this thread tiresome. I called the use of a disinformation tactic (FUD) in this, or any, discussion tiresome. The discussion is interesting, FUD in lieu of a relevant argument is not - it's just noise.

analyst2

The Corinthian wrote: »

I think you misunderstand what FUD means. FUD or Fear, Uncertainty, Doubt is disinformation tactic where false, irrelevant or otherwise dubious negative information is used to attack an position. As a result the critical flaw in your argument has been how you use your 'facts' to arrive to your conclusions:

1. Bad things are happening in the EU/Eurozone
2. Something happens
3. The EU/Eurozone collapses

It's the second step, that connects your 'facts' to your 'conclusions' that you are missing. At no stage have you actually deduced or even extrapolated how step 1 will lead to step 3 and have instead concentrated on throwing enough mud (step 1) in the hope that some will stick and the reader will make a similar leap of faith (to step 3).

But fearful of what exactly? I put forward one or two scenarios that in a 'worst case' certainly did not paint a rosy picture of the EU or Eurozone, but certainly I could not see how your proposed 'endgame' could come about. And apparantly neither do you.

That is false. You were asked specifically for relevant information and instead regurgitated more irrelevant information.

No one has called the subject of this thread tiresome. I called the use of a disinformation tactic (FUD) in this, or any, discussion tiresome. The discussion is interesting, FUD in lieu of a relevant argument is not - it's just noise.

Thanks for your follow up email. You are right, and I used the definition of "FUD" which you gave in your earlier post, as it was a term with which I was not familiar.

The Corinthian

analyst2 wrote: »

Thanks for your follow up email. You are right, and I used the definition of "FUD" which you gave in your earlier post, as it was a term with which I was not familiar.

I didn't give a definition to FUD in my earlier post; I simply explained what the acronym stood for. You attributed your own definition for what that meant.

Any chance you're actually going to fill in the details of 'step 2' from my previous post or would you prefer to stick to your present strategy?

analyst2

The capacity of the financial authorities to take additional measures has been severely restricted by the ruling of the German Constitutional Court. Even if a catastrophe can be avoided, which is far from certain, the pressure to reduce deficits will force the eurozone into prolonged recession. This will have incalculable political consequences. The euro crisis could endanger the political cohesion of the European Union and, as we have already seen, the old previously unshakeable French/German alliance is already showing signs of pressure.

The Corinthian

analyst2 wrote: »

The capacity of the financial authorities to take additional measures has been severely restricted by the ruling of the German Constitutional Court. Even if a catastrophe can be avoided, which is far from certain, the pressure to reduce deficits will force the eurozone into prolonged recession. This will have incalculable political consequences. The euro crisis could endanger the political cohesion of the European Union and, as we have already seen, the old previously unshakeable French/German alliance is already showing signs of pressure.

You're still making huge jumps in your logic; "incalculable political consequences" is a purely subjective and vague assessment by you, backed up by absolutely description of what these may be, let alone precedents demonstrating that they may indeed occur.

Basically all you're now suggesting is:

1. Bad things are happening in the EU/Eurozone
2. Incalculable political consequences occur
3. The EU/Eurozone collapses

Which is not really much of an improvement on 'something happens', is it?

Care to try again, or would you like to concede that you don't actually have any analysis for us and that in reality this is wishful thinking on your part, as was suggested earlier?

analyst2

The Corinthian wrote: »

You're still making huge jumps in your logic; "incalculable political consequences" is a purely subjective and vague assessment by you, backed up by absolutely description of what these may be, let alone precedents demonstrating that they may indeed occur.

Basically all you're now suggesting is:

1. Bad things are happening in the EU/Eurozone
2. Incalculable political consequences occur
3. The EU/Eurozone collapses

Which is not really much of an improvement on 'something happens', is it?

Care to try again, or would you like to concede that you don't actually have any analysis for us and that in reality this is wishful thinking on your part, as was suggested earlier?

"incalculable political consequences" are, by definition, uncertain.

I have to be honest when I say I have found your posts here aggressive, partonising and unfriendly. I've shown them to everyone else in the office for a second opinion and all agree.

I come here to exchange views with others and am not interested in playing some game with someone who comes over as an internet warrior, and seems more interested in scoring points and trying to ramp up the tempo of the discussion. So thanks for your replies so far, and please be aware that I am unlikely to continue politely replying to your posts while they continue in the same tone.

The Corinthian

analyst2 wrote: »

"incalculable political consequences" are, by definition, uncertain.

They're a lot more than uncertain, they're completely vague and abstract. By your same logic, one could argue that crisis could have "incalculable political consequences" that instead lead to a rapid federalization of Europe and because these 'consequences' are completely undefined that view would be as correct, or rather flawed, as your own.

Don't get me wrong. I'm equally as sceptical of those who wistfully claim that Europe will with certainty become a single national entity, but never really explain how this would be possible in anything but vague and abstract terms. And so it is important that it is not you or your views that I am challenging, but how you arrived at them.

I have to be honest when I say I have found your posts here aggressive, partonising and unfriendly. I've shown them to everyone else in the office for a second opinion and all agree.

I come here to exchange views with others and am not interested in playing some game with someone who comes over as an internet warrior, and seems more interested in scoring points and trying to ramp up the tempo of the discussion. So thanks for your replies so far, and please be aware that I am unlikely to continue politely replying to your posts while they continue in the same tone.

You are exchanging views and some of those being exchanged challenge yours. That's a large part of these discussions; our views should be challenged, because if they are and we can defend them, then they are worth something. Otherwise we should reconsider them.

So can you genuinely tell me how you have worked out that the EU "end game" has begun? I'd rather that than you turn to ad hominem attacks (which your last post was largely composed of) as a means to avoid doing so.

Scofflaw

It's true - all you're being asked to do here is lay out a road map from the points you refer to above (Greek unemployment etc) to the breakup of the EU. Otherwise you are, as he says, basically just going:

1. bad things in EU
2. ...
3. breakup of EU

A little more than that is required to justify your 'end game' claim, I'm afraid.

cordially,
Scofflaw

analyst2

The Corinthian wrote: »

You are exchanging views and some of those being exchanged challenge yours. That's a large part of these discussions; our views should be challenged, because if they are and we can defend them, then they are worth something. Otherwise we should reconsider them.

Its precisely because things are so volatile that anything can happen, and it is entirely possible I will be proved completely wrong.

I suppose, for me, I don't see discussion as defending or, by implication, attacking. As we are both speculating, neither of us can know for certain what will happen. So to try to "prove" I am right, or wrong, or you are right or wrong, is not possible. As IO am pro EU, I am not a wishful thinker wanting it to turn out the way I want, but fear it may not turn out the way I want.

Scofflaw

analyst2 wrote: »

Its precisely because things are so volatile that anything can happen, and it is entirely possible I will be proved completely wrong.

I suppose, for me, I don't see discussion as defending or, by implication, attacking. As we are both speculating, neither of us can know for certain what will happen. So to try to "prove" I am right, or wrong, or you are right or wrong, is not possible. As IO am pro EU, I am not a wishful thinker wanting it to turn out the way I want, but fear it may not turn out the way I want.

But - politely - what you're saying there is that you don't have any proof of what you're saying, indeed that you don't believe it's even possible to prove what you're saying, which is hardly much of a sound basis for an analysis.

This is a discussion forum, and there's no real way of discussing anything, even speculation, if people won't, or can't support their speculations.

I'm loath to put on the mod hat here, because you're stating a reasonably widely held feeling, but if you've got no way of showing that the EU is in "end game", then the bare unsupported statement isn't worth discussing, and doesn't really bear repeating.

cordially,
Scofflaw

The Corinthian

analyst2 wrote: »

Its precisely because things are so volatile that anything can happen, and it is entirely possible I will be proved completely wrong.

Anything can happen only if you choose to include the World's gold reserves spontaneously turning to lead. Otherwise we're actually considering probably or reasonably possible scenarios - and for that you need to have a cogent argument.

I suppose, for me, I don't see discussion as defending or, by implication, attacking. As we are both speculating, neither of us can know for certain what will happen. So to try to "prove" I am right, or wrong, or you are right or wrong, is not possible.

Again, I am not challenging if you are wrong or right. I am challenging how you arrived at your conclusion. I cannot tell if your conclusion (which may or may not come to pass) is correct, however I can say that how you came to it is certainly incorrect.

So can you support your earlier "end game" claim? Do you have an actual argument to do so?

analyst2

Scofflaw wrote: »

But - politely - what you're saying there is that you don't have any proof of what you're saying, indeed that you don't believe it's even possible to prove what you're saying, which is hardly much of a sound basis for an analysis.

This is a discussion forum, and there's no real way of discussing anything, even speculation, if people won't, or can't support their speculations.

I'm loath to put on the mod hat here, because you're stating a reasonably widely held feeling, but if you've got no way of showing that the EU is in "end game", then the bare unsupported statement isn't worth discussing, and doesn't really bear repeating.

cordially,
Scofflaw

How can anyone prove what hasn't happened yet? None of us can prove what will happen in the future.

Scofflaw

analyst2 wrote: »

How can anyone prove what hasn't happened yet? None of us can prove what will happen in the future.

And nobody sensible would ask them to do so. What they would ask, if someone makes a prediction, is how they see it coming to pass.

I can say "well, personally I think the EU will be strengthened by the current crisis", but it would be perfectly reasonable for you to then ask me how on earth I think that's going to be the outcome. And if I didn't have any way of saying how we get there from here, I wouldn't bother saying it, because I might equally well have said that the EU would turn into a rather fetching lampshade.

Just saying "well, that's what I think, I'm not going to attempt to justify it or show you why I think it" is for polls, not discussions. And you may have noticed we don't run polls.

cordially,
Scofflaw

analyst2

Scofflaw wrote: »

And nobody sensible would ask them to do so. What they would ask, if someone makes a prediction, is how they see it coming to pass.

I can say "well, personally I think the EU will be strengthened by the current crisis", but it would be perfectly reasonable for you to then ask me how on earth I think that's going to be the outcome. And if I didn't have any way of saying how we get there from here, I wouldn't bother saying it, because I might equally well have said that the EU would turn into a rather fetching lampshade.

Just saying "well, that's what I think, I'm not going to attempt to justify it or show you why I think it" is for polls, not discussions. And you may have noticed we don't run polls.

cordially,
Scofflaw

I agree, which is why I posted this

analyst2 wrote: »

Evidence?

Greece has unemployment approaching 25%, Athens is burning as Greeks revolt, the economy has shrunk by over 20%, and over 200000 greek businesses are bankrupted by the crises.

France ( whose banks will teeter and fall if Greece defaults) in trying to pressure Germany to keep bailing them ( and everyone else ) out), but Germany's finance minister says it is throwing good money after bad into a "bottomless pit" and the German people will not stand for more of their money being spent in this way.

One of the most remarkable, and crucial, features of the EU has been, to date, a willingness to sacrifice national interest to the common good, and to see the National interests of both France and Germany once more to the fore, at the expense of the common good of the EU, must give us all cause for concern.

Ask yourself this;

On a scale of 1 to 100, where would you put the chance of Greece defaulting in the next year?

On a scale of 1 to 100, where would you put the chance of Ireland defaulting within the next 3 years?

Ditto for, Spain, Portugal and Italy.

On a scale of 1 to 100, where would you put the chance of France in very serious trouble if any of its banks are undermined or bankrupted by any of these possible defaults?

No one can predict with any certainty, but to assert that there is no or little threat to (1) the Euro and (2) the EU seems to be a brave prediction, and let's hope you ar right and the Euro, and the EU continues unimpeded, and that National interest gives way once again to the common good.

and this

analyst2 wrote: »

The capacity of the financial authorities to take additional measures has been severely restricted by the ruling of the German Constitutional Court. Even if a catastrophe can be avoided, which is far from certain, the pressure to reduce deficits will force the eurozone into prolonged recession. This will have incalculable political consequences. The euro crisis could endanger the political cohesion of the European Union and, as we have already seen, the old previously unshakeable French/German alliance is already showing signs of pressure.

Scofflaw

analyst2 wrote: »

I agree, which is why I posted this



and this

...and I've described those points as step 1 of 3. That is, they are observations on what's happening. They don't predict anything on their own - you need to map out how we go from those observations to your conclusion.

There is a form of argument that involves taking incontrovertible or generally agreed facts, stating that one's conclusion based on those facts is "x", and if anyone argues with the conclusion, inviting them to show where the facts are wrong. It's not a valid form of argument.

Here, I'm not arguing that Greece doesn't have high unemployment, or a massive debt, nor that there isn't a good chance of a Greek default (I'd put an Irish default around 10-20 on your 1-100), nor that the German constitutional court hasn't made it more difficult for financial authorities to act. Nor am I arguing that there may not be a European recession - which would hardly be a first.

What I'm asking is how you get from those facts to the breakup of the EU.

cordially,
Scofflaw