United States of Europe, or else disintegration of the Euro

Dave! · 21-06-2012 09:45AM #1

I was listening to the Last Word yesterday evening, and the two guests he had on pretty much agreed that at this point there is really no "middle ground" that is at all likely anymore, e.g. Euro bonds. That effectively the only options are: some kind of US of E, or the disintegration of the Euro (with the possibility of a handful of countries staying within it).

One of them (wish I could remember their names) suggested that, being on the periphery, it wouldn't be in Ireland's best interest to sign up for a USE, that reverting to the Punt would be preferable.

But others have said that going back to the Punt would destroy everyone's savings, and have other disastrous effects on the economy. It might be better in the long run, but in the short- to medium-term it would be chaos.

Frankly it made for some rather bleak listening! Are those the only realistic options available? And a USE is unlikely to come about for a long time if at all, so is the disintegration of the Euro inevitable (as most commentators seem to be saying)?

The day after we go back to the Punt, what will the economy look like? What will be the direct and immediate consequences of it?

And then what will the economy be like 3 or 4 years later?

Which jobs will be most in jeopardy if this happens?

Not being too clued up on economics, I can't exactly offer an informed opinion here!

Cheers

bbam · 21-06-2012 10:03AM

I can appreciate that being a small island nation on the very edge of europe we probably wouldn't do too well out of an USE. We don't have much to bring to the table so would be marginalised at best and most probably seen as a net loss to the whole thing and so excluded..

The only two things I see that we could bring to the table as bargaining chips are...
-Multinationals, we do seem to have a good concentration of them at present. there may be an interest in bringing them in under the umbrella of an USE, probably for tax take if nothing else.. however with companise like Intel being registered in the Camen Islands I'd think the net benifet would be minimal..
-Green Power, there is no doubt we are sitting on a huge resource of wind and tidal power which surely would have some currency if we were in negotiations.. I'm not sure we have the "cop on" to develop this for ourselves and fear it will be sold off to foriegn interests at little gain to the state..

Thats it... is it enough and do we as a nation have an appetite to get deeper into Europe.. would they want us??

Scofflaw · 21-06-2012 11:14AM

To be honest, I don't see either of those outcomes as particularly likely, and I think saying they're really the only two possibilities most likely reflects a lack of imagination on the part of the panelists.

What I think we're likely to see over the next couple of years is certainly a deepening of integration - most particularly in the banking sector - but a USE? In what sense? Hardly anyone is looking for a federal Europe at this stage, which makes it an unlikely outcome.

Euro breakup? More likely, I would say, but also unlikely. The euro isn't a physical thing, but a political and legal construct. What would break it apart, as far as I can see, would be unwillingness in euro countries to tolerate the euro's restrictions on national responses to the crisis - a decision that the negative consequences of going it alone are smaller than the negative consequences of those restrictions.

Currently, the country furthest along the road in the direction of national disaster is Greece, and Greece is apparently entirely unwilling to contemplate leaving the euro - while those at the other end of the scale, such as Germany, for whom the impacts of going it alone would be much smaller (and may even be positive), have no pressing need to contemplate leaving.

I think this is likely to be another case where lots of pundits say "it has to be A or B, there are no other options", the EU Member States negotiate a smorgasbord of options A-Z, everyone says "that's hardly impressive", and then settles down to working with it.

Of course, even a banking union will be hailed as a USE in some quarters, and there's a grey area between a confederation with a partially common fiscal core and a federation.

cordially,
Scofflaw

KINGVictor · 21-06-2012 09:59PM

Scofflaw wrote: »

To be honest, I don't see either of those outcomes as particularly likely, and I think saying they're really the only two possibilities most likely reflects a lack of imagination on the part of the panelists.

What I think we're likely to see over the next couple of years is certainly a deepening of integration - most particularly in the banking sector - but a USE? In what sense? Hardly anyone is looking for a federal Europe at this stage, which makes it an unlikely outcome.

Euro breakup? More likely, I would say, but also unlikely. The euro isn't a physical thing, but a political and legal construct. What would break it apart, as far as I can see, would be unwillingness in euro countries to tolerate the euro's restrictions on national responses to the crisis - a decision that the negative consequences of going it alone are smaller than the negative consequences of those restrictions.

Currently, the country furthest along the road in the direction of national disaster is Greece, and Greece is apparently entirely unwilling to contemplate leaving the euro - while those at the other end of the scale, such as Germany, for whom the impacts of going it alone would be much smaller (and may even be positive), have no pressing need to contemplate leaving.

I think this is likely to be another case where lots of pundits say "it has to be A or B, there are no other options", the EU Member States negotiate a smorgasbord of options A-Z, everyone says "that's hardly impressive", and then settles down to working with it.

Of course, even a banking union will be hailed as a USE in some quarters, and there's a grey area between a confederation with a partially common fiscal core and a federation.

cordially,
Scofflaw

Excellent point Scofflaw.

But Angela Merkel and other German ministers- notably Wolfgang Schäuble and Westerwelle have been clamouring for a political union and it seems as if this is what the markets also want because it will lead to a "proper" OCA a la the USA or the UK where they have a federalised ownership of debt.

My question is what is the difference between Merkel's hypothesis of a political union and a USE which you deem as unlikely?

Scofflaw · 22-06-2012 02:44AM

KINGVictor wrote: »

Excellent point Scofflaw.

But Angela Merkel and other German ministers- notably Wolfgang Schäuble and Westerwelle have been clamouring for a political union and it seems as if this is what the markets also want because it will lead to a "proper" OCA a la the USA or the UK where they have a federalised ownership of debt.

My question is what is the difference between Merkel's hypothesis of a political union and a USE which you deem as unlikely?

I guess the brief and blunt answer is "everyone else"- or, to put it another way, the USE that Merkel has put forward is the USE I feel is unlikely,and I feel it's unlikely because the other countries do not want it, even in exchange for German financial muscle. Quite possibly Germany doesn't want it either, and quite possibly even Merkel doesn't want it, but has put it on the table as the price of what's being asked of Germany currently, expecting that price to be too high.

Or, yes, there's an outside risk that Merkel has looked at the various impasses, and said "all right, let's either do this or not", and is willing to be the German Chancellor who led Germany into a eurozone USE. But I don't see any real willingness to go that route from, say, Italy and Spain, let alone stretching it beyond the eurozone to places like the UK, and so I expect a series of technical integration measures stopping well short of anything resembling a USE.

cordially,
Scofflaw

bbam · 22-06-2012 09:15AM

Scofflaw wrote: »

I expect a series of technical integration measures stopping well short of anything resembling a USE.

I presume your thinking more harmonised fiscal policies and control being led from a central EU body.. if so how would we ensure we get a fair shout at the table?

Would it even be possible given the diverse nature of the EU, how could Ireland, Germany and Portugal for example, have a one shoe fits all financial policy considernig the vast gulf in the difference in the countries, or would we see a centralised body meating out "appropriate" financial rules for each nation to follow...

kennyb3 · 22-06-2012 11:28AM

I think a key point is that being missed is that any USE is going to be a long term issue, Dr Merkel probably wont even be German Chancellor after October 2013.

I'd go along with the continued path down the integration route discussed by Scofflaw but again stopping well short of a USE.

Dave! · 22-06-2012 11:41AM

But the main reason for a USE would be harmonised fiscal policy, so if that's the plan without a USE don't we have the same problem? Ireland would still surely be at a disadvantage as such a small country.

Or would the distinction be that a USE would involve policy being set/imposed directly by Germany, whereas the route we're going would be more a series of new treaties which we would opt into as we go along? If that's the case, what happens if countries opt into certain ones, and opt out of others? Sounds pretty messy, unlikely to achieve the goal unless everyone moves along together. So would it be more likely that we'd see the 'core' European countries form this union, and the rest of us stay within the Euro and fcuk it up for everyone else?!

swampgas · 22-06-2012 11:54AM

Dave! wrote: »

But the main reason for a USE would be harmonised fiscal policy, so if that's the plan without a USE don't we have the same problem? Ireland would still surely be at a disadvantage as such a small country.

Ireland is a small country, and that will always be a factor. The question is whether being a small country outside the EU/Euro is better or worse than being a small country inside the EU/Euro.

As far as I can see, Ireland would be much worse off outside the EU, regardless of the fact that we are a relatively minor EU player.

Scofflaw · 22-06-2012 01:35PM

Dave! wrote: »

But the main reason for a USE would be harmonised fiscal policy, so if that's the plan without a USE don't we have the same problem? Ireland would still surely be at a disadvantage as such a small country.

Or would the distinction be that a USE would involve policy being set/imposed directly by Germany, whereas the route we're going would be more a series of new treaties which we would opt into as we go along? If that's the case, what happens if countries opt into certain ones, and opt out of others? Sounds pretty messy, unlikely to achieve the goal unless everyone moves along together. So would it be more likely that we'd see the 'core' European countries form this union, and the rest of us stay within the Euro and fcuk it up for everyone else?!

I think that's very definite at this stage - there will probably be a much more tightly integrated group at the core, and then probably quite a diversity of other levels of integration outside that. Obviously, that presents the usual challenge for every country as to the level of integration they prefer, and we can expect to see the usual arguments within countries as to what's best.

I don't think any such USE would involve policy being "dictated by Germany", because I think that would frankly be intolerable for every other country - Germany's current clout causes a lot of grumbling, and that's just the de facto power of calling the tune by virtue of paying the piper. Nobody would want to set the current situation in stone - not even, I think, Germany. After all, Germany is not currently using its clout to control other countries, despite the hysteria - it is using it to set a price on use of its economic strength, and the price is that real reforms are applied rather than Germany's money being used for quick fixes, which I find it hard to find outrageous. A quick fix for Ireland would allow us to...well, to what, exactly? To reinflate our property bubble? To go on being uncompetitive?

As to what's best for Ireland in the upcoming integration drive...I think one has to recognise, first and foremost, that Ireland is, as swampgas says, a small country. It will continue to be a small country whether it's inside the tent or outside it, and one which is more affected by Europe than affecting Europe. So I think we have quite a big decision to make, because it's very much optional for us - we could decide to be part of the core from the earliest possible moment, recognising that we'll have small de jure clout and aiming to embed ourselves in the system, understand it, and use it as far as possible to our advantage, or we could decide to do whatever the UK does, or we could dither around for a while before opting for one of those paths.

The first option is the traditional choice of Irish governments, so it's what I would expect to see being pushed - but ceding powers to Brussels is obviously going to require referendums. Given that Merkel, who for the moment we will consider the driving force for this integration push, is calling for gradual and step by step integration, that gives us the delightful possibility of a rolling series of referendums, something which has already prompted calls for things to be done differently:

The process, as Merkel has consistently stressed, will be gradual. The introduction of each measure of fiscal and banking co-ordination will establish the necessary trust and confidence to move to the next stage.

There will be no single summit that establishes a fiscal and banking union. It is more likely that, given Germany’s concerns, over the next couple of years a series of measures will be proposed. Each measure will build on the previous one, leading eventually to the degree of mutual co-ordination and supervision that gives Germany the confidence to place its financial resources on the table as a guarantee for its euro partners.

Such a model presents a particular difficulty for Ireland. In the view of the current Attorney General, it seems that a referendum is required for each and every European treaty change.

In any event, the cumulative impact of the series of measures will be constitutionally significant enough to warrant a referendum. We therefore face the prospect of an endless series of referendums as voters are called to the polls time and again to ratify each and every separate change to the European treaties.

A never-ending series of referendum campaigns would risk paralysing political life in this country.

Furthermore, the more frequently referendums are held, the lower the turnout tends to be. There is a very significant risk that, in the context of low turnouts, referendums will be decided by crankish and extremist elements whose supporters tend to be more motivated about going to the polls.

To avoid this scenario, the Government will have to adopt a different approach from that followed in all European votes to date. Up to now, constitutional amendments on European matters have been phrased to bring the Constitution in line with a particular treaty that has already been signed.

If we are to avoid an endless series of referendums in the coming years, we will have to give the Government a degree of authority to agree to treaty changes that have not yet been agreed.

http://www.irishtimes.com/newspaper/opinion/2012/0622/1224318456353.html

cordially,
Scofflaw

Dave! · 22-06-2012 01:56PM

hmmmm... But the move towards integration is presumably intended to stabilise the currency as well as the Eurozone economies, so if other countries are permitted to opt in or out to varying degrees, doesn't that still mean that those who are on the periphery are still capable of damaging the currency? How can the 'core' countries insulate themselves from what goes on in the more marginal countries if they share a currency?

Scofflaw · 22-06-2012 02:53PM

Dave! wrote: »

hmmmm... But the move towards integration is presumably intended to stabilise the currency as well as the Eurozone economies, so if other countries are permitted to opt in or out to varying degrees, doesn't that still mean that those who are on the periphery are still capable of damaging the currency? How can the 'core' countries insulate themselves from what goes on in the more marginal countries if they share a currency?

In the same way Germany currently insulates itself from Greece - by being seen as the solution rather than part of the problem. I think the idea there would be that the core would be mutually supportive to a larger degree than is currently the case, while the peripherally involved countries wouldn't benefit from the mutual stabilisation mechanisms. To me, that makes it look like the peripheral countries are vulnerable in a crisis just as they are in this one, while the core countries are much less vulnerable by virtue of their size and mutual support - and, vitally, are seen to be so, which reduces the contagion of uncertainty - which means that any future crisis will present peripherals with a choice between continued vulnerability or moving into the core.

cordially,
Scofflaw

View · 22-06-2012 03:09PM

Scofflaw wrote: »

I guess the brief and blunt answer is "everyone else"- or, to put it another way, the USE that Merkel has put forward is the USE I feel is unlikely,and I feel it's unlikely because the other countries do not want it, even in exchange for German financial muscle.

Merkel hasn't advocated a USE though - indeed she is hostile to one of the more obvious "federalist" measures being proposed, namely Eurobonds.

Rather, to my mind, German politicians seem prepared to discuss the obvious point which is increasing economic union needs to be matched by increasing political control of such a union (i.e. a "political" union of some sorts).

I would say this seems to have been driven by judgments from Karlsruhe where the courts have laid down markers to that effect. And, my guess is that means a greater role for the European Parliament in due course.

Scofflaw · 23-06-2012 01:58AM

View wrote: »

Merkel hasn't advocated a USE though - indeed she is hostile to one of the more obvious "federalist" measures being proposed, namely Eurobonds.

Rather, to my mind, German politicians seem prepared to discuss the obvious point which is increasing economic union needs to be matched by increasing political control of such a union (i.e. a "political" union of some sorts).

I'm not sure I'd entirely agree - Eurobonds are something I'd consider a confederal measure rather than a federal one. That is, they provide a joint debt issuing mechanism without a corresponding degree of democratic supervision - the supervision mechanism is multilateral rather than federal, and thus rather more like using the ESM as a European version of the NTMA, if you see what I mean.

View wrote: »

I would say this seems to have been driven by judgments from Karlsruhe where the courts have laid down markers to that effect. And, my guess is that means a greater role for the European Parliament in due course.

Which makes sense. Whatever happens, the European political level is going to become increasingly important over the next few years - whether our press and political institutions adapt well remains to be seen.

cordially,
Scofflaw

St Mikael · 23-06-2012 11:11PM

Scofflaw wrote: »

To be honest, I don't see either of those outcomes as particularly likely, and I think saying they're really the only two possibilities most likely reflects a lack of imagination on the part of the panelists.

What I think we're likely to see over the next couple of years is certainly a deepening of integration - most particularly in the banking sector - but a USE? In what sense? Hardly anyone is looking for a federal Europe at this stage, which makes it an unlikely outcome.

...

I think this is likely to be another case where lots of pundits say "it has to be A or B, there are no other options", the EU Member States negotiate a smorgasbord of options A-Z, everyone says "that's hardly impressive", and then settles down to working with it.

Of course, even a banking union will be hailed as a USE in some quarters, and there's a grey area between a confederation with a partially common fiscal core and a federation.

I think you may be underestimating the scale of the problem that Europe has on its hands.

Granted, nobody particularly wants a 'USE'. The periphery certainly doesn't, as it would effectively amount to a cessation of power to the core/Germany. And nor do the Germans want it, since they would be looking, ultimately, at an arrangement that involves perpetual transfers of wealth out of the country. Undoubtedly the EU will be forced to take some steps in this direction - such as a banking union (whatever that means), debt mutualisation, probably some sort of coordinated capital investment fund - and hope that it will be enough to fix things.

But even if all that is enough to prevent the financial system from imploding, the real crux of the problem is unemployment, and only sustained economic growth can fix that. Tied to the same currency, there is no way the PIIGS can compete with German exports, and given the massive buildup of private sector debt, households are not going to be spending any time soon, and therefore businesses aren't going to be hiring any time soon. The solution has to be fiscal, and obviously the PIIGS governments can't afford this solution. So either the Germans pay directly (fiscal union), or they mutualise the entire currency bloc's debt, drive down bond yields, and allow the PIIGS to borrow and spend themselves (which is effectively the same thing).

If this does not happen, the unemployment problem will never go away (or, if it does, it will take years and years), and the entire European economy will remain in semi-permanent stagnation.

This is not politically tenable. Voters might have been willing to elect austerity-minded governments in the past, having been told that a few years of penny-pinching would be enough to see out the crisis, but eventually someone will vote for a Syriza, and once that happens... well, I think the 'choice' being talked about by these commentators is a pretty fair one, even if Europe probably has a bit more time to make it than the likes of Krugman/Roubini seem to allow for.

St Mikael · 24-06-2012 12:01AM

Dave! wrote: »

The day after we go back to the Punt, what will the economy look like? What will be the direct and immediate consequences of it?

And then what will the economy be like 3 or 4 years later?

Which jobs will be most in jeopardy if this happens?

Not being too clued up on economics, I can't exactly offer an informed opinion here!

This is the trillion-dollar question.

In theory, a re-introduction of the punt would potentially be a good thing for the economy. An Irish currency would certainly be a lot cheaper than the euro, give us the opportunity to become competitive again, and in 3-4 years we could be exporting ourselves back to health.

In the short term, obviously leaving the euro would be hugely destabilising. A currency devaluation would make imported stuff more expensive, so making everyone in the country relatively poorer. Plus there's obviously the problem of government debt, and realistically we would be left with no option but to default (and being locked out of bond markets for a few years). So we'd be looking at a pretty sharp recession.

On balance, a 'default+devaluation' option would probably be worth the short-term pain, as our current economic trajectory is looking pretty bleak. Argentina and Iceland are two examples of countries which have gone this route, and done reasonably well...

...EXCEPT, we have one additional problem, could we remain inside the EU if we defaulted on our debt and unilaterally left the eurozone? It's pretty unlikely, as we would probably have to implement some sort of capital controls to keep our banking system afloat, which effectively makes free trade impossible. And if we leave the EU, we are pretty scuppered.

I think there is still an argument that it would be worth the risk to leave the euro, which was with hindsight a terrible idea, but from a selfish point of view I would rather let Greece or Portugal be the guinea pigs.

pseudofax · 24-06-2012 12:58AM

Ireland isn't even a country anymore, it's a region owned entirely by Germany/IMF/EU. You are not a citizen of Ireland my friends, you are a subject of the Soviet Republics of the great EUSSR:cool: The Irish are quick to berate the British for their "independence" yet are willing to hand it over to faceless unelected puppet governments. Irony at it's height.

meglome · 24-06-2012 02:20AM

pseudofax wrote: »

Ireland isn't even a country anymore, it's a region owned entirely by Germany/IMF/EU. You are not a citizen of Ireland my friends, you are a subject of the Soviet Republics of the great EUSSR:cool: The Irish are quick to berate the British for their "independence" yet are willing to hand it over to faceless unelected puppet governments. Irony at it's height.

Why oh why do people feel the need to compare people who were forced at gunpoint to join the USSR with Ireland which has had democratic votes at every turn. Your post is nonsense.

pseudofax · 24-06-2012 05:03AM

meglome wrote: »

Why oh why do people feel the need to compare people who were forced at gunpoint to join the USSR with Ireland which has had democratic votes at every turn. Your post is nonsense.

Both systems are quite similar, but the EU was designed as a trap to lure prospective voters in. They were too clever to use bullets like the last time around. Every Irish person could not praise the EU enough 6 years and perhaps even longer ago.

Once Germany slowly converted our currency to monopoly money and moved power away from our own national parliment, the stage was set. The Eurozone has no built in escape mechanism, it was designed to entrap countries within from the outset. Like a Venus flytrap.

The United Kingdom, Sweden, Norway and Denmark are examples of the very few countries that realised what accession to the Eurozone would lead to - evenutal Bankruptcy. Germany intended from the outset to have us by the balls in their vice.

AlmightyCushion · 24-06-2012 05:24AM

pseudofax wrote: »

The United Kingdom, Sweden, Norway and Denmark are examples of the very few countries that realised what accession to the Eurozone would lead to - evenutal Bankruptcy. Germany intended from the outset to have us by the balls in their vice.

What does Germany gain from making other eurozone countries poor. 40% of Germany's exports are to the eurozone, if they make the eurozone countries bankrupt and poor there be less people buying audi cars and miele washing machines. A rich, prosperous eurozone is good for German exports and their economy whereas a poor, bankrupt eurozone will kill the German economy.

amacca · 24-06-2012 07:51AM

pseudofax wrote: »

Every Irish person could not praise the EU enough 6 years and perhaps even longer ago.

I wasn't, I'm Irish, just saying.

FreudianSlippers · 24-06-2012 01:28PM

meglome wrote: »

Why oh why do people feel the need to compare people who were forced at gunpoint to join the USSR with Ireland which has had democratic votes at every turn. Your post is nonsense.

In fact, I'd add to this that the proposed closer political union would look much more like the USA than the USSR. With each Member State functioning autonomously under a general "federal" framework of rules; each individual State setting their own tax and budgetary agenda with, perhaps, a low federal/European tax paid as well.

Pundits saying that we would lose control of our budget and tax matters are completely ignoring or ignorant to the way in which the USA works and the likelihood that it would also function that way under a tighter EU. I should point out, though, that I doubt it will be an EU level issue as I doubt the UK will want to be involved; so it will likely be a tighter Eurozone.

meglome · 24-06-2012 04:07PM

pseudofax wrote: »

Both systems are quite similar, but the EU was designed as a trap to lure prospective voters in. They were too clever to use bullets like the last time around. Every Irish person could not praise the EU enough 6 years and perhaps even longer ago.

They are not quite similar. Apples and Oranges may both be fruit but they are quite different. I'm not sure how you can 'lure prospective voters in'. If there are bad results from what people voted for they can always vote for something else. Just like Fianna Fail getting a drubbing in the last election. What bad things have the EU lured us into?

pseudofax wrote: »

Once Germany slowly converted our currency to monopoly money and moved power away from our own national parliment, the stage was set. The Eurozone has no built in escape mechanism, it was designed to entrap countries within from the outset. Like a Venus flytrap.

As was said above as an export nation it's in Germany's interests for the whole of the EU to be very successful. They want to sell us more of their goods. Your point makes no sense.

pseudofax wrote: »

The United Kingdom, Sweden, Norway and Denmark are examples of the very few countries that realised what accession to the Eurozone would lead to - evenutal Bankruptcy. Germany intended from the outset to have us by the balls in their vice.

Some Eurozone countries borrowed big and some didn't. Many countries outside the Eurozone borrowed big and many didn't. The only pattern is how well or poorly individual countries were run. (Norway is not even in the EU btw, might be all that oil). And again Germany needs to sell us their goods, having us 'by the balls' financially doesn't help that.

Your conspiracy falls down with even basic analysis.

Finnbar01 · 24-06-2012 04:15PM

A United States of Europe is a no no. The Germans will not have it.

Besides, more centralisation is a very bad thing.

The political project that we call the euro is over or at least its coming to an end.

Just as us 'xenophobes and little englanders' said it would.

hatrickpatrick · 24-06-2012 05:28PM

I am 100% decided on leaving this country if Germany gets its way on ceding more sovereignty to the EU. This is supposed to be a democracy, and an independent republic.

FreudianSlippers · 24-06-2012 05:31PM

Finnbar01 wrote: »

A United States of Europe is a no no. The Germans will not have it.

Besides, more centralisation is a very bad thing.

The political project that we call the euro is over or at least its coming to an end.

Just as us 'xenophobes and little englanders' said it would.

There is no proof that the "project" is coming to an end at all. Just because you continue to say it over and over doesn't make it fact. Care to put forward any evidence to support your theory? :rolleyes:

Finnbar01 · 24-06-2012 05:47PM

FreudianSlippers wrote: »

There is no proof that the "project" is coming to an end at all. Just because you continue to say it over and over doesn't make it fact. Care to put forward any evidence to support your theory? :rolleyes:

If you haven't noticed, Spain is on the brink of a bail out followed by Italy.

These countries are too big to bail out.

The only way the euro can surive is complete political and fiscal unity. These cannot happen as:

1. They would require mutiple changes to existing treaties with resultant referenda across the EU.
2. They would require a 'super' treaty, again resulting in referenda across the EU.
3. It would take years in the planning. Years we don't have.
4. The Germans are severly constrained by their consitution and polls show that Germans do not want any more integration or power to go over to Brussels.

Over to you.

FreudianSlippers · 24-06-2012 06:25PM

Finnbar01 wrote: »

If you haven't noticed, Spain is on the brink of a bail out followed by Italy.

These countries are too big to bail out.

The only way the euro can surive is complete political and fiscal unity. These cannot happen as:

1. They would require mutiple changes to existing treaties with resultant referenda across the EU.
2. They would require a 'super' treaty, again resulting in referenda across the EU.
3. It would take years in the planning. Years we don't have.
4. The Germans are severly constrained by their consitution and polls show that Germans do not want any more integration or power to go over to Brussels.

Over to you.

There has already been significant resources in excess of €750bn made available to Spain and Italy. There is no basis to the proposition that any country in the EZ is "too big to bail out".

To address your points:

1 & 2. It would possibly require changes to treaties which may result in referenda in Ireland. All other EZ countries have legislative power to create constitutional amendments. There is also equal merit to the suggestion that further treaty changes are not necessary or even relevant to the EU as a whole, confining the issue to the Eurozone.
3. It would take a significant amount of time to create any consensus on how a completely fiscally and politically joined EU may look. It wouldn't require that level of effort though, to "federalise" the Eurozone akin to the USA and implement (first) a banking union.
4. The German system for Constitutional amendment is relatively straightforward and was done very quickly and easily with full cooperation during the Fiscal Compact Treaty.

hatrickpatrick · 24-06-2012 06:40PM

FreudianSlippers wrote: »

4. The German system for Constitutional amendment is relatively straightforward and was done very quickly and easily with full cooperation during the Fiscal Compact Treaty.

Do you think the people would accept it? Honestly? The backlash against EU centralization seems to be growing day by day, all you have to do is looks at newspapers and opinion pieces from around Europe to see that.

Finnbar01 · 24-06-2012 07:57PM

FreudianSlippers wrote: »

There has already been significant resources in excess of €750bn made available to Spain and Italy. There is no basis to the proposition that any country in the EZ is "too big to bail out".

To address your points:

1 & 2. It would possibly require changes to treaties which may result in referenda in Ireland. All other EZ countries have legislative power to create constitutional amendments. There is also equal merit to the suggestion that further treaty changes are not necessary or even relevant to the EU as a whole, confining the issue to the Eurozone.

No, we would need to have referenda not just in ireland but across the EU.

3. It would take a significant amount of time to create any consensus on how a completely fiscally and politically joined EU may look. It wouldn't require that level of effort though, to "federalise" the Eurozone akin to the USA and implement (first) a banking union.

We can't have a federal EU without fiscal and political unity. Those things will take years in the making.

4. The German system for Constitutional amendment is relatively straightforward and was done very quickly and easily with full cooperation during the Fiscal Compact Treaty.

AFAIK, the German consitution cannot not be easily changed like our own.

Also, you need to take into mind what needs to happen for a federalised EU. We would need to allow the Germans to control our budgets and adopt reforms at bequest of the Germans. Granted, we would get that through in Ireland. But in the likes of France, Greece and Italy? Forget it.

karlth · 25-06-2012 12:17AM

St Mikael wrote: »

On balance, a 'default+devaluation' option would probably be worth the short-term pain, as our current economic trajectory is looking pretty bleak. Argentina and Iceland are two examples of countries which have gone this route, and done reasonably well...

Correction: Iceland never defaulted. The government just didn't guarantee private bank debt.

United States of Europe, or else disintegration of the Euro

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