What, no thread on the big meeting going on?
To summarize what you already know: Thursday night, an agreement was drafted to have more rigid fiscal rules in the EU, in exchange of the ECB printing money.
Everyone seem to accept that, except European political giants UK and Hungary, who flat-out declined, according to early reports. Sweden and the Czech Republic asked for more time to ask their Parlaiment. (funny that your excuse is asking guys you usually tell which buttons to push).
Early morning today, Hungarian officials and the PM indicated that Hungary's answer was not a denial, but a definitive maybe. Latest reports seem to indicate we might change that to "probably".
But latest is that Bulgarians, Danes, and Poles also seem to be leaning toward stalling the thing, so a scenario where only the euro-zone members get to agree on having responsible fiscal policies seem closer at hand. Except of course that Ireland is a member of that and they are reportedly not too keen on having to feel responsible for their own budget.
What's your beef with Ireland? :blink:
Quote from: Sheilbh on December 09, 2011, 07:21:13 AM
What's your beef with Ireland? :blink:
If they refuse this deal, they will make my countryman, Sarkozy, angry. :mad:
Quote from: Tamas on December 09, 2011, 07:23:47 AM
Quote from: Sheilbh on December 09, 2011, 07:21:13 AM
What's your beef with Ireland? :blink:
If they refuse this deal, they will make my countryman, Sarkozy, angry. :mad:
Sarkozy wants to bully us into increasing our corporate tax rate.
Peace in our time! :contract:
:unsure:
So latest reports is that UK will stand alone as the sole naysayer, with the core yay-people accompanied by a crowd of indecisive ones.
In other words, I fail to see how this meeting is not a big letdown right now.
England out of Europe? Perhaps? :bowler:
Quote from: Tamas on December 09, 2011, 07:23:47 AM
Quote from: Sheilbh on December 09, 2011, 07:21:13 AM
What's your beef with Ireland? :blink:
If they refuse this deal, they will make my countryman, Sarkozy, angry. :mad:
You mean the head of the Austrian union of
gypsies Roma (http://www.kv-roma.at/FRAMES/RUDOLFSARKOEZI.HTM)?
Quote from: Tamas on December 09, 2011, 07:56:53 AM
In other words, I fail to see how this meeting is not a big letdown right now.
More importantly I'm not convinced by the deal.
The element requiring constitutional amendments limiting structural deficits to 0.5% is probably pretty robust. The timetable's to be set by the Commission in theory, but in practice amending 17 constitutions is just going to take a long time.
They're not introducing a new stronger Stability and Growth Pact. From what I can see the current one is being 'strengthened' - the Commission will produce proposals soon - but it doesn't look automatic but subject to QMV within the EZ. I don't see how that's any different from what we had before, if France and Germany and Italy run deficits there's nothing anyone can do about it, if Slovakia do they'll rain holy hell on them.
They're going to rapidly develop the ESM - but it still won't be ready over the next year, probably - so we're stuck with the EFSF. The ESM will operate on QMV at least. Of the EFSF's €500 billion current fund will be 're-assessed'.
On the upside it looks like they're going to follow IMF procedure on private sector involvement.
Combined with Draghi's comments yesterday, though, this simply doesn't look enough to me. It seems very much like a reheated Stability and Growth Pact.
Edit: Also does anyone else think that the proposal to give money to the IMF who will then put it in the EFSF/ESM just kind of looks like money laundering to avoid German voters noticing what their government's doing? :mellow:
Quote from: KRonn on December 09, 2011, 07:45:26 AM
Peace in our time! :contract:
:unsure:
The Sun's headline is 'Fleeced in our time'. That was before the news of the veto I imagine.
I'm seen some bad fiction start this way.
Time to re-read Cauldron.
Quote from: Sheilbh on December 09, 2011, 08:45:29 AM
Edit: Also does anyone else think that the proposal to give money to the IMF who will then put it in the EFSF/ESM just kind of looks like money laundering to avoid German voters noticing what their government's doing? :mellow:
yeah, I don't get stuff like that - are German voters really that ignorant to not notice that?
Quote from: Sheilbh on December 09, 2011, 08:45:29 AM
They're not introducing a new stronger Stability and Growth Pact. From what I can see the current one is being 'strengthened' - the Commission will produce proposals soon - but it doesn't look automatic but subject to QMV within the EZ. I don't see how that's any different from what we had before, if France and Germany and Italy run deficits there's nothing anyone can do about it, if Slovakia do they'll rain holy hell on them.
They're going to rapidly develop the ESM - but it still won't be ready over the next year, probably - so we're stuck with the EFSF. The ESM will operate on QMV at least. Of the EFSF's €500 billion current fund will be 're-assessed'.
On the upside it looks like they're going to follow IMF procedure on private sector involvement.
Combined with Draghi's comments yesterday, though, this simply doesn't look enough to me. It seems very much like a reheated Stability and Growth Pact.
Edit: Also does anyone else think that the proposal to give money to the IMF who will then put it in the EFSF/ESM just kind of looks like money laundering to avoid German voters noticing what their government's doing? :mellow:
You guys have a lot of nerve mocking American overuse of acronyms.
Quote from: Cerr on December 09, 2011, 07:26:17 AM
Sarkozy wants to bully us into increasing our corporate tax rate.
Is that necessary? I thought the problem in Ireland was not related to Soveriegn debt but to a bank crisis.
Quote from: Cerr on December 09, 2011, 07:26:17 AM
Quote from: Tamas on December 09, 2011, 07:23:47 AM
Quote from: Sheilbh on December 09, 2011, 07:21:13 AM
What's your beef with Ireland? :blink:
If they refuse this deal, they will make my countryman, Sarkozy, angry. :mad:
Sarkozy wants to bully us into increasing our corporate tax rate.
so? That's no problem.
As belgium shows, a high corporate taxrate (or just a taxrate) need not be an impediment. The 50 biggest companies in Belgium don't even pay 10% tax via all kinds of backdoors.
"The question about whether a referendum is necessary...that's a matter that a lot of countries have to consider" Irish PM on EU pact
trololol
Quote from: Sheilbh on December 09, 2011, 08:45:29 AM
Quote from: Tamas on December 09, 2011, 07:56:53 AM
In other words, I fail to see how this meeting is not a big letdown right now.
More importantly I'm not convinced by the deal.
The element requiring constitutional amendments limiting structural deficits to 0.5% is probably pretty robust. The timetable's to be set by the Commission in theory, but in practice amending 17 constitutions is just going to take a long time.
They're not introducing a new stronger Stability and Growth Pact. From what I can see the current one is being 'strengthened' - the Commission will produce proposals soon - but it doesn't look automatic but subject to QMV within the EZ. I don't see how that's any different from what we had before, if France and Germany and Italy run deficits there's nothing anyone can do about it, if Slovakia do they'll rain holy hell on them.
They're going to rapidly develop the ESM - but it still won't be ready over the next year, probably - so we're stuck with the EFSF. The ESM will operate on QMV at least. Of the EFSF's €500 billion current fund will be 're-assessed'.
On the upside it looks like they're going to follow IMF procedure on private sector involvement.
Combined with Draghi's comments yesterday, though, this simply doesn't look enough to me. It seems very much like a reheated Stability and Growth Pact.
Edit: Also does anyone else think that the proposal to give money to the IMF who will then put it in the EFSF/ESM just kind of looks like money laundering to avoid German voters noticing what their government's doing? :mellow:
It looks like just words to me :huh:
So European countries will limit their structural deficits to 0.5%? When and how? Or will they conform to this requirement in the same way that Belgian firms pay their corporation taxes?
Haven't you been watching the markets? Save Europe Day happens twice a week.
Quote from: Richard Hakluyt on December 09, 2011, 10:56:54 AMSo European countries will limit their structural deficits to 0.5%? When and how? Or will they conform to this requirement in the same way that Belgian firms pay their corporation taxes?
The FT's got the summit document on their website. It's 16 paragraphs long. Three of them are about planning biannual summits and one is congratulating Greece and Italy on their new governments. But this is the basis of the plan to end the crisis and the starting point of treaty negotiations.
Having read through it doesn't look sufficient or terribly plausible to me, though hopefully it is. In particular it looks like a shadow of what was being briefed earlier in the week.
Edit: On the 0.5% thing they basically say these should be legally binding in domestic law at constitutional level and that the Court of Justice will have jurisdiction to decide if they've accurately transposed that into domestic law. The actual implementation is at a national level, though the Commission will propose suggestions on how to do so and member states will converge their budget deficits to balance or surplus on a timetable proposed by the Commission.
If they break that then they get sent into 'Excessive Deficit Procedure' which is what's in the article that justifies the Stability and Growth Pact (and is being 'reinforced'). At that stage countries get a list of structural reforms to pass from the Commission and Council and their budgets will have to be supported by the Commission and Council. But there's no mention of automatic sanction or any sense of how this'll be managed by the Commission and Council. So it could be as ineffective as the SGP.
That survives, but will be 'reinforced'. Countries that break the rules of, I think, debt greater than 60% of GDP and a defict over 3% of GDP (this is presumably to allow for cyclical deficits, otherwise I don't see the point of the constitutional amendment route) will automatically be put in 'Excessive Deficit Procedure' unless there's a QMV vote (of the Eurozone) not to apply it. There'll be new treaty provision on this.
Then there's this bit (their highlighting):
QuoteWe will examine swiftly the new rules proposed by the Commission on 23 November 2011 on (i) the monitoring and assessment of draft budgetary plans and the correction of excessive deficit in euro area Member States and (ii) the strengthening of economic and budgetary surveillance of Member States experiencing or threatened with serious difficulties with respect to their financial stability in the euro area. We call on the Council and the European Parliament to rapidly examine these regulations so that they will be in force for the next budget cycle. Under this new legal framework, the Commission will in particular examine the key parameters of the fiscal stance in the draft budgetary plans and will, if needed, adopt an opinion on these plans. If the Commission identifies particularly serious non-compliance with the Stability and Growth Pact, it will request a revised draft budgetary plan.
That's followed by a paragraph that begins 'for the longer term...' and you realise that that there is apparently the immediate, short-term proposed solution. And then, if you're me at least, you begin to worry.
Edit: Given the build up to this summit - in terms of what we was getting briefed and the urgency that the markets seemed to be inspiring - this really seems like a 'crisis, what crisis?' moment for Sarko and Merkel especially.
Quote from: Valmy on December 09, 2011, 09:28:31 AM
Quote from: Cerr on December 09, 2011, 07:26:17 AM
Sarkozy wants to bully us into increasing our corporate tax rate.
Is that necessary? I thought the problem in Ireland was not related to Soveriegn debt but to a bank crisis.
Yeah it was the bank crisis but there was also an overreliance on income derived from the property market/bubble.
Sarkozy seems to be obsessed with our tax rate. Increasing it was one of the conditions he wanted to impose on us before we got an interest rate cut on the bailout loan.
Here's an article related to it:
http://www.irishtimes.com/newspaper/world/2011/1208/1224308743569.html
QuoteParis and Berlin revisit tax base plan
ARTHUR BEESLEY and RUADHÁN Mac CORMAIC
EURO ZONE DEBT CRISIS: FRANCE AND Germany have revived their clamour for the alignment of Europe's corporate tax systems, an initiative long resisted by Dublin.
In a joint proposal for a toughening of Europe's budget rules, the two countries called for the escalation of efforts to forge a common corporate tax base and other measures to deepen economic co-ordination among single currency countries.
The development comes months after the conclusion of a contentious stand-off between Taoiseach Enda Kenny and French president Nicolas Sarkozy over Ireland's business tax policy.
The push in a Franco-German paper for more economic co-ordination is one of the prime differences, with a parallel proposal produced by European Council president Herman Van Rompuy and European Commission chief José Manuel Barroso.
While many elements of the papers are similar, there are concerns in Dublin that Franco-German proposals on tax, pensions and labour market co-ordination go well beyond the scope of current EU law. In Irish circles, the view is that such moves require a "great deal more teasing out" before they could be pursued in any formal way.
As a difficult summit debate looms over EU treaty change with the consequent risk of an Irish referendum, the Government has been insisting it will not be making any concessions on corporate tax in talks on a new crisis response.
For many months Mr Sarkozy blocked an interest rate cut on Ireland's bailout by insisting that Mr Kenny dilute the Irish tax regime.
The dispute was finally settled in July when the rate was cut in return for Mr Kenny's pledge to constructively engage in discussions on adoption of a common consolidated corporate tax base.
The common tax base would not harmonise corporate tax rates but it would lessen scope for multinational investors to maximise the profit they record in Ireland to benefit more from the low 12.5 per cent Irish tax rate.
Although Mr Kenny had criticised the tax base plan as the creation of a "back door" to a harmonised tax rate, his agreement to engage constructively in talks on the base came not long after the initiation of draft legislation from the European Commission to create a common consolidated corporate tax base.
While the political negotiation on the legislation is likely to take many years before any part of it is enacted, France and Germany are pushing again for rapid progress.
They listed the corporate tax base as one of three priority areas earmarked to intensify development of Europe's single market.
To reinforce growth through competitiveness and convergence of economic policy, they called for the creation of a common judicial framework "to allow for faster progress in certain specific areas" such as "the convergence and harmonisation of the base for corporate tax and the introduction of a tax on financial transactions".
Also mentioned were financial regulation and labour market reforms. According to France and Germany, such initiatives must be compatible with the single market.
Paris and Berlin want automatic sanctions for countries that break EU budget rules, which would require a fully fledged amendment to the Lisbon Treaty.
"When the European Commission establishes that a member has a budget deficit exceeding 3 per cent of GDP, automatic sanctions will be triggered, unless a qualified majority of the euro group decides otherwise," they said.
The member state would be obliged to conclude with the commission and have approved by the euro group a "European reform partnership" outlining budgetary and structural measures.
It's not advisable to be slow and measured when a crisis of confidence is taking place.
A link to the text of the accord :
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/126658.pdf
I find all the fuss funny.
When you spend more than you earn you're going to be in trouble one day. This day is more or less now. :nelson:
But we are told it's the fault of capitalism. Hell yeah. :rolleyes:
Quote from: szmik on December 09, 2011, 12:19:49 PM
But we are told it's the fault of capitalism. Hell yeah. :rolleyes:
How is soveriegn debt the fault of Capitalism? Perhaps that the capitalists failed to make enough money for the governments to tax?
Quote from: Valmy on December 09, 2011, 12:22:37 PM
Quote from: szmik on December 09, 2011, 12:19:49 PM
But we are told it's the fault of capitalism. Hell yeah. :rolleyes:
How is soveriegn debt the fault of Capitalism? Perhaps that the capitalists failed to make enough money for the governments to tax?
check your sarcasm meter, he is not agreeing with that :P
But he is right, in leftist Europe (ie. almost all of Europe) this crisis is the clear failure of the free market. Which is funny and infuriating at the same time.
Also, I read that the Finns are threatening to pull out unless the simple-majority requirement stuff in the draft gets into real majority requirement. They must be shooting for Liberum Veto
Quote from: MadImmortalMan on December 09, 2011, 11:23:39 AM
Haven't you been watching the markets? Save Europe Day happens twice a week.
:lol: too true
Quote from: Tamas on December 09, 2011, 07:19:41 AM
What, no thread on the big meeting going on?
To summarize what you already know: Thursday night, an agreement was drafted to have more rigid fiscal rules in the EU, in exchange of the ECB printing money.
Everyone seem to accept that, except European political giants UK and Hungary, who flat-out declined, according to early reports. Sweden and the Czech Republic asked for more time to ask their Parlaiment. (funny that your excuse is asking guys you usually tell which buttons to push).
Early morning today, Hungarian officials and the PM indicated that Hungary's answer was not a denial, but a definitive maybe. Latest reports seem to indicate we might change that to "probably".
But latest is that Bulgarians, Danes, and Poles also seem to be leaning toward stalling the thing, so a scenario where only the euro-zone members get to agree on having responsible fiscal policies seem closer at hand. Except of course that Ireland is a member of that and they are reportedly not too keen on having to feel responsible for their own budget.
Poland seemed rather enthusiastic about the new thing so not sure where the stalling comes from. Are you sure it's not just your silly media saying that so Hungary doesn't look like a fool again?
There would be only one downside to the UK leaving the EU, as far as I am concerned: they would probably roll back English as one of the three core languages of the EU. Other than that, I say get ouf, limeys.
I can't wait for all the stupid expats in Poland to be deported. :D
Quote from: Tamas on December 09, 2011, 12:25:26 PM
Quote from: Valmy on December 09, 2011, 12:22:37 PM
Quote from: szmik on December 09, 2011, 12:19:49 PM
But we are told it's the fault of capitalism. Hell yeah. :rolleyes:
How is soveriegn debt the fault of Capitalism? Perhaps that the capitalists failed to make enough money for the governments to tax?
check your sarcasm meter, he is not agreeing with that :P
But he is right, in leftist Europe (ie. almost all of Europe) this crisis is the clear failure of the free market. Which is funny and infuriating at the same time.
Also, I read that the Finns are threatening to pull out unless the simple-majority requirement stuff in the draft gets into real majority requirement. They must be shooting for Liberum Veto
That's because it is. It's all the fault of Lobbying.
Interesting take by The Economist:
QuoteBritain and the EU
Britain, not leaving but falling out of the EU
Dec 9th 2011, 10:29 by Bagehot
BRITAIN did not walk out of the EU last night. But let there be no doubt about it: we have started falling out.
David Cameron finally did what British prime ministers have threatened in Europe so many times, and used his veto last night in Brussels, my BBC radio told me at dawn this morning. This is an astonishingly dramatic moment, the BBC added: the British prime minister has refused to sign up to a new EU treaty involving all 27 members, because the rest, led by France and Germany, would not grant him the safeguards he sought giving Britain powers to block unwelcome regulation of the City of London.
As a result of Mr Cameron's veto, the BBC said, 23 other countries have now agreed to seek their own fiscal pact involving deep integration around the tax and spending powers of member governments. Standing on its rights as a member of the current EU treaties, Britain argues that such a pact within a union should not be allowed to use the institutions that legally belong to the 27, such as the European Commission, the European Council or the European Court of Justice. At one point, an EU diplomat informed me in an overnight email, Mr Cameron could be heard arguing with his fellow-leaders that when members of the new club of 23 hold their planned monthly summits, they should not be allowed to use the buildings and meeting rooms of the European Council.
The BBC's exceedingly well-informed political editor Nick Robinson predicts this will lead to a long series of legal battles and rows with other EU countries, and to calls from gleeful British Eurosceptics to press on and seek a wholesale renegotiation of British relations with Europe (which they will then want put to a referendum, threatening to split the Conservative-Liberal Democrat coalition).
That stuff about drama and rows is clearly right. But I fear I do not see where Mr Cameron used his veto.
In my version of the English language, when one member of a club uses his veto, he blocks something from happening. Mr Cameron did not stop France, Germany and the other 15 members of the euro zone from going ahead with what they are proposing. He asked for safeguards for financial services and—as had been well trailed in advance—France and Germany said no. That's not wielding a veto, that's called losing.
Now, the EU is proposing quite a range of damaging and stupid new rules for financial markets. Anthony Browne, a chief policy aide to the Mayor of London (and key Cameron rival) Boris Johnson has a point when he writes this morning on ConservativeHome that:
"Faced with a choice between an EU treaty to save the euro and retaining control of regulation of the City, President Sarkozy decided to retain regulation of the City"
But nobody can say they were surprised. The French government has been saying for weeks that it would not allow Britain to have a sweeping opt-out from financial services rules. Only last week, I quoted a pair of French government sources in my column, writing:
"France sees a strong Europe as a lever of influence. Disliking the enlarged EU of 27 countries (in which its clout is diluted), France wants to use the euro crisis to deepen integration around a core of countries that use the euro, under the political control of a handful of big national leaders. To comfort French voters, Mr Sarkozy has started talking up euro-zone integration as a shield against globalisation and bullying by financial markets.
Today's unprecedentedly Eurosceptic Conservative Party sees a strong Europe mostly as a threat to Britain's global leverage. Mr Cameron says he supports deeper integration within the euro zone, as long as Britain does not have to pay, loses no sovereignty and yet is not marginalised. That is not enough for Tory MPs. They want the prime minister to use changes in the EU's architecture to secure concessions, such as opt-outs from European employment law or EU rules that harm the City of London.
French sources call it "totally unacceptable" to allow British banks to set up in deregulated competition just across the Channel. Britain wants rights of oversight over the euro zone, it is said in Paris: well, the euro zone needs oversight over the City of London. If Britain seeks to "profit" from the crisis, then rule changes can be agreed by countries that use the euro, excluding Britain"
And a very big part of what happened last night was a reflection of Mr Cameron's weakness within his own party, following a rebellion over a Europe vote that saw 81 Tory MPs ignore a strict, three-line whip. What happened last night, in addition to a fight to protect the City of London, is that Mr Cameron failed to secure a deal that he felt able to sell to his deeply Eurosceptic party (with two cabinet ministers demanding a referendum on any new treaty in the last few days, and scores of MPs ready to rebel on any EU bill put through the House of Commons).
It is worth being clear about this. Mr Cameron says he refused to sign up because he was defending British national interests in the long-term. In the immediate term, he took the decision to reject a new EU treaty because he was not sure he could get it through the House of Commons.
Having failed, he walked away, empty-handed. Just three other countries walked with him—Hungary, Sweden and the Czech Republic—and one or all of them may yet end up joining the new pact. We are not very far away from a final division of the club with 26 countries on one side, and one on the other.
This moment was both predictable and predicted. Everything dates back to a first meeting between the newly-elected David Cameron and Angela Merkel in Berlin in May 2010. By chance, in my previous role as Charlemagne, I was in the chancellery that day as one of a small group of Brussels correspondents invited for briefings from the German government. Mrs Merkel badly wanted Britain to stay on the inside track of the EU, we learned, fearing that she would find herself alone in the room with France and the Club Med countries. She wanted Britain and others for balance, and was anxious not to push away allies such as Poland who in theory plan to join the euro one day and are desperate to avoid being in an outer core.
Thus Mrs Merkel wanted to push ahead with new treaties to save the euro at the level of all 27 countries. I stayed on to watch Mr Cameron's meeting and joint press conference, and heard the British prime minister explain that he wished the euro well, but could not commit Britain to any involvement in deeper integration. I wrote this:
"Mr Sarkozy dreams of building a new power structure round the 16 euro-zone countries. But Mrs Merkel wants economic policy to be decided by all 27 EU members, precisely because she likes to balance "Club Med" members of the euro zone with more liberal countries, including Britain, Sweden, Denmark, the Czech Republic and Poland. Yet David Cameron, the British prime minister, is adamant that deeper economic co-ordination in Europe must affect only the 16. That may be savvy British politics, but it risks pushing Mrs Merkel into France's arms."
A year and a half later, at some time around 4am last night in Brussels, Mr Cameron pushed Mrs Merkel into the arms of the French. She went along with this, and this was predictable too. In November I wrote a column from Berlin (sorry, last quotation from myself), setting out the German view:
there is frustration in Berlin at what are seen as British double-standards. Mr Cameron tells euro-zone members to do more to save their currency. Yet Britain does not offer to help and demands to be consulted on big decisions, for example on bank recapitalisation. In Brussels Mr Cameron tells the EU to beware of breaking up the single market, and stoutly defends free-trade rules that apply to all. Yet back in London, ministers talk of special opt-outs giving British business low-cost, deregulated membership of the common market. "
In Berlin the belief is that rewriting single-market rules would lead to many countries demanding more protections—the opposite of what Britain wants. Belgium, for instance, might push for more workers' rights. Facing a tough re-election fight, Mr Sarkozy last week declared that Europe should not be a "dupe" when it came to global trade, and proposed EU import taxes to help pay for European welfare systems.
Germany's priority is rules establishing unprecedented oversight of euro-zone economies. If Britain asks too high a price for its consent, Germany will reluctantly agree to a new treaty outside the EU system. This, it is expected, would involve more than 17 countries but fewer than 27. Britain would lose its veto"
Berlin offered one more, very clear message: that British Eurosceptics were wrong to declare that Britain could become the leader of the 10 countries that do not use the euro, the ten "outs". There is no club of outs, I was told, and Mr Cameron had a bruising taste of this reality at an October summit when Mr Sarkozy angrily told some of the countries outside the euro that they had no interest in siding with Britain.
What happens now? Well, British Conservative Eurosceptics divide into two broad camps. A more moderate camp have convinced themselves that EU membership is blocking the sweeping supply side reforms that they believe would propel Britain to renewed growth. They think that if Mr Cameron can only shed the influence of hand-wringing Euro-Quislings in the Foreign Office and the Liberal Democrat party, he can play hardball and renegotiate a new, low-cost, low-regulation free-rider membership of the single market.
This moderate camp is guilty, mostly, of excessive optimism.
For a fine summary of this position, look at this week's Spectator magazine, and its main editorial, headlined: "Leadership, please."
Published on the summit eve, the leader says:
"British Europhiles have long scorned the concept of a 'two-speed Europe', but that is, by default, what is likely to emerge from the mess. We will have a first tier bound by fiscal as well as monetary union, smaller than the current eurozone, and second tier which will be increasingly divorced from the Franco-German power axis. Ideally, the second tier should impose minimal regulations and resemble the free trade area we signed up to in 1975.
David Cameron is losing an opportunity to assert himself as leader of a wider European alliance. It could be an appealing place: promoting the free movement of goods, people and capital, but with each country retaining sovereignty and the power to set its taxes, prepare its budgets and retain a veto over rules which will be harmful to its national interest."
"The Prime Minister is in a position of great strength, if only he would realise it. He is in the position that John Major was in the early 1990s, having lost a disastrous gamble to enter the Exchange Rate Mechanism (another bad idea which this magazine was alone in opposing). Then, it was all too easy to portray Britain as isolated in Europe. Now, there are already ten EU nations outside the eurozone who will play no part in any fiscal union. It is a constituency begging for direction—if only David Cameron would seize his opportunity"
This fantasy politics lasted all of 12 hours.
The other Eurosceptic camp are essentially pessimists. A big dose of their pessimism about the flawed initial structures of the single currency has been borne out by events: to have a grown-up debate, this needs admitting. But they are much too gloomy about the single market, which they believe is not worth the cost of Britain's EU membership. They are much too sanguine, I would add, about the costs of a break-up of the euro (one Tory MP yesterday called for the disorderly break-up of the euro, while John Redwood, a darling of the right and former cabinet minister, today urges an orderly break-up of the currency as soon as possible). This camp thinks that British influence in the EU of 27 is not worth a candle. One red-faced misanthrope, Edward Leigh, yesterday told Mr Cameron not to come back from Brussels waving a piece of paper like Neville Chamberlain. For such Tory MPs, it is always 1938.
They would like Britain, essentially, to be Switzerland with nuclear weapons. I think Britain is bigger, and better than that.
Nor do I think we would be granted the sort of Swiss deal that British Tories yearn for. Switzerland is allowed access to the single market for relatively low cost because it is small. Because Switzerland is small, its absence from the single market table does not fundamentally alter the nature of that market. A walk-out by Britain, the largest free-market minded power in Europe, would change the nature of the single market fundamentally.
I also think that Switzerland's deal with the EU is not as good as British Eurosceptics think. It is built around accepting large chunks of EU regulation without any say in order to protect Swiss bank secrecy.
Oh yes, the banks. The City of London is very important, and the EU has some bad ideas for regulating it. But I find it hard to cheer the idea that Mr Cameron took an extraordinarily big decision last night about our relations with Europe because he was so convinced he could not win arguments in Brussels about those regulations.
A final thought. If we do end up leaving the EU for the sake of the City of London (a big if) it would be ironic if some of those same banks and hedge funds then turned around and announced they were leaving Britain anyway because euro-zone rules made it impossible to work in London, and so they were off to a combination of Paris, Frankfurt, Zug and Singapore. So sorry old boy, nothing personal.
Quote from: Grey Fox on December 09, 2011, 12:47:33 PM
That's because it is. It's all the fault of Lobbying.
:lol:
Quote from: Martinus on December 09, 2011, 12:44:50 PM
There would be only one downside to the UK leaving the EU, as far as I am concerned: they would probably roll back English as one of the three core languages of the EU. Other than that, I say get ouf, limeys.
I can't wait for all the stupid expats in Poland to be deported. :D
Nah. Nobody is going to learn French no matter what scheme our neighbors to the north concoct.
Quote from: Martinus on December 09, 2011, 12:44:50 PM
There would be only one downside to the UK leaving the EU, as far as I am concerned: they would probably roll back English as one of the three core languages of the EU. Other than that, I say get ouf, limeys.
I can't wait for all the stupid expats in Poland to be deported. :D
What? Ireland is not good enough to wave the Anglophone banner on their own?
Merkel and Sarkozy speak English with eachother.
Quote from: Tamas on December 09, 2011, 12:25:26 PM
check your sarcasm meter, he is not agreeing with that :P
But he is right, in leftist Europe (ie. almost all of Europe) this crisis is the clear failure of the free market. Which is funny and infuriating at the same time.
I know I was asking about the mentality he was mocking.
I haven't been following the blow by blow too closely, but how did a southern eurozone crisis suddenly result in an emergency EU summit with a plan to balance everyone's budget? a) I don't see a reason for involvement of countries that have their own currency, and b) it doesn't seem a solution for anyone.
IIRC all EU members but 2 (one of the the UK) are supposed to one day enter the EZ, so it was logical to have the process take the form of a EU wide treaty. I think that was the way Merkel wanted it as well. Sarkozy wanted a two-tiered approach. He's got it now.
Also, the crisis has gone way past the PIIGS now. Belgium, France and Austria are under pressure already.
Quote from: alfred russel on December 09, 2011, 01:09:42 PM
I haven't been following the blow by blow too closely, but how did a southern eurozone crisis suddenly result in an emergency EU summit with a plan to balance everyone's budget? a) I don't see a reason for involvement of countries that have their own currency, and b) it doesn't seem a solution for anyone.
a) is because the non-Eurozone countries want to be able to take part in decisions and because Germany has an interest to get the Scandies and Poland on board
Quote from: Grey Fox on December 09, 2011, 01:00:29 PM
No private Enterprise = No lobbying.
Right, right?
No government spending = no lobbying.
The US Post Office is lobbying like a motherfucker right now.
Quote from: Iormlund on December 09, 2011, 01:14:12 PM
IIRC all EU members but 2 (one of the the UK) are supposed to one day enter the EZ, so it was logical to have the process take the form of a EU wide treaty. I think that was the way Merkel wanted it as well. Sarkozy wanted a two-tiered approach. He's got it now.
Also, the crisis has gone way past the PIIGS now. Belgium, France and Austria are under pressure already.
It makes little sense to me. Why go for an agreement of 27 when all you need now is an agreement of 17?
Certainly the past few years haven't been a strong advertisement for the euro.
Apparently, because you are afraid of being outvoted by France and the PIGS and would prefer to have the Scandies and other non-EZ countries to balance them. It is true that Germany (or Merkel at least) seems to have created a lot of bad will lately within the EZ.
Quote from: Iormlund on December 09, 2011, 01:46:30 PM
Apparently, because you are afraid of being outvoted by France and the PIGS and would prefer to have the Scandies and other non-EZ countries to balance them. It is true that Germany (or Merkel at least) seems to have created a lot of bad will lately within the EZ.
The Germans? Pissing off other Europeans? No way.
Quote from: Martinus on December 09, 2011, 12:44:50 PM
There would be only one downside to the UK leaving the EU
A bizarre statement, given that you claim to be a free-market liberal.
Who, apart from the UK, is another EU member state of significance trying to stand against a protectionist vision of the common market?
Quote from: Warspite on December 09, 2011, 02:18:11 PM
Quote from: Martinus on December 09, 2011, 12:44:50 PM
There would be only one downside to the UK leaving the EU
A bizarre statement, given that you claim to be a free-market liberal.
Who, apart from the UK, is another EU member state of significance trying to stand against a protectionist vision of the common market?
Marty is a socio-liberal nowadays. He craves Big State like he craves Big Toes
Quote from: Warspite on December 09, 2011, 02:18:11 PM
Quote from: Martinus on December 09, 2011, 12:44:50 PM
There would be only one downside to the UK leaving the EU
A bizarre statement, given that you claim to be a free-market liberal.
Who, apart from the UK, is another EU member state of significance trying to stand against a protectionist vision of the common market?
Are we talking about the same UK whose only objective today was to protect the City? Is that the standard-bearer against protectionism?
Quote from: Iormlund on December 09, 2011, 03:15:19 PMAre we talking about the same UK whose only objective today was to protect the City? Is that the standard-bearer against protectionism?
Protectionism doesn't mean anything to protect an industry. Protectionism's about protecting an industry from competition. That's different from trying to stop regulations that a government would think hurt a sector of their economy.
The government's objection was precisely that EU regulation would make it impossible for the City to compete with Switzerland, Dubai, Hong Kong or New York. I think they'd probably support a liberalisation of regulations on financial services in the EU and the establishment of a Common Market in services (at last). So none of their position's protectionist.
So the City is to be taxed into oblivion because the Greeks are not as thrifty as the Germans :hmm: ?
Quote from: szmik on December 09, 2011, 12:19:49 PM
I find all the fuss funny.
When you spend more than you earn you're going to be in trouble one day. This day is more or less now. :nelson:
But we are told it's the fault of capitalism. Hell yeah. :rolleyes:
Seems to me that the opposite is happening - that the premise coming out of the summit is that the cause of the problem was fiscal indiscipline; hence the only concrete being proposed are limitations on government spending.
When in reality government deficits have little to do with the present crisis. In fact, of all the vulnerable countries, only Greece had serious fiscal issues pre-crisis.
I can't name a nation without serious fiscal issues pre-crisis.
Quote from: MadImmortalMan on December 09, 2011, 06:21:49 PM
I can't name a nation without serious fiscal issues pre-crisis.
Of the crisis nations, Ireland and Spain. Even Italy had seen debt decline as a percent of GDP and were running a surplus for some of the time.
I believe Portugal was in deep trouble so I'd probably link them in with the Greeks.
If you are in deep fiscal troubles the moment some kind of shit hits the fan, then you do have serious fiscal issues even when goings are good, you are just not noticing it.
Quote from: Tamas on December 09, 2011, 06:28:43 PM
If you are in deep fiscal troubles the moment some kind of shit hits the fan, then you do have serious fiscal issues even when goings are good, you are just not noticing it.
What were Ireland and Spain's deep fiscal issues?
Quote from: Sheilbh on December 09, 2011, 06:32:25 PM
What were Ireland and Spain's deep fiscal issues?
Ireland's deep fiscal issue is they assumed a fuckload of bank liabilities.
I'm still waiting for the other shoe to drop on Spain.
Quote from: Admiral Yi on December 09, 2011, 06:39:12 PMIreland's deep fiscal issue is they assumed a fuckload of bank liabilities.
That was before the crisis hit?
And let's not forget the Irish weren't keen on that idea. They were put under massive pressure by the UK and other European 'partners'.
Quote from: Sheilbh on December 09, 2011, 06:40:32 PM
That was before the crisis hit?
That was before Irish yields started rising I think.
QuoteAnd let's not forget the Irish weren't keen on that idea. They were put under massive pressure by the UK and other European 'partners'.
I've read differently, and it always doesn't have anything to do with anything.
woops, also
Explain to me how Spain supposedly ran a surplus but their debt never went down.
2005 debt--$478 billion
2006 debt--$500 billion
That's a decrease in the debt to gdp ratio for them, but the debt didn't get smaller. Spain's "surplus" that year was 2%
Ireland:
2005 debt--$53.9 billion
2006 debt--$56.6 billion
Ireland is supposed to have run a 3% surplus in 2006. WTF happened to the extra twelve billion or so dollars? Their debt should have dropped by six billion.
My numbers come from The Economist (http://www.economist.com/content/global_debt_clock).
Quote from: Tamas on December 09, 2011, 06:28:43 PM
If you are in deep fiscal troubles the moment some kind of shit hits the fan, then you do have serious fiscal issues even when goings are good, you are just not noticing it.
I think Ireland's problem was that it was simply small. A large wave could capsize it nor matter how good it was doing.
Quote from: Razgovory on December 09, 2011, 07:14:34 PM
Quote from: Tamas on December 09, 2011, 06:28:43 PM
If you are in deep fiscal troubles the moment some kind of shit hits the fan, then you do have serious fiscal issues even when goings are good, you are just not noticing it.
I think Ireland's problem was that it was simply small. A large wave could capsize it nor matter how good it was doing.
Absolutely. The same for Greece and Portugal. I guess the lesson is the smaller you are, the tighter your balance sheet needs to be.
Quote from: Admiral Yi on December 09, 2011, 06:39:12 PM
Quote from: Sheilbh on December 09, 2011, 06:32:25 PM
What were Ireland and Spain's deep fiscal issues?
Ireland's deep fiscal issue is they assumed a fuckload of bank liabilities.
Private bank liabilities are a fiscal issue?
Quote from: Iormlund on December 09, 2011, 03:15:19 PM
Quote from: Warspite on December 09, 2011, 02:18:11 PM
Quote from: Martinus on December 09, 2011, 12:44:50 PM
There would be only one downside to the UK leaving the EU
A bizarre statement, given that you claim to be a free-market liberal.
Who, apart from the UK, is another EU member state of significance trying to stand against a protectionist vision of the common market?
Are we talking about the same UK whose only objective today was to protect the City? Is that the standard-bearer against protectionism?
Yes. Trying to preserve deregulation is not protectionism. You may not agree with it, but it is not protectionism.
Quote from: Warspite on December 09, 2011, 09:55:21 PM
Private bank liabilities are a fiscal issue?
Not until the government promises to pay them.
Quote from: MadImmortalMan on December 09, 2011, 07:17:01 PM
Quote from: Razgovory on December 09, 2011, 07:14:34 PM
Quote from: Tamas on December 09, 2011, 06:28:43 PM
If you are in deep fiscal troubles the moment some kind of shit hits the fan, then you do have serious fiscal issues even when goings are good, you are just not noticing it.
I think Ireland's problem was that it was simply small. A large wave could capsize it nor matter how good it was doing.
Absolutely. The same for Greece and Portugal. I guess the lesson is the smaller you are, the tighter your balance sheet needs to be.
Raz contributed to this thread in a meaningful way! Hurrah!
The Economist has an insider's take of the negotiations:
QuoteIn the nick of time, a well-placed source (a senior official who is broadly neutral towards the British government in this fight) has given me his reading of what happened, and where it all turned sour for Mr Cameron. It rings true to me.
Mr Cameron had two problems, as my source sees it. The first was the nature of his demand, and how it was made. In essence, the British did not ask for an "emergency brake" clause or opt-out for financial regulation.
What they asked for was a protocol imposing decision-making by unanimity on a number of areas of regulation currently decided by majority voting. (If you want to be really technical, the choice is voting by unanimity or the special Qualified Majority Voting (QMV) used in the EU, which is a sort of super-majority system taking into account a certain number of countries and also their populations).
As my source puts it, this amounted to a big winding-back of the clock for many EU leaders, setting a "horrendous precedent" that could unravel the single market. As they see it, common rules for the common market have been adopted (with few exceptions, such as tax) by QMV ever since the Single European Act approved by Margaret Thatcher in 1986.
The much-discussed Financial Transactions Tax issue already requires unanimity and therefore could never be imposed on the City of London without Britain's agreement. What is more, as was pointed out in Brussels with some vehemence, when it comes to financial services there have hardly ever been any cases of Britain being outvoted in the adoption of such legislation.
In simple terms, that means that Britain's request to move to unanimity was taken as a huge ask that had nothing to do with the subject at hand (saving the euro) or was a sign of bad faith (because it is driven by mistrust regarding future legislation). In my source's view, Britain also tabled its request very late in the day, simply sending a whole draft protocol to the European Council legal service the day before the meeting without talking the ideas through with key allies and national capitals.
Then, says my source, came the second crunch moment for Mr Cameron. Once the 27 EU leaders gathered in the summit room, a sense rapidly emerged that a lot of countries did not share Germany's enthusiasm for full-blown treaty change, a process which is slow and fraught with risks (the markets might not wait that long, Ireland might have to hold a referendum, Britain would have to get a vote through the House of Commons and so on).
By a certain point on Thursday night, I am told, a majority of countries were growing interested in a quick and dirty legal fix, suggested by the president of the European Council, Herman Van Rompuy. The fix was dreamed up by lawyers working for Mr Van Rompuy. They said that a legal device, known as "Protocol 12", would allow the 27 leaders of the EU to agree most of the new rules and mechanisms for fiscal union in the euro zone by a simple, unanimous decision among themselves.
Suddenly, Germany looked isolated. Mr Van Rompuy, a former Belgian prime minister elected by EU leaders to chair their summits, decided to see if he could sweeten the deal for the wavering EU leaders, and asked Mr Cameron if he would consider dropping some of his requests. This made sense to some leaders in the room. Mr Cameron's demands were already more than many of his colleagues would tolerate, and Britain had already said publicly it would tailor its demands to the scale of the treaty change on the table. Mr Cameron said he would not lower his ambitions, and that his demands would be the same in the event of Protocol 12 being used, or a full-blown EU treaty.
A hostile view of this is that Mr Cameron overplayed his hand. In this version of events, the British prime minister thought the mood of the room was running towards Protocol 12, and because Protocol 12 is decided by unanimity, he thought he had the whip hand.
Instead, my source tells me, the room turned on Mr Cameron. This, I am told, "was the point at which the Protocol 12 route, which requires unanimity, was effectively closed down and one country after another accepted a new treaty at 17+."
Did Mr Cameron miscalculate? Did he want to end up with a treaty being crafted at almost 26, with Britain on the outside? My source is certain that was not Mr Cameron's goal, and my source is not alone in this thinking.
It is now almost inevitable that separate structures be set up, with Britain on the outside, it seems. Talk in London of preventing the "Eurozone-plus" from using the Court of Justice is also a mistake, I am told. Article 273 of the treaty allows just this.
You can choose to believe this account or not. It comes from a single source, who is well-placed but clearly viewing this from a particular perspective.
Time will tell. But what a mess.
Quote from: MadImmortalMan on December 09, 2011, 07:02:33 PM
Ireland:
2005 debt--$53.9 billion
2006 debt--$56.6 billion
Ireland is supposed to have run a 3% surplus in 2006. WTF happened to the extra twelve billion or so dollars? Their debt should have dropped by six billion.
I'm not sure. I could be wrong but I'd guess it's a combo of inflation, interest rates, debt maturity and government financing. Also from my understanding governments would always need to be issuing debt to keep going, because the revenue is seasonal but the expenditure's constant. It's cheaper for governments to do that by issuing long-term debt than it would be just to issue one-year bonds, say. I think this may be the case with some of the Baltics. I think Estonia has a government debt of around 5% which is pretty constant and probably just for financing government.
And of course what matters is how the debt's doing in terms of the GDP, the same goes for austerity. In the UK the budget's increasing in nominal terms but is decreasing in real spending terms.
This is precisely the issue with Spain for example. The debt itself isn't that bad it's the economic failure and the difficulty of foreseeing growth that makes Spain risky. Italy's slightly different but I think for foreign creditors it's similar.
Quote from: MadImmortalMan on December 09, 2011, 07:02:33 PM
Explain to me how Spain supposedly ran a surplus but their debt never went down.
2005 debt--$478 billion
2006 debt--$500 billion
That's a decrease in the debt to gdp ratio for them, but the debt didn't get smaller. Spain's "surplus" that year was 2%
Ireland:
2005 debt--$53.9 billion
2006 debt--$56.6 billion
Ireland is supposed to have run a 3% surplus in 2006. WTF happened to the extra twelve billion or so dollars? Their debt should have dropped by six billion.
My numbers come from The Economist (http://www.economist.com/content/global_debt_clock).
The simple explanation is the the Economist is measuring the debt in dollars, but the actual debt itself is denominated in Euros.
Since the Euro increased in value against the dollar in 2006, the value of the debt in dollars increased even as the quantity the debt in Euros decreased.
Taking the Ireland example. $53.9 billion as of 12/31/05 would be about Euro 45.5 billion; whereas $56.6 billion as of 12/31/06 would be Euro 42.9 billion.
Quote from: Tamas on December 09, 2011, 06:28:43 PM
If you are in deep fiscal troubles the moment some kind of shit hits the fan, then you do have serious fiscal issues even when goings are good, you are just not noticing it.
Under that definition, every country in Europe has serious fiscal issues.
No country in Europe can assume the liabilities of their banking system under conditions of severe crisis without trashing their public finances.
Quote from: The Minsky Moment on December 10, 2011, 03:25:10 PM
Under that definition, every country in Europe has serious fiscal issues.
No country in Europe can assume the liabilities of their banking system under conditions of severe crisis without trashing their public finances.
What countries can?
Quote from: Jacob on December 10, 2011, 03:50:35 PM
Quote from: The Minsky Moment on December 10, 2011, 03:25:10 PM
Under that definition, every country in Europe has serious fiscal issues.
No country in Europe can assume the liabilities of their banking system under conditions of severe crisis without trashing their public finances.
What countries can?
Maybe a few of the big Islamic oil producing countries that don't have traditional banking systems to begin with.
Or a couple of under-developed countries with tiny financial sectors.
IMO, a nation without deep fiscal troubles is one that can cease taking on new debt for two or three years without disrupting the required spending of the state. If new debt is necessary for funding ongoing operations and not capital/infrastructure improvements, that's where the danger line is.
I have a ready hyperbolic comparison: comparing the nature of the conflict within the EU to the one prior to the US Civil War.
I know it leaks from countless holes but you gotta admit, it is not as bad as if Marty said it.
I don't know much about the ACW - would you mind giving a brief summary of the argument?
I hope it means that Germany is going to march south and burn Athens.
Quote from: Zanza on December 12, 2011, 09:20:25 AM
I don't know much about the ACW - would you mind giving a brief summary of the argument?
:lol:
Quote from: Zanza on December 12, 2011, 09:20:25 AM
I don't know much about the ACW - would you mind giving a brief summary of the argument?
I like to think on the "southern lazy dimwits ruining everything until their hard working northern neighbors bitchslap them, dragging them screaming and crying into a proper state, establishing a better federation in the process" line
Quote from: Tamas on December 12, 2011, 09:27:00 AM
Quote from: Zanza on December 12, 2011, 09:20:25 AM
I don't know much about the ACW - would you mind giving a brief summary of the argument?
I like to think on the "southern lazy dimwits ruining everything until their hard working northern neighbors bitchslap them, dragging them screaming and crying into a proper state, establishing a better federation in the process" line
We already know that you're so fucking ignorant regarding the crisis that it hurts, no need to reinforce that notion over and over again.
Quote from: Tamas on December 12, 2011, 09:27:00 AM
I like to think on the "southern lazy dimwits ruining everything until their hard working northern neighbors bitchslap them, dragging them screaming and crying into a proper state, establishing a better federation in the process" line
Yeah that is more like the 1930s to the 1980s not the Civil War. The South spent the next 70 years or so after the Civil War being mad about the Civil War and stubbornly resisting industrialization.
Quote from: The Larch on December 12, 2011, 09:41:52 AM
Quote from: Tamas on December 12, 2011, 09:27:00 AM
Quote from: Zanza on December 12, 2011, 09:20:25 AM
I don't know much about the ACW - would you mind giving a brief summary of the argument?
I like to think on the "southern lazy dimwits ruining everything until their hard working northern neighbors bitchslap them, dragging them screaming and crying into a proper state, establishing a better federation in the process" line
We already know that you're so fucking ignorant regarding the crisis that it hurts, no need to reinforce that notion over and over again.
:lol: relax I am not serious.
To be serious, the allegory is correct in only one regard: we need to decide on the kind of Union we want or else the shit will hit the fan.
Either go for more fiscal unity or less, the current one does not appear to work very well.
Quote from: Tamas on December 12, 2011, 09:47:43 AM
Quote from: The Larch on December 12, 2011, 09:41:52 AM
Quote from: Tamas on December 12, 2011, 09:27:00 AM
Quote from: Zanza on December 12, 2011, 09:20:25 AM
I don't know much about the ACW - would you mind giving a brief summary of the argument?
I like to think on the "southern lazy dimwits ruining everything until their hard working northern neighbors bitchslap them, dragging them screaming and crying into a proper state, establishing a better federation in the process" line
We already know that you're so fucking ignorant regarding the crisis that it hurts, no need to reinforce that notion over and over again.
:lol: relax I am not serious.
To be serious, the allegory is correct in only one regard: we need to decide on the kind of Union we want or else the shit will hit the fan.
Either go for more fiscal unity or less, the current one does not appear to work very well.
It's already grating to be on the receiving end of condescending crap from a German in an internet forum, but from a Hungarian? Fuck that shit. :P
Spain's problem is not laziness and greediness (AFAICT), it's that job security nonsense that makes it impossible to hire new staff.
Quote from: Admiral Yi on December 12, 2011, 09:55:13 AM
Spain's problem is not laziness and greediness (AFAICT), it's that job security nonsense that makes it impossible to hire new staff.
Young people and almost anybody hired in the last 15 years or so already have minimal job security, yet they aren't getting hired anyway.
If you're looking for a unionalogy, Tamas, I think Articles of Confederation and Hamilton's time in Treasury serve better.
Anyway noone's attacking member states' rights so ACW clearly doesn't work.
Quote from: The Larch on December 12, 2011, 09:56:37 AM
Quote from: Admiral Yi on December 12, 2011, 09:55:13 AM
Spain's problem is not laziness and greediness (AFAICT), it's that job security nonsense that makes it impossible to hire new staff.
Young people and almost anybody hired in the last 15 years or so already have minimal job security, yet they aren't getting hired anyway.
On that, an other sweeping generalization (I love those!) is that frankly, there isn't enough need for work. We have a lost of production work moved to the 3rd world, and even it it wasn't, even Construction requires less manpower than it used to.
Quote from: Sheilbh on December 12, 2011, 10:02:19 AM
Anyway noone's attacking member states' rights so ACW clearly doesn't work.
No one was attacking the member states' rights in the ACW either.
Quote from: Sheilbh on December 12, 2011, 10:02:19 AM
Anyway noone's attacking member states' rights so ACW clearly doesn't work.
But we will have to reduce those rights or reduce the Union. Indecision and non-mandatory "rules" are digging our graves.
Quote from: Valmy on December 12, 2011, 10:05:09 AM
Quote from: Sheilbh on December 12, 2011, 10:02:19 AM
Anyway noone's attacking member states' rights so ACW clearly doesn't work.
No one was attacking the member states' rights in the ACW either.
Correct. States (in the US) don't have rights. Their governments have powers. Same is true of the Federal government.
Quote from: The Larch on December 12, 2011, 09:56:37 AM
Quote from: Admiral Yi on December 12, 2011, 09:55:13 AM
Spain's problem is not laziness and greediness (AFAICT), it's that job security nonsense that makes it impossible to hire new staff.
Young people and almost anybody hired in the last 15 years or so already have minimal job security, yet they aren't getting hired anyway.
That can't be true. When you don't provide generous protections to new workers, firms go into a delirious hiring frenzy, knowing that they can fire anyone who doesn't work out.
Just like they're doing the U.S.!
Quote from: Tamas on December 12, 2011, 10:11:12 AM
But we will have to reduce those rights or reduce the Union. Indecision and non-mandatory "rules" are digging our graves.
The ACW analogy works to the extent that some member states think that other member states are taking advantage of the pooled power/wealth to advantage themselves at the expensive of the whole (or major portions of the whole). You are correct that this is unsustainable, even if it is only a perception.
Quote from: Ideologue on December 12, 2011, 10:41:25 AM
That can't be true. When you don't provide generous protections to new workers, firms go into a delirious hiring frenzy, knowing that they can fire anyone who doesn't work out.
Just like they're doing the U.S.!
Suddenly, it smells a lot like straw in here.
I'll bet it does, Scarecrow.
That's not a strawman argument. It's a direct attack on what Yi considers to be the core of the problem in Spain, an element that--if removed--would solve Spain's issues.
I find the assertion dubious, as it certainly did not prevent a major contraction in the U.S. job market despite an overall lurch into recovery. Even though I agree with him substantially that mandated job security is not necessarily a very good thing, I don't think it's Spain's problem (especially given, assuming that Larch is right, and I'll defer to him on issues about employment law in Spain, that such protections don't even exist).
Quote from: Ideologue on December 12, 2011, 10:49:20 AM
I'll bet it does, Scarecrow.
That's not a strawman argument. It's a direct attack on what Yi considers to be the core of the problem in Spain, an element that--if removed--would solve Spain's issues.
I find the assertion dubious, as it certainly did not prevent a major contraction in the U.S. job market despite an overall lurch into recovery. Even though I agree with him substantially that mandated job security is not necessarily a very good thing, I don't think it's Spain's problem (especially given, assuming that Larch is right, and I'll defer to him on issues about employment law in Spain, that such protections don't even exist).
It'd help if Yi qualified what he thinks is "job security nonsense". The job market in Spain since the 90s, when the job market was liberalized under the 1st PP government, is essentially two-tiered. There's, very broadly speaking, a privileged tier of people with very high job security, consisting mostly of middle aged people in fixed contrats and public workers, and there's another tier of younger workers in temporary contracts with very little job security. Getting rid of somebody from the first group is extremely expensive, getting rid of somebody from the second group is extremely easy.
Quote from: Ideologue on December 12, 2011, 10:49:20 AM
I'll bet it does, Scarecrow.
That's not a strawman argument. It's a direct attack on what Yi considers to be the core of the problem in Spain, an element that--if removed--would solve Spain's issues.
I find the assertion dubious, as it certainly did not prevent a major contraction in the U.S. job market despite an overall lurch into recovery. Even though I agree with him substantially that mandated job security is not necessarily a very good thing, I don't think it's Spain's problem (especially given, assuming that Larch is right, and I'll defer to him on issues about employment law in Spain, that such protections don't even exist).
I think you need to look up what a strawman argument is. Even if you strip out all the rhetorical bullshit (and you can't, since rhetorical bullshit is the core of your assertion) you still have something that Yi never said. That's pretty much the definition of a strawman argument, Mr Scarecrow.
Any "direct attack" that doesn't include quotes is not direct, and is highly likely to smell of Ide.
Southern Europeans are too stupid to be lazy.
Quote from: The Larch on December 12, 2011, 10:55:52 AM
It'd help if Yi qualified what he thinks is "job security nonsense". The job market in Spain since the 90s, when the job market was liberalized under the 1st PP government, is essentially two-tiered. There's, very broadly speaking, a privileged tier of people with very high job security, consisting mostly of middle aged people in fixed contrats and public workers, and there's another tier of younger workers in temporary contracts with very little job security. Getting rid of somebody from the first group is extremely expensive, getting rid of somebody from the second group is extremely easy.
This is the way one responds logically to an assertion like Yi's, Ide. Note the lack of bullshit and froth.
TL, to what do you attribute Spain's economic problems? My understanding was that it was the overspending on infrastructure to support a housing bubble, but that's a pretty superficial understanding if even true.
I'd be interested in hearing too. My impression is that it's like Ireland. Lots of growth was coming from banks and property speculation with the necessary construction projects. The economies based on banking, property and construction got hardest hit, inevitably.
But I don't know how much that's it.
Quote from: grumbler on December 12, 2011, 11:23:23 AM
Quote from: The Larch on December 12, 2011, 10:55:52 AM
It'd help if Yi qualified what he thinks is "job security nonsense". The job market in Spain since the 90s, when the job market was liberalized under the 1st PP government, is essentially two-tiered. There's, very broadly speaking, a privileged tier of people with very high job security, consisting mostly of middle aged people in fixed contrats and public workers, and there's another tier of younger workers in temporary contracts with very little job security. Getting rid of somebody from the first group is extremely expensive, getting rid of somebody from the second group is extremely easy.
This is the way one responds logically to an assertion like Yi's, Ide. Note the lack of bullshit and froth.
TL, to what do you attribute Spain's economic problems? My understanding was that it was the overspending on infrastructure to support a housing bubble, but that's a pretty superficial understanding if even true.
There are many issues intertwined. Infrastructure overspending per se is not a problem, although there's a certain mythification of big emblematic projects at the regional level which divert funding from more useful stuff. The main example of this is our high speed rail system. IIRC Spain is nowadays the country with the most extensive high speed rail system in Europe, and I would bet big that they go half empty most of the time. Back in the 80s, when Spain joined the EU there was a real need of improving our infrastructures, but public authorities became drunk with that and nowadays we're building high speed rail and highways to even the most remote corner of the country, and provincial airports appeared throughout the land.
Regarding the housing bubble, which is IMO the main culprit, it created a poisonous efect on society and the economy. Renting culture is almost non-existant in Spain, everybody wants to own the house they live in. Many times mortgage payments would be lower than the monthly rent, so lots of people thought that they were better off buying instead of renting. Also, people would buy apartments not to live on them or to rent them, but as an investment, in the belief that it'd never go down. People would buy appartments before the building was built, and before somebody started living in them it could have gone already through several owners that never set a foot there. Appartments became thus a commodity to be speculated with, in an exponential way, as people would mortgage one appartment to buy another, rinse and repeat. This kind of speculation was widespread, and created an artificial demand for residential building. It was felt mostly in bigger cities, where new neighbourhoods and suburbs would pop up here and there only to be left as ghost towns afterwards and touristic areas, where housing developments for summer houses sprouted along the Mediterranean coast like mushrooms in autumn.
This construction boom had a perverse effect at the local level, as the cities and villages got most of their financing through taxes in new developments, so they encouraged it instead of cooling it down. Local and regional savings banks (the famous "cajas") financed most of those developments and are now laden with plenty of repoed housing developments, finished and unfinished, and land where there's 0 interest to build anything. The regional savings banks, most of the time in cahoots with the regional governments, were also quite cavalier about their business and lent millions and millions of euros to their cronies in the regional governments in order to bankroll vanity white elephant projects.
It also had a perverse effect in local youths, as in these areas lots of people would drop off from high school without even completing secondary education and get a job in construction instead of completing their education. We're talking about 16-17 yo youths that could get well payed jobs right off the bat, and were able to afford big cars before they were 20, making their colleagues that stayed in school look foolish.
Cheap credit, which fueled the housing boom, also fueled consumption, and soon everybody and their dog was buying everything through credit. You "financed" everything. Your new car? Comfortable monthly instalments. Your new appartment? Mortgages were easy to get. Holidays abroad? No worries, every travel agency would offer you a scheme for payment.
Everybody knew that at some point it'd all come tumbling down and there was a big need to diversify from construction, but few steps were taken to move away from that, either for lack of will, means or long term thinking. When the credit became scarcer we were left with lots of people with no other professional qualifications than working in construction, with banks which would no longer give mortgages or financing schemes so easily, leaving plenty of legitimate clients dry and plenty of unsellable appartments that nobody knew how to get rid of.
I've rambled a bit but I think that you get the idea.
In other discussions, Iormlund added that the whole effect described above was fired up by the fact that the interest rate on credit was below inflation (thanks to ECB policy, see optimal currency area theory) so it was rational to borrow as much as possible and don't save at all.
Quote from: Zanza on December 12, 2011, 12:36:49 PM
In other discussions, Iormlund added that the whole effect described above was fired up by the fact that the interest rate on credit was below inflation (thanks to ECB policy, see optimal currency area theory) so it was rational to borrow as much as possible and don't save at all.
That's also what I heard, that interest rates with the euro were so much lower than with the peseta that banks relaxed lending regulations a lot and the population became drank with cheap credit. I'm no expert in the issue but that access to credit became so much easier is a fact. IIRC we're still in a better position credit-wise than before accessing the euro, but the Spanish society became so used to cheap credit that it has become a deep crisis.
I have friends who work in banking and they told me that they saw plenty of cases of people who got their paychecks on the 1st of every month and by the 5th most of it would be gone, when all their monthly installments of the different stuff they bought through credit (mortgage, car, tv, whatever) came through. One missed paycheck would put them in the red. Another friend of mine works in the financial branch of a car company which offered its own financing to their clients, and in the last couple of years they get more calls from people wanting to get rid of their cars because they can't afford them anymore than calls from people wanting to buy new cars. They're anecdotes, but they frame the discourse I've been giving about the widespread extension of cheap credit during the boom years of the Spanish economy.
Larchie has explained why the local governments, regional saving institutions and families are indebted. The rest was borrowed by businesses to increase workforce, buy new machinery and so on, as per usual in any growing economy with such low rates. It went well until the credit crunch shut all financing down all of a sudden, and businesses started falling like dominoes.
As an aside, another reason why the central government, with relatively low debt, is in such a bad position is that the markets expect it to guarantee regional debt (and they are quite right).
As for why the central government didn't do more to at least contain the bubble, I suspect they weren't expecting things to go bust until much later (let the next guy deal with it) and nowhere near as bad. Also, a problem only circumscribed to Spain would have been far more manageable just by increasing exports.
The subprimes debacle however took them by surprise and made the hit worldwide. So now we have to compete for exports with dozens of other coutries in the same dire straits in a climate of widespread austerity and lack of growth.
Quote from: Iormlund on December 12, 2011, 02:36:30 PM
I suspect they weren't expecting things to go bust until much later (let the next guy deal with it) and nowhere near as bad.
I think you just summarized everything from the subprime shitstorm to the present.