12-06-2011, 09:59 AM
As of now, Mrs Merkel, and Sarkozy on her coat-tails, have agreed, between the two of them, how the twenty-seven countries of the EU will be, or at least the 17 countries of the Eurozone. They made a point of saying that this would go ahead with, or without, the agreement of the UK, although,in fact, any treaty change requires the consent of all countries. Their idea, long-term, is that countries will be obliged to pass laws which make it impossible for them to produce budgets which almost balance, under threat of vast fines. (That is exactly what was supposed to happen in 2004, when France and Germany both exceeded their allowed borrowing, but, in all the circs, what with it being them who were being profligate, it was quietly forgotten.)
The stock-markets reacted positively, but perversely, the rating agencies warned all the Eurozone countries that their ratings were now a bit dodgy, and F and G might lose their triple A ratings, which would muck up the whole plan.
I see a couple of problems. One, that the plan is long-term, while the crisis is in need of a quick fix. Two, that there is nothing in it to sort out growth, and more importantly weven than that, the underlying structural problems. Why would it be, for example, that interest rates, or the currency, which would suit Mercedes Benz, would also suit a man in Crete with a donkey and a few olive-groves?
My view is that Germany has needed Greece and similar countries, since by merging its Deutschmark with their weak drachma etc, into a euro, that euro necessarily is weaker against say the dollar than the the old German currency would be, thus enabling exports. But the same process works against Greece. Byron, where are you!
The stock-markets reacted positively, but perversely, the rating agencies warned all the Eurozone countries that their ratings were now a bit dodgy, and F and G might lose their triple A ratings, which would muck up the whole plan.
I see a couple of problems. One, that the plan is long-term, while the crisis is in need of a quick fix. Two, that there is nothing in it to sort out growth, and more importantly weven than that, the underlying structural problems. Why would it be, for example, that interest rates, or the currency, which would suit Mercedes Benz, would also suit a man in Crete with a donkey and a few olive-groves?
My view is that Germany has needed Greece and similar countries, since by merging its Deutschmark with their weak drachma etc, into a euro, that euro necessarily is weaker against say the dollar than the the old German currency would be, thus enabling exports. But the same process works against Greece. Byron, where are you!