Eurozone Fiscal Union

[addy]

http://money.cnn.com/2011/12/04/news/int...?hpt=hp_t1

In the wake of the deepening debt crisis, European leaders will meet for another summit to discuss ways of addressing the problem; and this time they are talking about rewriting EU treaties, one of the major points being to establish fiscal union.

The overarching idea is to begin building a fiscal union that will correct flaws within the EU, which has a common currency and shared monetary policy, but no mechanism to ensure that all members are financially sound. The key players -- Germany, France and the European Central Bank -- all broached the subject last week, saying closer political and economic ties are needed to ensure the future of a unified Europe.

What do you think of the idea? Will it succeed or fail in shaping up the euro?

[Leanne]

I don't know, but this has got to be the turning point -- either the Euro will stabilise and Greece will be able to repay the loans other countries have been ill-able to afford but gave them anyway, or the other members of the EU will grow tired of having their hitherto-perfectly-decent currencies dragged down by countries with a terrible economic track record (eg Italy) and secede.

[abu nuwas]

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!

[srijantje]

i need a bit of advise here,i'm considering to change all my euro's[not many]into rupees before the bottom falls from under it,would that be a good idea?

[abu nuwas]

i need a bit of advise here,i'm considering to change all my euro's[not many]into rupees before the bottom falls from under it,would that be a good idea?

Anyone who tells you they can predict the future in financial affairs, or any other, is a liar. On the other hand, if it is a toss up, then exchanging into another currency, will only carry the certainty that you will pay for the privilege, and much more so, if you only hold a relatively small amount.

[srijantje]

thanks,i'll wait a bit

[billy]

cameron vetoed the treaty and talk has it we (the uk) could be left out in the cold, which is balderdash. the eu need us, it needs all countries who are fairly stable. they can' afford to have the uk drop out because the first that hit's them is higher debts. if the eu currency dissolves and it surely will should they kick us out, they will have to find billions even tens of billions to readjust their banking systems, their printed monies and the currency evaluations against the dollar. we still have the pound so for us it will be a lot easier. we need a beet immigration control that allows easy border crossing and the right to live within member countries, yet only have the right to benefits from ones country of origin. that way anyone who claims benift in a member state can be simply and without fuss sent home and be blacklisted.