The historian Niall Ferguson points out that a monetary union requires economic and thus political centralization:
Is to follow through the original logic of monetary union. If you go back to 1989 Delors report it was explicit that one consequence of monetary union would be central control of national budgets, of national policy. And that is ultimately the crucial staging point for a federal system of the sort that you have here in Canada.So if this logic is correct, then for the EMU to saved it will require further political and economic integration.
Do you think that the current situation in Europe will lead to the break up of the European Monetary Union or do you think that it will try to be saved. My opinion is that there will be further political and economic integration as the cost of not doing this would be too economically costly for Europe and the rest of the world.
There will definitely be some changes made. What a mess.
ReplyDeleteI don't know what will happen, but they should have some sort of plan to gradually end the union.
I can't remember which post I commented on, but my prediction remains the same as it always has: Breakup of the Eurozone along Germanic/Latin-Greek lines: Germany, Netherlands, Austria,Luxembourg, Finland, Estonia, maybe Slovakia, maybe Slovenia in one zone, Italy, Spain, Portugal in the other. Not sure if Greece would be in this second zone or thrown out altogether. Not sure which zone France would end up in.
ReplyDeleteIn other words, those countries whose culture values hard work and those countries whose culture doesn't.
As I've said before: Germans won't stand for their taxes going to subsidize Greek laziness forever.
I agree with you Bud-D that that will most likely be what happens in the long run due to the fact that there is no common culture among the Europeans, but before the European politicans have no other choice but to accept reality they will do everything to keep the European monetary and political project alive to include Euro-bonds and further political/economic integration. Plus the consequences of a breakup would be disasterous and painful for the Europeans who have shown that they have no stomach for any form of austrity, so even though they may not like staying in the EMU and the Germans don't like having to bail out Greece they really don't have much of a choice.
ReplyDeletehttp://www.cnbc.com/id/47594790
I do agree with you Jeff, that the European elite will do everything they can to drag this out.
ReplyDeleteLooks like 2012-2013 will be the year according to this guy.
ReplyDeletehttp://www.zerohedge.com/news/big-reset-2012-and-2013-will-usher-end-scariest-presentation-ever