I disagree Euro. Sure, the banking crisis in the US (and UK) was a big problem and kicked off the whole financial mess of the past few years ...However, the position the eurozone now finds itself in, is to a great extent self-inflicted: The euro was never going to work without a single economic government
I dont think I can agree. The eu is already quite tightly integrated financially. The system as it stands is capable of adjusting between members. What happened was a sudden and severe shock affecting all member countries. maybe greece was heading for a fall, but it was pushed over the edge. The other states have been unable to help because although they have more or less survived the push, they are severely weakened. Some are still toppling. It was by no means clear the EZ would have had difficulties had ordinary trading conditions continued. This goes to the heart of the current problem and possible reforms. Reforms must prevent the possibility of a future bank crash, but Britain specifically is resisting such measures.
the differing economic conditions of the countries were too divergent to manage without full fiscal union, and large transfers from North to South.
well, this is rather what we had. The free banking market decided it was perfectly safe to transfer vast amounts south. Then it decided it wasnt. This is the problem. Banks. Why exactly did banks decided this was safe? Because they knew damn well Germany would in the end be forced to bail them out? How could Germany allow this to repeat? The problem was transfers were too great.
Weighting euro policy in Germany's favour to allow an artificially low exchange rate for German exports, meant there was no way of stopping the economies of Ireland and Greece et al, from overheating (exacerbated by reckless behaviour). So the PIIGS were able to borrow at unacceptably low rates to buy German goods.
I dont understand. All I have heard says that the PIIGS pulled down Germany's exchange rate, but to the same extent Germany must have pushed up that of the PIIGS. So before all this happened, the effect would have been to slow the PIIGS economy. If they overheated, it wasnt for this reason. (...banks...)
Being trapped in the euro meant struggling countries didn't have the flexibility to withstand the storm (by changing interest rates, devaluing, QE, etc)
interest rates are very low and have been. Couldnt have done much better there. Devaluing? increases the costs of borrowing? Increases costs of imported raw materials. Increases inflation. Increases an upward spiral of wage denands. Honestly believe Greece would be doing better now if had Drachma?
Added to Germany's obsession with low inflation which further stifled growth.
Germany...you mean the one place in europe which seems to be financially still solvent? What did you say they are doing wrong and eveyone else is doing right?
Remains to be seen whether the ECB will, even now, intervene in a way that's necessary and adequate
Yes it will. It has already intervened as necessary (well, it has.) and will intervene more once Germany is satisfied fundamental guarantees are in place. I almost see the solution in place here.
I can't understand the non-euro 9 joining in (if indeed they all do) - they're locking themselves into a depressive austerity club, much closer budget scrutiny, loss of sovereignty, with little or nothing to show for it. Cameron could never have signed Britain up to it
Cameron's view is swayed by an obsession with the UK finance industry which no one else shares. Also, his own anti EU rabble. I repeat what Portillo said the other day, parts of the conservative party would pay any price, financial or political, to be out of europe. So they dont care if what Cameron does is bad for the UK so long as it drives a wedge between the UK and europe. In the UK we have seen the results of growth based on borrowing. There are many economists now saying it is impossible to continue this. So how are the europeans wrong?
The reason Cameron said no (I don't believe the EZ would try to force tighter fiscal policy for Britain when we aren't in the EZ) is because the EZ wanted to introduce a Tobin tax and increase financial regulation throughout the Europe - effecting London. Cameron did not find this acceptable, so he has put the interests of the finacial and political elite above creating a sustainable and balanced economy.
Exactly so.
From now on it will look like that the ez makes a desition for them self and offers it then to the eu... If not all eu countries confirm the ez will make it by them self by intergoverment treaties and offers every eu nation to join.
Nothing has changed then. This is exactly how the eu has always grown. Eventually people tend to join the centre block.
With this way we dont need a yes from all eu countries any more...
Again this is the historic trend. As more people have joined it has been accepted that decisions must be by majority.Who has a parliament where every member has a veto on legislation?
As you see from now on its the ez who makes the rules.
Notice it isnt just the ez countries planning to join the new treaty. You exaggerate. Also, wait a bit until the borrowing crisis reaches Britain and see how things look then.