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2015-07-29

German Council of Economic Experts economists expressed scepticism about any moves towards a eurozone Treasury

FT 28 July 2015

“Making the euro area collectively responsible for potential costs without member states giving up any national sovereignty over fiscal and economic policies would, sooner or later, make the currency union more unstable,” they wrote.

The experts’ report follows a claim in Der Spiegel that the German finance ministry was open to the idea of transferring German tax revenues to a eurozone budget.

German government officials said these discussions were at an early stage and would require treaty changes.

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Marcel Fratzscher, president of DIW Berlin in FT:
The creation of a proper fiscal union is the most urgent reform

Problemet med climate change är inte att det blir tre grader varmare, vilket vore skönt i Sverige, utan att havsytan kan stiga tre meter.

2015-07-28

Marcel Fratzscher, president of DIW Berlin in FT: The creation of a proper fiscal union is the most urgent reform

I går skrev jag om att 

Italy’s finance minister calls for ‘political union’ to save euro

I dag är det dags för det tyska eldunderstödet till de italienska bröderna.


The creation of a proper fiscal union is the most urgent reform and a rare opportunity for Europe to get Germany back on board


Marcel Fratzscher, president of DIW Berlin, a think-tank, FT 27 July 2015


A fiscal union should include a eurozone finance minister — an idea long favoured by Wolfgang Schäuble, Germany’s finance minister. Such a person would be accountable to a strengthened European Parliament with a new chamber for euro area issues. 


He or she could have the right to intervene in national budgets if these violate European law, such as the fiscal compact, and have a budget financed through a European tax as an add-on to either the value added tax or the corporate tax of euro area member states. 


The minister could have the ability to issue some jointly guaranteed debt within narrow limits. This ability to tax and borrow could be limited to two purposes: to provide unemployment insurance and to support investment.


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Deutsches Institut für Wirtschaftsforschung


Das DIW Berlin - Deutsches Institut für Wirtschaftsforschung ist eines der größten Wirtschaftsforschungsinstitute in Deutschland.  

Als Mitglied der Leibniz-Gemeinschaft wird das DIW Berlin überwiegend aus öffentlichen Mitteln finanziert.

DIW Berlin



News


2015-07-27

Italy’s finance minister calls for ‘political union’ to save euro

I går skrev jag på denna blog att Krugman visar bristande militans.

Hans skriver att The point is that it wasn’t at all hard to see, right from the beginning, that currency union without political union was a very dubious project. 

Detta kan leda tanken fel.

Saken är den att Currency union with political union is an even more dubious project.
..

I dag läser jag i Financial Times att 

Italy’s finance minister calls for ‘political union’ to save euro

Italy is calling for a wide set of measures — including the swift completion of banking union, the establishment of a common eurozone budget and the launch of a common unemployment insurance scheme — to reinforce the common currency. 

He said an elected eurozone parliament alongside the existing European Parliament and a European finance minister should also be considered.

The Italian finance minister is confident this is the right path for the eurozone, but he is not certain it is a winning battle. Many eurozone governments, including Italy, are facing pressure from people who are increasingly sceptical about the merits of existing European economic integration, let alone the possibility of more to come.


Detta är ett led i den stora konspirationen.

"I am sure the euro will oblige us to introduce a new set of economic policy instruments. It is politically impossible to propose that now. But some day there will be a crisis and new instruments will be created."
Romano Prodi, EU Commission President. Financial Times, 4 December 2001

Men om man ställer till rejäla kriser, så kan varje nationell maktelit skrämma sitt folk till underkastelse. De tvingas acceptera. EU-kommissionens tidigare ordförande, virrpannan Romano Prodi, var så omedveten att han skrev en kolumn i självaste Financial Times (20 maj 2010), där han lugnt konstaterade att han och alla de andra som drev fram europrojektet naturligtvis visste att det skulle leda till en svår kris förr eller senare.

Jag citerar: ”When the euro was born everyone knew that sooner or later a crisis would occur. It was inevitable that, for such a bold and unprecedented project, in some countries (even the most virtuous ones), mistakes would be made and unforeseeable events occur.” 

Nils Lundgren 2011





2015-07-26

Krugman: Who could have foreseen the huge problems the euro would eventually cause? Actually, lots of people., /but not Jonung/

In January 2010 two European economists /Lars Jonung and Eoin Drea/ published an article titled “It Can’t Happen, It’s a Bad Idea, It Won’t Last,” mocking American economists who had warned that the euro would cause big problems. 

The only big mistake of the euroskeptics was underestimating just how much damage the single currency would do.

The point is that it wasn’t at all hard to see, right from the beginning, that currency union without political union was a very dubious project. So why did Europe go ahead with it?

Mainly, I’d say, because the idea of the euro sounded so good. That is, it sounded forward-looking, European-minded, exactly the kind of thing that appeals to the kind of people who give speeches at Davos. 

Such people didn’t want nerdy economists telling them that their glamorous vision was a bad idea.

Paul Krugman 20 July 2015


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RE: Currency union with political union is an even more dubious project.

See "ever closer union" - The United States of Europe

Lars Jonung at IntCom




2015-07-22

Bill Emmott, a former editor of The Economist: Eurozone is happy to back Berlin when it is wrong and resist it when it is right, FT July 21, 2015

Eurozone is happy to back Berlin when it is wrong and resist it when it is right

Bill Emmott, a former editor of The Economist and executive producer of the ‘The Great European Disaster Movie’, FT July 21, 2015 

What I mean by “right” is the view expressed by Wolfgang Schäuble, Germany’s finance minister, that Greece should leave the euro, both for its own sake and that of the single currency itself. And even if you don’t think it is right, it is certainly logical.

It is hard to find a better definition of “wrong” than the fiscal pact of 2012, which mandates a universally tight fiscal stance in the eurozone, regardless of whether a country has an affordable level of public debt, regardless of the cost of borrowing and regardless of the state of aggregate demand, and which simultaneously rejects any idea that countries with large current-account surpluses bear any responsibility for adjustment.

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John Plender on Bubbles

Bubbles will be clearer as central banks start to normalise policy
John Plender, FT 21 July 2015


For unreconstructed efficient market theorists, bubbles do not exist. 

For semi-reconstructed ones, they exist but, as former Federal Reserve chairman Alan Greenspan claimed in the late 1990s, they are perceptible only after the fact. To spot a bubble in advance, he declared, requires a judgment that hundreds of thousands of informed investors have it all wrong.

Given that many spotted the dotcom bubble in advance and identified the property bubble before the credit crunch of 2007, the semi-reconstructed position seems almost as eccentric as the out-and-out efficient market stance. 

The eccentricity is further underlined by the fact that 2015 has witnessed two of the most readily detected bubbles in history.

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John Plender at IntCom

2015-07-09

Martin Wolf: There are no /Greek/ government deficits to finance consumption (or almost none). So money would be used to pay interest and amounts due.

There are no government deficits to finance consumption (or almost none). So money would be used to pay interest and amounts due.

Martin Wolf

I mailed him and asked: 

How much money will Greece use to roll over old loans?
And how much is used to pay gov deficits for consumption?
I am a bit ashamed not to know this.

Om man ger ett treårigt lån till Grekland på t ex 100 miljarder euro, skall man då bli förvånad om Grekland efter tre år kommer tillbaka och vill låna 100 miljarder igen

Om man ger ett treårigt lån till Grekland på t ex 100 miljarder euro, skall man då bli förvånad om Grekland efter tre år kommer tillbaka och vill låna 100 miljarder igen så att de kan lösa det förfallande lånet?
Till min generade häpnad upptäcker jag att jag inte vet hur mycket av de pengar Grekland nu vill låna, i utbyte mot ytterligare nedskärningar, som skall gå till deras överkonsumtion och hur mycket som skall användas till att rulla runt tidigare lån.

Tillagt

Where did all the money go?
http://www.macropolis.gr/?i=portal.en.the-agora.2080

Credit Jesper Katz

I länken finner du historisk data. Frågan om andelen som går till grekisk budget, rekapialisering av grekiska banker resp. återbetalning av skuld i framtiden vet vi inte då de två första variablerna är okända.

Rolf Englund Det är väl en allvarlig brist i vår kunskap? The people has a right to know hur mycket som går till lata grekers pensioner och hur mycket som går tillbaka till EU?

Jesper Katz: Visst vore det intressant att veta hur mycket som är verkligt nya pengar och hur stor andel bara är att ersätta gamla skulder med nya. Det skulle ge oss en siffra på hur mycket skattebetalarna i andra EU-länder skall ge till Grekland netto denna gång (även om det kommer kallas lån). 

Men jag vill i sammanhanget påminna om att pengarna som går tillbaka inte främst går till EU men till olika länders budgetar. Exempelvis, har Estland lånat ut - om jag minns rätt - ca 4 procent av BNP. Och skulle ECB inte få tillbaka sitt kapital och tvingas rekapitaliseras skulle detta tas ur medlemsländernas centralbanker och inte kunna delas ut till deras länder...