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FT.com: Slithering to the wrong kind of union By Otmar Issing (August 8, 2011)
If these conditions do trigger reforms - which in many countries is long overdue - that would be welcome. However, the fact that a member country can be assured that its membership of the euro - even in the case of permanent violations of the rules - will be saved at any price causes moral hazard and creates an obvious potential for blackmail.

...

Emu is based on rules enshrined in international treaties. The euro was created as a "depoliticised currency" - its stability entrusted to an independent central bank with a clear mandate to maintain price stability. Any attempt to "save" monetary union via agreements which transfer sovereignty to a European level, where violations of fundamental treaties have become a regular event, lacks any logic. In the end it will only further alienate the people from Europe itself.

A monetary union with a stable euro can only survive if central bank independence is fully respected. This implies that the European Central Bank abstains from fiscal policy actions. Yet to change the "no bail-out" clause ever more in the direction of a bail-out regime is not a step towards a democratically-legitimised political union. It is a move on a slippery road to a regime of fiscal indiscipline drowning hitherto solid countries in the morass of over-indebtedness.

(Google link)

Paying lip service to "political union" and praising the European project of economic integration, a piece against Eurobonds, for strenthening the Stability and Growth Pact, and against a "transfer union".

The only avenues Issing does not rule out are defaults and Eurozone exits - even expulsions.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Tue Aug 9th, 2011 at 05:23:45 AM EST
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