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Martin Wolf: A disastrous failure at the summit (FT.com)
Mr Cameron presented his colleagues with a list of demands designed to protect both the City and the ability of the UK government to regulate it, largely unhindered by European regulators. Mr Cameron could have stated, instead, that he would accept a treaty applicable only to members and candidate members of the eurozone. He could have intimated that he would put a treaty that did any more than this to a UK referendum (which would have been surely lost). Instead, he ended up with no additional safeguards for the City and a semi-detached status inside the European Union, of which, he has insisted, he wants the UK to remain a member. That is not a success. He has achieved nothing positive, but will undermine the credibility of UK membership of the EU. That brings substantial costs.

...

The core decision was to strengthen fiscal discipline, so building what Angela Merkel, Germany's chancellor, and Nicolas Sarkozy, the French president, last week called a "stability and growth union" - or, as I think of it, an "instability and stagnation union". Even under an intergovernmental treaty, this reinforced discipline could probably still occur via EU institutions, as Olli Rehn, European commissioner for economic and monetary affairs, now argues.

...

Still more important, as professor Kevin O'Rourke of Oxford university argues on Project Syndicate, is that it is also an economic monstrosity. Let me make this point by turning last week's analysis of the balance of payments into one of foreign, private and government financial balances in eurozone members (see charts). To remind readers: these have to add up to zero, by definition. But how they go about adding up is revealing.

Wow. First pointing out that the "Stability and Growth Pact" and now the "Stability and Growth Union" actually foster instability and stagnation, and then getting religion on three-sector accounting (get your paradigm shifts 19 months early on European Tribune).

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Wed Dec 14th, 2011 at 04:36:10 AM EST
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