The End of the European Dream | 276 comments (274 topical, 2 editorial, 0 hidden)

Re: "... But the Currency is Good" (none / 1)

Writing sensible rules for the Eurozone in the Maastricht Treaty would have been a major plus.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon May 9th, 2011 at 04:52:12 PM EST
[ Parent ]

Re: "... But the Currency is Good" (4.00 / 3)

What was written was what Germany would sign up to. And I continue to think the "leaders" of the time expected further development re economic governance. They were wrong. But my point is that they were not "visionary" or "starry-eyed" - more likely "worried" would be the word.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon May 9th, 2011 at 05:01:24 PM EST
[ Parent ]

Re: "... But the Currency is Good" (none / 0)

Worried the club med would undermine German stability?

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon May 9th, 2011 at 05:57:32 PM EST
[ Parent ]

Re: "... But the Currency is Good" (none / 1)

afew:

what they feared: Germany dominating Europe and using Central Europe as its economic backyard.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue May 10th, 2011 at 09:52:45 AM EST
[ Parent ]

Re: "... But the Currency is Good" (4.00 / 2)

What was written was what Germany would sign up to.

Then the Euro was a bad idea, and Maastricht sans EMU would have been a better treaty.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 10th, 2011 at 09:25:16 AM EST
[ Parent ]

Re: "... But the Currency is Good" (4.00 / 2)

The euro with no further evolution in terms of economic governance has now been shown to have been a bad idea.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue May 10th, 2011 at 09:55:04 AM EST
[ Parent ]

Re: "... But the Currency is Good" (none / 1)

Or perhaps it was a good idea inadequately implemented, and the problem now is that the political environment has now changed so much in a bad way that demonstrable problems cannot be fixed any longer. A resurgent German nationalism seems to have paralysed the EU. But if there were a coherent alternative majority on the Council, Germany could be outvoted. So perhaps the spinelessness of the rest of Europe is as much to blame.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue May 10th, 2011 at 10:12:24 AM EST
[ Parent ]

Re: "... But the Currency is Good" (4.00 / 3)

You cannot build a system that deliberately favours the most powerful player and then expect that it will be reformed to something better in the future. That is, well, "starry-eyed idealism" is a term that comes immediately to mind.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 10th, 2011 at 10:25:15 AM EST
[ Parent ]

Re: "... But the Currency is Good" (4.00 / 4)

The same mistake made at Bretton Woods, and for exactly the same reason, failing to solve exactly the same problem.

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Tue May 10th, 2011 at 10:30:54 AM EST
[ Parent ]

Re: "... But the Currency is Good" (none / 1)

The overwhelming dominance of one player?

It is very difficult for a political process/negotiation to solve that problem unless all the other payers have a united and coherent opposing position. So far the Eurozone crisis has seen a conspicuous lack of solidarity of anyone with or for anyone else. It's every member for themselves at the moment with the majority keeping their heads down and hoping not to have to get involved.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue May 10th, 2011 at 10:38:20 AM EST
[ Parent ]

Re: "... But the Currency is Good" (4.00 / 2)

The problem is the macroeconomic instability resulting from the tendency of trade balances to grow more lopsided with time. The solution is the introduction of penalties on net exporters. The difficulty is that, until a crisis hits, there is no incentive to do anything, and after the crisis hits the exporter of last resort has everyone else over a barrel.

See: the US at Bretton Woods, China at the G20, Germany in the Euro.

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Tue May 10th, 2011 at 11:03:31 AM EST
[ Parent ]

Re: "... But the Currency is Good" (none / 1)

If you think Mitterand and Delors were starry-eyed idealists, have a bag of salmiak on me ;)

More than anyone seems to want to recognize in this discussion, the rapid fall of Communism redrew the map of Europe and forced them into an attempt to tighten the bolts on the European superstructure. I don't know to what extent they believed it would really work. Maybe I should try to see if Delors has said anything of late. Mitterand, apparently, is silent.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue May 10th, 2011 at 10:39:56 AM EST
[ Parent ]

Re: "... But the Currency is Good" (none / 1)

Hmm, time to revisit Reunification - some history rewriting where Jerome downplayed claims that Mitterrand feared reunification, or DoDo's "We'd better take down the wall ourselves".

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Tue May 10th, 2011 at 11:05:58 AM EST
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Re: "... But the Currency is Good" (none / 0)

afew:

My memory from that time is also that Mitterand feared reunification but was resigned to it - and negotiated with Kohl to get stronger European integration, particularly wrt the common currency, as the price of his support.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue May 10th, 2011 at 11:28:49 AM EST
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Re: "... But the Currency is Good" (4.00 / 4)

Maybe the Convergence Criteria and the Growth and Stability Pact were macroeconomic nonsense, and lately the ~~Competitiveness Pact~~ ~~Pact for the Euro~~ Euro-Plus Pact is just ideological shock doctrine.

Without a negative feedback mechanism for limiting the growth of internal trade imbalances, and with arbitrary constraints on fiscal policy and an ideological prohibition of "printing money" the thing was primed for a blow-up. We're actually unfortunate that the global financial crisis started with the subprime crisis and acted as a trigger for the Eurozone crisis, allowing people to pretend that all was well with the Eurozone had it not been for contagion from across the Atlantic.

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Tue May 10th, 2011 at 10:26:55 AM EST
[ Parent ]

Re: "... But the Currency is Good" (none / 0)

Uh, didn't Germany write it?

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Tue May 10th, 2011 at 09:46:10 AM EST
[ Parent ]

Re: "... But the Currency is Good" (none / 0)

Uh, did it?

by afew (afew(a in a circle)eurotrib_dot_com) on Tue May 10th, 2011 at 09:53:37 AM EST
[ Parent ]

Re: "... But the Currency is Good" (none / 0)

Didn't the German Finance Ministry design the Euro convergence criteria under Theo Weigel, and then later the Stability and Growth Pact?

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Tue May 10th, 2011 at 10:07:22 AM EST
[ Parent ]

Re: "... But the Currency is Good" (none / 1)

They certainly had a lot of input (not particularly starry-eyed or visionary, btw), accepted by partners who wanted to tie them in. The expectation was that - as had happened before - there would be further moves towards "greater union" in terms of economic governance because everyone, the Germans included, would simply be forced into them by circumstances. But Germany stood by monetarism and moved towards mercantilism, and the whole continent got converted to marketista theology which prevented either right or left governments from reacting to that.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue May 10th, 2011 at 10:24:53 AM EST
[ Parent ]

Re: "... But the Currency is Good" (none / 0)

Why did Germany "need to be tied in", and why into a monetary union?

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Tue May 10th, 2011 at 10:29:43 AM EST
[ Parent ]

Re: "... But the Currency is Good" (none / 0)

To mitigate German hegemony...

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue May 10th, 2011 at 10:39:03 AM EST
[ Parent ]

Re: "... But the Currency is Good" (none / 1)

Then a monetary union is exactly the wrong tool.

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Tue May 10th, 2011 at 11:05:07 AM EST
[ Parent ]