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I recall proposing an "neuro/seuro" divide as a possible solution to the existing fiscal policy needs of the different areas. However, it would be pointless unless the "seuro" area political leaders had coherent ideas about a common "seuro" political economy, especially concerning when, why and on what they should deficit spend. Putting Yanis Varoufakis in charge of common economic policy, creating a "Seuro Central Bank" and a "Seuro Investment Bank" would be hopeful steps, but to whom would he report? Are there two or three sane politicians in the entire "seuro" area who could provide leadership? And how would two monetary unions fit into the existing EU structure? It makes my head hurt.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Aug 31st, 2011 at 02:59:21 PM EST
Are there two or three sane politicians in the entire "seuro" area who could provide leadership?
Spain wouldn't know a sensible monetary policy it if hit it in the face.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Aug 31st, 2011 at 03:25:40 PM EST
[ Parent ]
Oh, I'm sure Trichet would be available <ducks>
by Bernard on Wed Aug 31st, 2011 at 03:30:01 PM EST
[ Parent ]
But is a seuro meaningful? The euro was a political project to unite EU, the neuro if the southern countreis are expelled is business as usual for the remaining countries, but for the expelled to unite in a seuro would be because of what?

As I see it the meaningful levels of currency are the same as the political levels. If we could have a seuro with functioning rules, then we could just as well reform the euro. If we can not do that, we can not have an EU currency and then memberstate becomes the default level.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Wed Aug 31st, 2011 at 03:43:03 PM EST
[ Parent ]
But is a seuro meaningful?

Yes.

But it may not be a meaning that the Hanseatic League (sorry, Neuro countries) will like.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Aug 31st, 2011 at 04:00:49 PM EST
[ Parent ]
Size matters. If there is a neuro-zone comprised of the current surplus countries their economic weight would make the remaining EU countries more vulnerable to market attacks, among other problems. It is a version of PIIGS UNITE! If such a seruo-zone could issue bonds and invest in needed infrastructure and were it willing to take on the function of a transfer union or its equivalent equivalent it could serve to boost the welfare of all members. The trick would be embodying a mechanism for growing economic activity and well-being in all member states instead of having predatory members who played winners and losers within the union. It would then also serve as an alternative for neuro-zone countries that find themselves uncomfortable with now being at the bottom of their currency union pecking order instead of towards the top.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Aug 31st, 2011 at 04:18:02 PM EST
[ Parent ]
how would two monetary unions fit into the existing EU structure?

It might be helpful were there a better answer to the question of how ONE monetary union fits into the EU. Seems that the best answer we have to that question is "badly".

This is likely the consequence of attempting to pretend that economics is a completely separate sphere from politics. That assumption, which has been spread far and wide, stultifies any attempt at meaningful discussion.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Sep 1st, 2011 at 09:34:29 AM EST
[ Parent ]
ARGeezer:
how would two monetary unions fit into the existing EU structure?

It might be helpful were there a better answer to the question of how ONE monetary union fits into the EU. Seems that the best answer we have to that question is "badly".

But two would fit worse, because we have one parliament, one commission, one investment bank and so on. Yes, we need a treasury that can do contra-cyclical spending (and a stronger parliament and other changes), but fractioning institutions in accordance with import/export balances is imo unlikely to help. Should the Seuro-zones SEIB and SECB have oversight from a South European Parliament?

As I see it, if the leaders of the import countries could make a functioning seuro, they could use that knowledge and skill to reform the euro. At present, the TINA-approach in the south is an almost as big a problem as the TINA-approach in the north.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Fri Sep 2nd, 2011 at 03:24:04 PM EST
[ Parent ]
Before there was a Euro there was an ECU (European Currency Unit). So even if the Eurozone breaks up the EU would presumably still do its accounting in Euros...

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri Sep 2nd, 2011 at 05:38:13 PM EST
[ Parent ]
Should the Seuro-zones SEIB and SECB have oversight from a South European Parliament?

Under a Neuro/Seuro scenario, both would be run under the enhanced cooperation rules, rather than under Parliament/Commission authority.

Besides, you can always declaw a federal central bank it by making it issue Seuro only to cover internal balance of payments imbalances within the Seurozone and undercut speculative attacks between Seurozone member currencies.

Not that I see any pressing economic need for a Seuro at all. I can see the political point, but frankly I am not convinced that it is worth the trouble of setting up an enhanced cooperation framework just to give the middle finger to the BundesBank.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Sep 3rd, 2011 at 11:45:16 AM EST
[ Parent ]

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