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I don't think Germany is the problem, just the main symptom. Yes, Germany runs an unsustainable strategy for current account surpluses and fixed exchange rate. But absent cooperation from ECB and political leaders all across Europe they would have been forced to recycle their surpluses or see their claims written of.

The main problem is instead that all of the elite politcal class and the ECB are acting in collusion (based on belief or interest) to apply Shock Doctrine to the European economies, starting from the periphery.


I agree that 'all of the elite political class and the  ECB are acting in collusion' and this is obvious NOW. It was a different world in 1990 when the process began. But Germany is the chief national beneficiary of the status quo and the lead defender. So long as it plays this role it remains difficult to expose the role that elites in all countries are playing in this process and impossible to counter that policy.

The 'cooperation from the ECB' was baked into the cake when the EMU was established as a part of the price for Germany entering. And the interests being advanced were obviously those of the elites considering that the first step was removal of controls on capital flows. This should have only followed implementation of effective prudential regulation and establishment of Euro Zone wide bank resolution policies financed by a Euro Zone wide source of funding.

A significant incentive to German elites for joining was that debtors in other countries could no longer devalue their debts. The consequences of these factors were much cleared to interested party elites than to most citizens. 'Most citizens' were convinced that the EMU would IMPROVE their condition, which was one of enjoying the benefits of social welfare policies, not DEGRADE their condition by stripping away those benefits to the enrichment of the elites.

 Had those citizens believed that such changes as have come about since would indeed happen I cannot believe they would have favored joining. I would argue that there was no true 'meeting of the minds' on the part of citizens of future EMU nations. The citizens were duped.

Say that several countries are forced out after electing governments that would support living wages, renewable energy and full employment. None of those needs a monetary union. With a Seuro, two arguments in favor of the euro would be gone, a Seuro grants neither European unity nor sooths insecure emotions by being a symbol of being accepted into Europe proper. There would be a simple reason against, the failures of EMU showing the risks and no arguments in favor.

Governments that could support living wages, renewable energy and full employment might concievably be elected, but if these countries are not of significant economic and political weight they are much less likely to be able to sustain these policies in the face of predictable sabotage by those remaining in the EMU. That is one major benefit of a Seuro union.

Also a Seuro union, especially were it to include Italy, would give greater weight and power to insure reasonable treatment by the EMU due to its new found ability to renegotiate or default on debt held by EMU entities. They could, for instance, declare that the gratuitous damage done by Troika policies be deducted from the debt owed. And the ability of an SCB to employ creation of endogenous money for self liquidating investments could quickly turn around the economies of peripheral countries, providing a clear example of practical alternatives to austerity while shooting TINA in the head.

But the biggest benefit that the creation of a Seuro Union would have would be to break the control that conservative interests currently have over policy. As for soothing 'insecure emotions by being a symbol of being accepted into Europe proper' I would say that this is best accomplished by said citizens learning to stand up for their own self interest rather than being addicted to meaningless lies and delusions. Being 'accepted into Europe proper' may be the post modern version of Marx's 'opiate of the people'.      

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Sep 20th, 2013 at 11:55:32 AM EST
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ARGeezer:
Governments that could support living wages, renewable energy and full employment might concievably be elected, but if these countries are not of significant economic and political weight they are much less likely to be able to sustain these policies in the face of predictable sabotage by those remaining in the EMU. That is one major benefit of a Seuro union.

But they don't need a Seuro union to cooperate. If a couple of peripheral countries got their act together they could easily gum up the works in the EU.

Thinking about it, if they are in practise removed from the euro zone - but through ECBs grabbed power rather then any legal procedure - then I think they would retain their seats at the ECB Governing Council. And they would in any case have their seats in the Council of the European Union, which appoints - by a qualified majority - the executive board of the ECB.

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by A swedish kind of death on Fri Sep 20th, 2013 at 03:00:09 PM EST
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