Stiglitz: Reform or Divorce in Europe | 79 comments (79 topical, 0 editorial, 0 hidden)

Unless the Seuro has a true fiscal union.

The premise of my argument is that a SEURO Monetary Union would start with significant recycling mechanisms including a shared, portable unemployment, health care and retirement scheme, and both monetary and fiscal policies suitable to the needs of trade deficit countries. Another premise is that these conditions would have to be accepted by new members seeking to join.

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 28th, 2016 at 03:21:10 PM EST
[ Parent ]

Re: SEURO? (4.00 / 2)

That's the reason why I think that it is even less likely to happen than the radical reform of the treaties proposed by Stiglitz.

And I am sure that, for political and ideological reasons, as well as national and individual pride, no political leader or party will dare to prepare a second class currency union until the crisis has happened. And once the crisis happens, it will be too late...

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet

by Melanchthon on Sun Aug 28th, 2016 at 03:31:10 PM EST
[ Parent ]

Re: SEURO? (none / 1)

And once the crisis happens, it will be too late...

To the contrary, the day or the day after the collapse has occurred would be the most opportune time to put such a plan into action. The shock will be paralyzing action by most and they will be trying to figure out what they can do. Hopefully, some discussions and a general plan will have been prepared. Hopefully, Yanis Varoufakis will be involved, preferably as a senior advisor or as head of the SEURO Monetary Union, and capital controls will immediately be put into place. Then events will drive the rest. As soon as another EMU member joins the SEURO perceptions will change. And, at the least, countries that join will be joining a Monetary Union run along the lines that the EURO should have been run - for the benefit of all members. I suspect that, even before any new members join, Germany will see the threat and be forced to respond. At least the ice dam will have been broken.

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 28th, 2016 at 08:09:43 PM EST
[ Parent ]

Re: SEURO? (4.00 / 2)

Well that would be a very different response to the way they responded to the last financial crisis, which was to double down on austerity policies. Is there any evidence to support your conviction the response would be any different now?

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sun Aug 28th, 2016 at 08:37:59 PM EST
[ Parent ]

Re: SEURO? (none / 1)

My argument is hypothetical and analytical. I am a long time admirer of H.G. Wells and his fictive utopian novels and I believe it IS possible to make contributions through such fictive approaches.

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Aug 29th, 2016 at 12:37:35 AM EST
[ Parent ]

I hope I am wrong (4.00 / 4)

As you know, I sometimes like to take an argument to its logical conclusion to see where it might lead to, regardless of whether that accords with conventional views of reality. But I also like to be clear where there is supporting evidence and where what I am saying is, at best, hypothetical, and at worst, counterfactual.

In the case of your argument, you seem to be making the assumption that Southern European leaders are secret admirers of Yanis Varoufakis and are intent on ensuring that, unlike Greece, they will not allow their countries to become isolated, bullied into defeat by the Euro Group, and sold down a river.

I don't know (say) Italian politics well enough to be definitive, but I struggle to find any evidence to confirm your hypothesis. In fact, what evidence I see appears to confirm the opposite: That the hard nationalist right is in the ascendant and we are more likely to see a reversion to national currencies and nationalist/fascist policies than the creation of any grand redistributive schemes such as the Seuro.

The irony is that it turns out it was the UK, which has done relatively well out of the EU, which has been the first to call time on its participation in the European project. Greece probably had a much better cause for doing so. But the consequence is that the EU is now in retrenchment mode and we are in the business of saving what we can rather than in engaging in new, collective, imaginative initiatives.

Even I am pushing the boundaries of political reality when I call for the development of much greater EU integration of health care, education & training, social welfare, pensions/retirement, procurement, energy sustainability and security, infrastructural development, and Governance systems even though you can make a very good rational case that such integration could deliver much greater collective benefits at reduced cost than isolated initiatives by individual member states. Thus, even though such policies would have a progressive redistributive impact, all members states could still be winners.

I am hoping that the shock of Brexit combined with the persistence of anaemic growth despite all monetary stimulus will enable a re-think. The UK has always had a baleful influence on all community social market and integrationist initiatives, and so it's absence from the decision making process could be a positive. However the tide may be going out on the European Project. Merkel was the last European leader of real stature who could have made it happen, but her authority has been eroded by the refugee crisis and its impact on Germany. Hollande and Rajoy are lame ducks and the trend elsewhere is almost all in rightward, nationalist directions. What progressive movements there are are almost all marginal.

I hope I am wrong...

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Aug 29th, 2016 at 07:45:32 AM EST
[ Parent ]

Re: I hope I am wrong (none / 1)

I have made it abundantly clear that the most I would hope for is that the intital founders of a SEURO would actually take the steps to form such a union. The rest would be driven by events and consequences. Else the whole argument would be pointless, as most already assume it is.

As to justification, all I am arguing is that it is better to have some prepared position that is inherently left compatible into which EMU members that are unable to endure a collapse of the EURO and the chaos of again having a small economy and currency could take refuge or fall. It is, inherently, as strategy for desperate times. If it is better than nothing it will have achieved something.

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Aug 29th, 2016 at 01:42:48 PM EST
[ Parent ]

Re: I hope I am wrong (4.00 / 2)

I think we're about due for a Wall St Crash Mk II, followed by a move to fascism and violent dictatorship, followed by war, which may be terminal. (Most of Europe would be reduced to a radioactive swamp.)

Isn't that how these things usually end?

Progressives tend to forget that left-leaning movements only make headway when they have the support of the bourgeoisie.

In the UK, Labour would have gotten nowhere was a movement of workers. It was the support of the upper classes that made it a viable political movement.

And then after WWI, aspirations to communism and support for the Soviet Union were a right of passage for most of the Oxbridge crowd.

Today? The Oxbridge crowd mostly want jobs in finance and/or a nice property portfolio. Organised idealism is rather hard to find.

The Parliamentary Labour Party and the Fabian Society are practically camping out of the doorstep of the Tory party. There are some vague lingering remnants of interest in Social Democracy - certainly no Socialism - but even plain old centrism is considered extremist left-wingery now.

And there's nothing new to take the place that socialism used to have. Occupy failed, mainstream progressives in the US are a wholly owned subsidiary of Washington Inc, and Trump is taken seriously as a presidential candidate.

As is Hillary.

There's very little to be optimistic about. Technologically, there's endless scope for change. But it's unlikely to happen without a convulsion that clears away the old zombie form of insane neoliberalism and replaces it with something fresher and better able to imagine and create a humane future.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Aug 29th, 2016 at 03:29:22 PM EST
[ Parent ]

Re: SEURO? (none / 1)

Yes. All the "something less than a train wreck" scenarios rely on the classical liberal axiom of rational actors acting rationally, when history indicates we'll be far more likely to get, "When in danger or in doubt, run in circles, scream and shout."

by rifek on Tue Aug 30th, 2016 at 02:48:51 PM EST
[ Parent ]

Re: SEURO? (3.67 / 3)

Hopefully, some discussions and a general plan will have been prepared.

As Migeru pointed elsewhere, if such a plan was prepared in advance, it would raise a lot of political opposition, unless it is kept secret, which would be impossible.

And I can say I seriously doubt Yanis Varoufakis would support a SEURO union.

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet

by Melanchthon on Sun Aug 28th, 2016 at 09:20:15 PM EST
[ Parent ]

Re: SEURO? (none / 1)

Informal discussions between principals could be kept contingent, hypothetical and fairly confidential. Those involved would have to be careful not to deny the rumors, just dismiss them as mere rumors based on hypotheticals. "It is never official until it is denied."

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 28th, 2016 at 09:34:23 PM EST
[ Parent ]

Re: SEURO? (none / 1)

It would make perfect sense for Italy or other countries faced with the prospect of the collapse of the Euro to consult with Yanis Varoufakis if he agrees. After all he almost certainly has the best grasp on all of the problems involved from his experience with Greece. And it would be impossible to distinguish whether those discussions also included a possible SEURO Union - unless a party to the discussions spoke publicly, and even then...

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 28th, 2016 at 09:43:44 PM EST
[ Parent ]

Yanis Varoufakis (4.00 / 4)

Yanis Varoufakis is politically toxic as far as Europe's political and financial elite are concerned. Anything involving him will immediately be dismissed as:

academic
not serious
wrong headed.

So yes, if a Seuro actually emerged from any discussions involving him it would come as a complete shock to Europe's elite as they will have steadfastly ignored everything involving him. He could have been blogging about it for months and presenting academic papers on the topic, and it would still come as a shock to them.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sun Aug 28th, 2016 at 11:39:09 PM EST
[ Parent ]

Re: Yanis Varoufakis (none / 1)

So much the better. "Europe's political and financial elite" NEED a whack up side their collective heads with a 2X4 to get their attention. Might even get some to pull their heads out of where they have so long been - though I cannot imagine how the mechanics of that metaphor might work.

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Aug 29th, 2016 at 12:03:21 AM EST
[ Parent ]

Re: SEURO? (4.00 / 4)

Agreed. His ideas would seem to be more along the line of creating a parallel currency in the deficit country, which under Lisbon is legal.
This would seem easier to organise than SEURO by an order of magnitude and make sure that most of the stimulus happens locally until such time as this currency is recognised abroad, which may be never. So that makes two advantages. Not sure how it could be gamed by the financial sector as convertibility would be restricted.

There is a possibility that in a second phase such currencies could join a SEURO I suppose, but that could not be an immediate response to a crisis.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Mon Aug 29th, 2016 at 06:38:58 AM EST
[ Parent ]

Re: SEURO? (none / 1)

There is a possibility that in a second phase such currencies could join a SEURO I suppose, but that could not be an immediate response to a crisis.

That would depend entirely on the desires of the first two members of a SEURO. An Itallian 5* led government and Greece could very well decide to set up such a SEURO just for the reasons I have indicated. That step alone might bring about a change in the attitudes of the German Government which could obviate the need - or not. But the very existence of such a union would be an existential threat to Germany's current dominant position - if Germany has the wits to see that and act on it.

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Aug 30th, 2016 at 09:52:29 PM EST
[ Parent ]

Stiglitz: Reform or Divorce in Europe | 79 comments (79 topical, 0 editorial, 0 hidden)

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