The future of the Euro

Here are the slides from the Euro lecture: The Future of the Euro(All Souls).

 

Today we hear that Belgian bonds have been downgraded. Another day, another problem for the architects of the Euro. They are getting to the point where investors do not wish to lend to any of the Euro area countries, because investors have grave misgivings about the longevity of the currency and the stability of the individual states seeking to borrow money.

 

I argued yesterday that orderly break up would be the least damaging way of proceeding. If each country had its own currency and Central Bank again, they could start to compete and put in place a domestic growth strategy that might work. There will be substantial  losses, but those losses are already there in the system, within the banks and bond holdings. The argument is over how quickly they should be taken, and how the pain should be distributed.

 

If they wish to carry on with their currency they have to get much faster and bolder at creating their EU state and all purpose Central Bank, to give the currency chance of life, backed by a credible sovereign capable of making the necessary decisions. That poses all sorts of difficult democratic issues.

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117 Comments

  1. Mike Stallard
    Posted November 26, 2011 at 7:12 am | Permalink

    I have read through this. In no way am I an expert, but I think that, with a little help, I could happily learn quite a lot. It is simple and fairly put. So, thank you for letting us all see it, even though we cannot actually be at the lecture.

    Allow me to be personal for a moment. You must get terribly discouraged by keeping on repeating yourself and – yes – being treated as a Maverick (BBC talk = loony). Please don’t get discouraged. You are building up a loyal and determined following here and people will listen eventually. It is a cogent and lucid message: keep saying it please!

    • Amanda
      Posted November 26, 2011 at 9:35 am | Permalink

      John Redwood for Chancellor

      • George Stewart
        Posted November 26, 2011 at 1:04 pm | Permalink

        He should be PM.

      • Peter T
        Posted November 26, 2011 at 1:36 pm | Permalink

        I second that. It has been obvious for some time that he has the knowledge and the intellect. Why he is not already Chancellor is something of a puzzle to me.

      • BobE
        Posted November 26, 2011 at 6:47 pm | Permalink

        Thank you John.

    • Oldrightie
      Posted November 26, 2011 at 9:39 am | Permalink

      It gives me much pleasure in endorsing this comment post. Particularly the latter sentiment. Heroes are always marked by their courage in tough situations. Few generals were ever heroic material!

    • libertarian
      Posted November 26, 2011 at 10:24 am | Permalink

      Mike

      I agree with your sentiments entirely. John Redwood is one of a very very small number of politicians with the talent, knowledge and ability to make a positive difference to our economic way of life, so of course the metro media and the idiot talentless “charisma” politicians not only don’t listen but consistently ridicule.

      What some of that talentless bunch need to realise is that in an internet age they won’t get away with the normal trick of pretending they knew ( are you listening Vince Cable?) all along as we know different.

    • Disaffected
      Posted November 26, 2011 at 11:47 am | Permalink

      Totally agree with the first blog- thank you for taking the time to encourage useful informed debate rather than the language of fear that Lib Dems and Europhiles use to con the public.

      I thought Lords Lawson and Turnbull wrote a particularly good open letter to Huhne yesterday about distorting the causes of climate change when there is no substantive scientific evidence to substantiate what Huhne says. Worth a read, irrespective of your view on the subject, because it demonstrates very intelligently how Huhne is misguiding people by his claims.

      You must also align with Boris, David Davis, Ian Duncan Smith and get rid of Cameron he is a walking disaster for your party.

      • BobE
        Posted November 26, 2011 at 6:46 pm | Permalink

        In case anybody missed the letter. Here is a link to it.
        Lords Lawson and Turnbull have written an open letter to Chris Huhne over climate change. : http://is.gd/FncOcc

  2. sinosimon
    Posted November 26, 2011 at 7:29 am | Permalink

    MrRedwood, do you have a view on Detlev Schlichter’s analysis that what we are seeing is the unwinding of the post Bretton-Woods paper money era? And what should we do to protect ourselves if this catastrophic shock comes about?

    Reply: I agree that we are living with the consequences of poor management of paper currencies and fractional reserve banking. Those who want gold backed currency again are no longer the mad fringe of the debate. The whole post Bretton-Woods system is on trial, and the architects of the present settlement have a lot to prove to stabilise it.

    • sinosimon
      Posted November 26, 2011 at 10:05 am | Permalink

      Thank you for replying. Given the political pressures to relieve what I think de Tocqueville called ‘the masses voting themselves largess from the treasury’ how can governments with elastic money ever be relied on to do the right thing? Whatever system of controls is supposedly chosen, if politicians cave in to demands for ever greater social benefits with no growth to underpin them the currency is debauched.

      • Kenneth
        Posted November 26, 2011 at 12:17 pm | Permalink

        I think governments need proper scrutiny which can only come from democracy: we need to harness the wisdom of the People.

        However, we must guard against coaching of public opinion through propaganda. We are are being told the truth, but not the whole truth by our media.

        Remember the EEC referendum? Neither our media nor government leaflets said very much about ‘ever closer union’. We were mislead about the group we were joining. We cannot be blamed for making the wrong decision if we are not properly informed.

        This is why, in my view, why we need to have balanced media through media diversity and plurarity AND strict balance at the BBC which is still woefully lacking.

    • libertarian
      Posted November 26, 2011 at 10:27 am | Permalink

      Rather than a purely gold backed currency would not an agreed basket of commodities be a better option?

      • Gary
        Posted November 26, 2011 at 3:35 pm | Permalink

        A basket of sinking fiat currencies, why should that be any be better ? They are ALL sinking, just some faster than others. This is easy to see. Ask yourself how much a loaf of bread cost 15 years ago in any fiat currency. The dollar alone has lost 80% or more since 1971 and more than 95% since the federal reserve began. All skimmed by the bankers through inflation. Get out of this paper !

        • zorro
          Posted November 26, 2011 at 4:40 pm | Permalink

          Forgive me but I don’t have time to find the reference….but I remember doing some research showing that income tax take in the US covers the interest on money created by the Federal Reserve since 1912. Of course, that money could have been printed without interest but then the private banking interests which control the FED would not have benefited.

          “Give me control of a nation’s money and I care not who makes the laws’…..Mayer Amschel Rothschild

          zorro

          • A different Simon
            Posted November 26, 2011 at 5:33 pm | Permalink

            1913 wasn’t it Zorro ?

            Col Gadaffi is the most recent example of what happens to leaders who attempt to reject fiat currencies and the bank of international settlements system .

            The private banking interests are utterly ruthless .

        • libertarian
          Posted November 26, 2011 at 7:51 pm | Permalink

          Sorry, typo should have read agreed commodities

        • libertarian
          Posted November 26, 2011 at 7:54 pm | Permalink

          Gary my statement says ” a basket of COMMODITIES “

    • A different Simon
      Posted November 27, 2011 at 9:12 pm | Permalink

      Mr Redwood ,

      You are the only politician I’ve seen dare to actually write in those terms .

      Some of us have come to the conclusion that the system is so loaded against us that we cannot win so are better off conserving our energy . No wonder the tax take is going down .

      What amazes me is that so many people fail to see that the problems are systemic and insist on blaming the numerically small number of people who have no intention of working .

      Great question Sinosimon .

  3. alan jutson
    Posted November 26, 2011 at 8:19 am | Permalink

    Yes being attacked and picked off one by one by the markets at the moment, does not appear to be a lot of solidarity between them on a combined defensive action, other than someone else (Germany)should pay.

    All defensive action appears too little, too late.

    They seem to have forgotten that you cannot borrow for ever to fund debt, at some stage you have to bite the bullet and live within your income (tax take).
    The longer you delay, the bigger the corrective action needed.

    • Bob
      Posted November 26, 2011 at 10:40 am | Permalink

      They just try to defer the problem long enough to get them through another election. Our electoral system is powered by the uneducated masses who vote for whoever is promising them the most handouts, and they do not understand nor care how the economy will provide for them. This is why I suggested before that there should be a weighting of votes according to educational attainment and your contribution to society. Otherwise it’s a race to the bottom as we are now finding out.

      Reply: One person one vote is fundamental to modern democracy. Elites are often wrong.

      • Rebecca Hanson
        Posted November 26, 2011 at 9:00 pm | Permalink

        “One person one vote is fundamental to modern democracy. Elites are often wrong.”

        and mass online consultation is fundamental to future democracy. Well done for blazing the trail John.
        http://cyberrhetoricbyrebeccahanson.blogspot.com/2011/11/mass-online-discussion-and-democracy.html

        By the way re: the breakup of the Euro, have you properly considered whether all the countries should break apart or whether some would be wiser to remain in allied pairs or groups?

      • Bob
        Posted November 26, 2011 at 10:00 pm | Permalink

        Reply to reply:
        Modern is not the word that comes to mind as I stand in the wooden booth marking an “x” onto a piece of paper. It feels more like 17th century than 21st

        I remember asking the clerk if my nine year old daughter could come with me to mark the ballot paper and she said no, the rules are very strict, you must mark the paper yourself ( I wonder how they enforce that for postal votes?).

        Anyway, I for one feel that the system is in need of modernisation.
        If not vote weighting, then at least manifestos should be fully costed and irrevocable, to stop politicians from making false promises.

        • libertarian
          Posted November 26, 2011 at 11:44 pm | Permalink

          What would be really nice and you know 21st century would be the ability to vote for a government rather than have one picked by the Queen

    • Shade
      Posted November 26, 2011 at 11:21 am | Permalink

      It seems obvious to most commentators in the UK and elsewhere that Germany “must pay”. I often wonder whether the German population realise what appears obvious to others. Is there a real debate in Germany about this? It would appear not, otherwise there would surely be a mass movement to bring back the D mark, or at least, kick out the PIIGS.

      If Germany does indeed have to pay, what would that do to its debt/GDP ratio which is already over 80%? Apparently Sarko suddenly decided that a €400bn bailout fund was ok after all (previously he was calling for something much larger) when he realised what “paying” into it would do to France’s credit rating!

      Toddle pip

      Reply: I am told the German government plays it all down in Gerrmany and stresses how they are insisting on financial discipline in other countries rather than sending them loads more money.

      • Gary
        Posted November 26, 2011 at 3:29 pm | Permalink

        Germany cannot pay. Nobody can. Germany is still paying for German unification. The only thing left to decide what kind of default will be chosen. Inflationary or deflationary, and if the eu can survive it. Since the banker technocrats are obviously in charge, inflation it will be.

  4. Peter van Leeuwen
    Posted November 26, 2011 at 8:23 am | Permalink

    Thank you, very interesting slides, also suitable for non-experts.
    . . . And yes, they DO wish to continue with their currency. That includes the whole Dutch government (a kind of Con-Lib minority government) and an overwhelming majority in parliament. So wish us luck!

    Reply: Do the Dutch people share the view of their leaders? Do their leaders have a plan to correct the obvious shortcomings of current Euroland governance?

    • Peter van Leeuwen
      Posted November 26, 2011 at 11:12 am | Permalink

      @Mr. Redwood:
      “Do the Dutch people share the view of their leaders?”
      The Dutch have a perfectly proportional democratic system with no threshold (even animal-right campaigners/vegetarians with 1.8% and fundamentalist Christians with 1.6% are represented in parliament). Although sensitive to opinion polls, Dutch MPs aren’t ruled by them and always have their own responsibility.

      “Do their leaders have a plan to correct the obvious shortcomings of current Euroland governance?”
      I hope so. Even last night the Dutch, Finnish and German ministers of finance (representing the more hawkish wing in the eurozone divide) were meeting and planning. The Dutch are strongly in favor of more IMF involvement (more eurozone humility) and were also the government successfully lobbying for the original IMF involvement 2 years ago. For the longer term, prime-minister and minister of finance jointly wrote their proposal for a eurozone budget tsar in the FT some time ago ( e.g. http://www.ft.com/intl/cms/s/0/e420064a-d971-11e0-b52f-00144feabdc0.html#axzz1eo4BiquE ).
      As a smaller country, the Netherlands favours the “community method” over the “intergovernmental” method (favours the EC refereeing a treaty implementation over a eurozone government dominated by the largest countries). Obviously the Dutch (and the Germans for that matter) will have to compromise in order to find a solution with the more latin-oriented part of the eurozone.
      There is the argument that eurozone governments are much too slow, and are rushing to disaster. But there is also the argument that the very experience of the crisis is needed to make the eurozone come together. Germany will have to decide when to stop leveraging its model and start compromising. The German model is not so different from those who say that a debt crisis isn’t solved by more debt, but by structural changes. Time will tell . . .

    • Denis Cooper
      Posted November 26, 2011 at 1:16 pm | Permalink

      I’m not a poetical type, but when I read that the easiest solution would be for Germany to leave the euro I’m reminded of a snatch of poetry I’ve heard before and which I’ve now taken the trouble to look up – W.B.Yeats:

      “Turning and turning in the widening gyre
      The falcon cannot hear the falconer;
      Things fall apart; the centre cannot hold;
      Mere anarchy is loosed upon the world.”

      I can’t see how the euro could survive if Germany resigned its position as the leader of the pack, the strong and stable large country with deep pockets and an enduring, almost instinctive, desire for hegemony within Europe, the country which acts as the solid bridge connecting the disparate countries which have been seduced into the mad scheme for a shared currency.

      I’d have a small wager with Peter van Leeuwen that if Germany announced that it was reverting to the mark then europhile Dutch politicians would quickly decide that they no longer wished to share a currency even with France, let alone with Slovakia and Slovenia, wherever they may be.

      • Peter van Leeuwen
        Posted November 26, 2011 at 10:15 pm | Permalink

        @Denis: If Germany were to revert to the D-Mark, no doubt that the Dutch would exit the euro as well. In that case they’d probably revert to the good old Dutch guilder and peg to the D-Mark. The poor Dutch may then seem to have regained their “independence” but in reality they would have lost any influence they now have, as they wouldn’t have any on Germany’s monetary policy (having a “fax-currency” similarly to having a fax-democracy as sometimes Norway is painted these days in relation to the EU)

        • APL
          Posted November 27, 2011 at 8:54 am | Permalink

          Peter van Leeuwen: ” to having a fax-democracy as sometimes Norway is painted these days in relation to the EU”

          Better a fax democracy than the faux democracy the EU would impose on Greece and Italy.

          In the former at least you may choose to fax your requests wheras in the latter they are Instructions & demands sent to your capital.

        • Denis Cooper
          Posted November 27, 2011 at 9:28 am | Permalink

          Then don’t peg the guilder to the D-Mark.

          • Peter van Leeuwen
            Posted November 28, 2011 at 10:33 am | Permalink

            @Denis Cooper: And tell the Swiss never to peg their franc to the euro? Some choices in the real world aren’t as free and independent as they seem. Being part of a currency board where together you decide, gives more influence. Example? Poor Jens Weidmann (German on the ECB board) sometimes gets outvoted. All part of sharing responsibility.

  5. Peter Richmond
    Posted November 26, 2011 at 8:33 am | Permalink

    I often wonder why more people do not point to lessons from history. First the Romans from Italy, then Napoleon from France and more recently Hitler from Germany sought to impose a single government across Europe. However in all cases, no long lasting solution of this kind has proved to be enduring. The current set of leaders from Italy, France and Germany seem about to have their history lesson the hard way.
    And may I echo the remarks of Mike Stallard. Keep writing John. You are educating us all.

    • uanime5
      Posted November 26, 2011 at 12:05 pm | Permalink

      Unlike the empires of Napoleon, Hitler, or the Romans the EU is made of countries who wanted to join it. This has made it more long lasting.

      Reply: I do not think it will be longer lastign than the Roman empire. The French and German attempted empires were enforced at the barrel of a gun and brought down by the gun. Fortunately so far the EU has not used guns against its own citizens, and accordingly does not face armed rebellion.

      • lifelogic
        Posted November 26, 2011 at 2:01 pm | Permalink

        So far!

        • zorro
          Posted November 26, 2011 at 4:49 pm | Permalink

          ‘so far’…yeah I liked that too….

          zorro

          • Andy
            Posted November 26, 2011 at 8:08 pm | Permalink

            Well we have had two Coups in less than a fortnight with nay a tank to be seen. That was going it a bit. Trouble is ‘they’ (the Euro Elite) have probably got a taste for it now.

      • zorro
        Posted November 26, 2011 at 4:48 pm | Permalink

        Give us a break uanime5, the EU has been going barely 50 years and in its enlarged state around 20 years and it is falling to pieces over a bungled attempt at a single currency. Imperial Rome managed an enlarged empire with sound administration, and with peaks and troughs, for over 400 years….no comparison.

        zorro

        • A different Simon
          Posted November 26, 2011 at 5:37 pm | Permalink

          Yep , the Romans gave us proper sanitation all the EU has succeeded in doing is to turn Europe into a toilet .

      • Kenneth
        Posted November 26, 2011 at 6:03 pm | Permalink

        My feeling is that there are Germans (perhaps the majority) who do not want to be in charge of a large part of Europe.

        They fear it will take them to a dark place they have been before.

    • BobE
      Posted November 26, 2011 at 6:58 pm | Permalink

      And remember that Sarko is up for election this spring. He will need to attract votes.

  6. Martin
    Posted November 26, 2011 at 8:41 am | Permalink

    Regarding “democratic issues” who says the Euro should be broken up? Was there a vote I missed coverage of?

    The simple fact is that the present low interest policy has driven free capital out of the west. Both the ECB and the BofE persist with seeing interest rates as something that only exist to control inflation. As we know to our pain in the UK this is not so. If say interest rates were increased to 5% money would flow into our economies. The banks would have more to lend to companies to invest and pay taxes. Savers too would be paying more tax.

    • libertarian
      Posted November 26, 2011 at 10:31 am | Permalink

      Martin

      As a businessman I agree with you totally we actually need HIGHER interest rates to stimulate the economy, I also agree with you that 5% is about where we should be right now

      • lifelogic
        Posted November 26, 2011 at 2:03 pm | Permalink

        Ten year money plus the now large bank margins is well above that already for most businesses even if they can find a lender.

        • libertarian
          Posted November 26, 2011 at 7:58 pm | Permalink

          Irrelevant its the savers, investors and pensions that are important and they earn squat, therefore don’t save/invest etc therefore not as much money in the system as there could be. There are more savers in the UK than borrowers

          • lifelogic
            Posted November 27, 2011 at 12:24 pm | Permalink

            Cut out the middle man (the banks) can be tax advantages to under the EIS scheme if done carefully.

  7. lifelogic
    Posted November 26, 2011 at 8:58 am | Permalink

    I agree fully. An orderly break up is needed as the least worse option. Pressing on poses all sorts of difficult democratic issues – namely the destruction of such vestiges as still exist.

    The destruction of democracy seems to be the main aim of the EU however. The stresses caused by this would surely be far worse and potentially rather more violent and temporary.

    • lifelogic
      Posted November 26, 2011 at 10:13 am | Permalink

      I see that UK growth forecasts are all being cut by several forecasters – I assume to reflect the continued anti growth government policies that are so evident almost everywhere with this coalition.

      Also in the telegraph: “We’ll rewrite law on strikes, Francis Maude warns the unions – Trade union laws could be rewritten to curb unions’ ability to hold strikes in response to next week’s “stupid and wrong” public sector walkout, Francis Maude has disclosed.”

      This should have been one of the very first things the coalition did along with easy hire and fire for all. Rather late now with only three + years left in power. The deal offered to the state sector is still far, far too generous anyway and will need future revision down.

      State sector and private sector pensions need to be similar in size. One that is about eight times the other with the rich subsidised by the poor. Many with no ability to fund any private pensions at all for themselves.

      Of course MP’s could start by setting an example.

      Reply: The MPs fund has imposed two contribution increases in recent years, taking the contribution level to the highest in the public sector

      • uanime5
        Posted November 26, 2011 at 12:14 pm | Permalink

        “This should have been one of the very first things the coalition did along with easy hire and fire for all.”

        That’s what temporary contracts are for. Odd that ministers and business leaders keep forgetting this.

        “The deal offered to the state sector is still far, far too generous anyway and will need future revision down.”

        That’s not how negotiations work. You have to reach an agreement with your staff; trying to bully them just leads to more strikes.

        “State sector and private sector pensions need to be similar in size.”

        Agreed public sector pensions need to be more generous. It’s the least the profit making sector can do to reward those who helped them make a profit.

        • forthurst
          Posted November 26, 2011 at 1:35 pm | Permalink

          “Agreed public sector pensions need to be more generous. It’s the least the profit making sector can do to reward those who helped them make a profit.”

          Congratulations on your late discovery of irony as a dialectical tool.

          • lifelogic
            Posted November 26, 2011 at 5:52 pm | Permalink

            What the state sectors helps them make a profit do you really think that?

            Perhaps with basic defence and law and order – but even there they seem to be keen on fighting and loosing pointless wars and are useless at law and order and basic deterrents.

            As for they rest it seems to be all about taxing, licencing and inconveniencing the wealth creators at every opportunity. Also providing poor health, a hugely expensive and inefficient legal system, poor schools & education and distributing other’s money to the feckless in the main.

            Are they really worth about eight times the pension on average?

          • davidb
            Posted November 26, 2011 at 7:35 pm | Permalink

            🙂

        • Bazman
          Posted November 26, 2011 at 8:29 pm | Permalink

          What they would like to see is further use of the revolving door recruitment process in which employees are taken on with the legal minimum wage and conditions. They start off enthusiastic and after a while see what it is all about they can then be bullied in a Capo system, leave or be fired. In essence put up and shut up. Large profits with low labour costs. Works higher up the scale with certain low cost supermarkets paying higher than average wages, work like hell, and often good money to graduate trainee managers who they think they basically own. Many leave or become ill with stress.
          Avoiding any definite or specifics is another tool used by these type companies to get more work with minimum rights. ‘Management discretion’ is what they call it.
          Anyone who believes they are looking for the right person is a fool in my experience they are looking for desperation. Funny to see their faces as your attitude turns from trying to impress to ‘ram it’ and ram it they do.

          • A different Simon
            Posted November 26, 2011 at 9:38 pm | Permalink

            I know a couple of small businessmen who are not looking to exploit anyone but are terrified of getting turned over themselves to the extent that they will not take people on .

            Most small companies cannot afford an H.R. manager to keep abreast of the regulations and they can’t afford to take the eye off the ball to do it themselves or they will find themselves out of business .

            How about exempting organisations of less than 100 people from the bulk of employment regulations ?

          • Bob
            Posted November 26, 2011 at 10:11 pm | Permalink

            Quite right. If people don’t want to be exploited by unscrupulous employers they should become self employed, and in due course if they are successful they in turn can become virtuous employers.

          • Bazman
            Posted November 27, 2011 at 11:19 am | Permalink

            That right its all the fault of the employee. If you exempted any company with less than 100 employees from employment regulations all companies would only ’employ’ 99.

          • lifelogic
            Posted November 27, 2011 at 12:28 pm | Permalink

            Why only employers of under 50 why not all employers are limited to a maximum pay off of say £5,000 per person. If they are any good they can get another job.

          • A different Simon
            Posted November 28, 2011 at 2:29 pm | Permalink

            Bazman ,

            There won’t be any employees if companies don’t take them on in the first place .

            This is why I believe employment legislations should be biased towards those out of work rather than those in work at the moment .

            Thus by consigning more people to the dole you are actually worsening the position of people in work by making it more of an employers market .

          • Bazman
            Posted November 28, 2011 at 6:34 pm | Permalink

            Lfelogic you have had this redundancy calculator shown to you many times.
            http://www.direct.gov.uk/redundancy.dsb
            A 60 year old with 40 years service earning £400 a week is only entitled to £11800.
            Should he be entitled to less? You are wrong and should stop your lies and fantasies over massive redundancy payments for the average worker.
            A different Simon, not the pieman Simon I presume. Employers can quite easily avoid most employment legislation by the use of short term agencies and contracts. Firing someone for one days sick because they have found someone more desperate and who will in to work for a lower rate. Should this be allowed? Is it acceptable for a person who has worked for the same company for years to be in this position with no recourse?
            This will definitely increase unemployment.

      • lifelogic
        Posted November 26, 2011 at 2:17 pm | Permalink

        The contribution level as a % of salary is quite high now. However the contribution as a % of the value of benefits received (which is what actually matters) is still about the best their is.

        A final salary scheme with a choice of accrual rates. Members can choose to contribute at 1/40th, 1/50th or 1/60th. It is a contributory pension with the contribution rates set at 11.9%, 7.9% and 5.9% respectively. If they are sensible (and have a good life expectancy) they choose to pay in at 11.9% and get 100% of salary after 40 years service.

        Perhaps paying in about £320K for a benefit of perhaps £1.4M + about. Over 4 times what they actually pay in.

        I am sure we would all like a similar scheme in the private sector you are now limited to paying in £50K of your own money – so often cannot even get up t0£1.4M with 100% of your own money!

        • lifelogic
          Posted November 26, 2011 at 2:21 pm | Permalink

          Also I believe MP’s pensions are still linked to the old, higher, RPI rate.

          • zorro
            Posted November 26, 2011 at 4:59 pm | Permalink

            The pension scheme for MPs is by far the best in the public sector even for the higher contributions. Of course, a lot of MP’s do not rely solely on their MP wage and undergo other remunerated activity…

            zorro

      • Bazman
        Posted November 26, 2011 at 7:53 pm | Permalink

        How making it even more easy to sack low paid workers who have little rights anyway in their temporary contracts and even more desperate that they climb over each other is for the birds. Is this going to improve anything? Higher up, how much commitment will this produce. This race to the bottom will not apply to high management that’s for sure.

        • A different Simon
          Posted November 26, 2011 at 9:50 pm | Permalink

          We have almost 3 million unemployed .

          Employment legislation should be biased towards creation of new jobs rather than preservation of existing jobs .

          I hear what you are saying about the potential abuse of easy fire but you cannot have easy-hire without easy-fire .

          The only employment protection worth a damn is alternative jobs to go to , ie an employees market .

          In an employees market bad employers go out of business .

          In an employers market regulation will have very little effect on improving the lot of employees .

          I suspect that running a high level of unemployment has been a deliberate policy for a couple of decades to keep wages down .

          • Bazman
            Posted November 27, 2011 at 11:22 am | Permalink

            You cannot have easy-hire without easy fire? Then what are all these employment agencies doing? What is the point of working on short term contracts etc. You are just making things up.

  8. figurewizard
    Posted November 26, 2011 at 8:59 am | Permalink

    The Euro served German industry’s balance sheet very well for many years. Now that it needs to be bailed out the figures don’t look so good, which is why a disorderly break up is inevitable.

  9. Tedgo
    Posted November 26, 2011 at 9:04 am | Permalink

    Frankly we are at a point where all the citizens of Europe should be given a referendum. Various questions need to be asked.

    1) Should the experiment of the EU continue or should we simply turn it in to a common trading area with a very very small central bureaucracy. (EFTA has 90 people).

    2) Should the EU continue but with full sovereignty restored to national parliaments and a much reduced central bureaucracy. Costly policy’s such as CAP would go.

    3) Do the people want closer financial integration around the Euro, effectively a central EU treasury.

    4) Do those in the Euro want to remain in the Euro or reintroduce their own currencies.

    5) Do those not in the Euro wish to join the Euro.

    6) Do the people want closer political integration with effectively an elected central EU government.

    Obviously with each question there needs to be a proposed plan and associated discussion. The referendum would have to be carried out like a census rather than in a polling booth.

    Each country would decide its future with the EU, depending on the overall outcome across the EU versus the results from their own citizens.

  10. Brian Tomkinson
    Posted November 26, 2011 at 9:16 am | Permalink

    Thank you for providing the slides of your lecture; I hope it was well received. we shall see how long it takes before the euro is dismantled.
    I still think that, far from being a safe haven as the government would have us believe, following the chancellor’s statement next week the focus will also be back on the UK. How pleased he must have been that events in euroland have been distracting attention from his feeble attempt to sort out the UK economy but all good things must come to an end. I noted that after all this time ‘Newsnight’ last night discovered that the public debt is rising inexorablydespite all the ‘cuts’ and that the difference between the coalition and Labour is hardly significant. What happens when the markets do punish the government for failing to properly address the situation and force up our cost of borrowing – Osborne’s only claim to success – other than the BoE inventing more fake money and accelerating the move to hyperinflation?

    Reply: In the last few days I have at last had serious enquiries for briefing on the true state of the debt, spending and tax reveneus from BBC journalists working on main news and comment programmes

    • lifelogic
      Posted November 26, 2011 at 10:58 am | Permalink

      To reply:- watch out I can just imagine how the journalists will spin it all cutting out the bits they want and using it all out of context. Doubtless they will say the economics “is settled” and 98%+ of economists agree (apart from a few odd ball eccentrics) just as they do the the Carbon religion/exaggeration.

      Will the BBC ever take a sensible line on the EU, the EURO, the Global Warming Scare/exaggeration, the free at the point of use NHS and the ever, bigger & bigger (and over paid) state sector – at all levels local to EU.

      I tend to think not. To0 many vested interests and too much Guardian group think to be ever turned around?

    • alan jutson
      Posted November 26, 2011 at 2:32 pm | Permalink

      reply to reply

      The fact that they have contacted you and appear serious is a start, perhaps when they give you sufficient air time, without constant interruption, I may start to believe that the penny is finally begining to drop with them.

      John you have my good wishes that you get some prime time to tell it like it is in your usual clear and knowledgeable manner.

      I only hope they are not attempting to manufacture a split, painting you as the rogue, but then you are/should be, wise to these tactics now.

    • Martyn
      Posted November 26, 2011 at 6:19 pm | Permalink

      Another reply to John’s Reply:
      I would not wish your ego to become inflated, John, but may I say more power to your elbow if you get a chance to get on air.
      Your measured, thoughtful and clearly thought out comments and observations make the average politician (note that I name no names) appear as vapid, twitching muppets (sorry, puppets) as those one might see on a Punch & Judy show at the seaside.
      I love the way that your opponents are so often quickly reduced to bluster and raised voices when you are on air. Go for it!

    • Bob
      Posted November 26, 2011 at 10:19 pm | Permalink

      And another reply to reply.
      Be very careful, they will try every trick in the book to twist what you say and make you look ridiculous. They see you as the enemy!

      Listening to radio 4 in the car this evening my only consolation was that I no long pay to support this lefty rubbish.

      • lifelogic
        Posted November 27, 2011 at 12:39 pm | Permalink

        Radio 4 can be quite funny sometimes. That a whole group of people can be, to a person, so right on, left wing, big state, pro EU and fake “green sustainable” yet not one has the faintest idea of the engineering or economics behind it.

        I particularly like the constant confusion of cause and effect when it suits them – in for example discussing the gender pay gap or when discussing silly half baked lefty books like -“The Spirit Level: Why Greater Equality Makes Societies Stronger.”

        Does no one, employed at radio four, have any basic maths, logic, statistics, economics or engineering? I suppose they are all just fixing the hardware for these buffoons to waffle through.

        • alan jutson
          Posted November 27, 2011 at 8:51 pm | Permalink

          Lifelogic

          They are simply presenters, pure and simple.

  11. Gordon
    Posted November 26, 2011 at 9:53 am | Permalink

    Hear, hear!!

  12. GJ Wyatt
    Posted November 26, 2011 at 10:02 am | Permalink

    Euroland subscribes to the motto united we stand, divided we fall. Some of them can now see that being united brings each other down. But what they don’t yet get is the idea that if they separated themselves from the bonds shackles that tie them together they would prosper. They have nothing to lose but their chains! (Please note, Mr Barroso)

  13. stred
    Posted November 26, 2011 at 10:04 am | Permalink

    How long before non-Euro countries with £200,000 debt per taxpayer and median earnings of £24K have their bond interest raised? When countries are finally forced to stop borrowing and inflating, then they will return to a balanced economy.

    As in Ireland, the only way to put things right will be to cut public pay and pensions, starting at the top. This will not be done by asking the Civil Masters at the top to organise it. They have benefitted from the decision to pay ‘top people’ more in order to improve administration. But, what have we received in return? Every Ministry is a shambles with waste and underperformance, while the targets are set to suit bonuses and the staff are allowed to entertain themselves on tax funded credit cards.

    We need new leadership with the determination to make the necessary decisions. Not a PR motivated speechmaker who feels for the least line of resistance.

    • forthurst
      Posted November 26, 2011 at 12:10 pm | Permalink

      Government Departments need to be put into Administration using experienced external administrators with experience of turning round bankrupt organisations by slimming down, cutting out waste and refocusing on core activities.

    • uanime5
      Posted November 26, 2011 at 12:17 pm | Permalink

      Well the EU is in a good position to demand pay cuts for those at the top and other reforms.

      • A different Simon
        Posted November 26, 2011 at 2:59 pm | Permalink

        Uanime5 ,

        The EU is an organisation brought about by big business and finance .

        One of their objectives is to create a single cross European market for those big businesses .

        Healthcare is one of the biggest businesses and EU considers our NHS to have an unfair advantage over private healthcare providers not only here but in France and Germany who want to expand into the UK .

        This may come as a shock but the EU’s aim is not to nationalise things or for the state to take over the running of these services , it is to privatise them .

        This almost inseperable relationship between the state and big business is known as national socialism .

    • zorro
      Posted November 26, 2011 at 5:11 pm | Permalink

      ‘How long before non-Euro countries with £200,000 debt per taxpayer and median earnings of £24K have their bond interest raised? When countries are finally forced to stop borrowing and inflating, then they will return to a balanced economy.’

      Perfect conditions in which to stoke another housing boom, underwriting the scheme with taxpayers cash, and entangling people in debt which they may not soon be able to afford……oh wait!

      zorro

      • A different Simon
        Posted November 26, 2011 at 9:57 pm | Permalink

        You hear that John Cridland from the CBI wants youngsters to be able to access their pension to buy their house !

        Apart from this being a monumentally crass idea he was completely unaware that nobody has a pension these days !

        I suppose you cannot expect someone who has gone straight from University to the CBI without ever doing a job in industry to see that the underlying problem is that houses are too expensive .

        You couldn’t make it up .

        • zorro
          Posted November 26, 2011 at 10:56 pm | Permalink

          They don’t want free people, they want debt slaves….As I have previously said they are terrified that house prices. However, they must fall to affordable levels so that people can save /invest money in productive capacity which they are currently pushing into paper assets/fairy tale house prices, so that a few vested interests don’t lose money!

          zorro

          • A different Simon
            Posted November 27, 2011 at 11:05 am | Permalink

            Agree completely with your summation .

            It’s bad enough being a debt slave oneself but ten times worse looking at kids who don’t have the slightest idea of the reality they are growing up into .

            Have you looked into Henry Georges Land Value tax ?

  14. Gary
    Posted November 26, 2011 at 11:02 am | Permalink

    This question is the crux. Imo.

    On the one hands we have the electorate primed with expectation of largesse from the govt, and on the other we have the govt ready to buy votes. Under a fractional reserve cartel you have the perfect mechanism for providing almost unlimited money to provide for this. Everyone wins. Except they don’t. In the end the taxpayer loses, usually very badly. This problem has no solution under this system. Turkeys don’t vote for Christmas.

    So what to do ? Get the govt out of banking, abolish legal tender laws. That means let the market determine what type of money to use, and how much to issue. Get this function out of the hands of govt mandated banking cartels.

    What would happen ? Sound money would drive out unsound money. No person who had a choice would accept inferior, devaluing paper as payment and to use for saving. We would probably end up with, quite quickly , the best form of money, and that would probably be gold and silver. It may be some form of crypto currency. But there would only be one or two currencies.

    The problem is the vested interests. Because their interests are vested in this system, they would tell you until they are blue in the face that the market cannot be left alone. What they really mean is that their cushy monopoly to skim the wealth cannot be left to the market for it would be lost to them. And that is out of the question.

    • Gary
      Posted November 26, 2011 at 3:37 pm | Permalink

      That was a reply meant for sinosimon.

  15. ian wragg
    Posted November 26, 2011 at 11:13 am | Permalink

    Germany has had a good run. Encouraging borrowing by member states so the proles could buy Mercs and BMW’s. A bit like Gordon Browns end of boom & bust, after we baled out the banks it turned out to be an illusion. Now our kids are faced with clearing up the mess.
    I’m sure when history is written, the EU will be seen to have been a disasterous vanity project by the unelected toffs and maybe we wil read aboutwhat happened to them when the whole house of cards fell down.
    Remember Mussolini???

  16. Shade
    Posted November 26, 2011 at 11:44 am | Permalink

    A thing that puzzles me is why balance sheets of European banks are apparently not reflecting proper valuations of their assets in weak Eurozone loan and bond investments? I thought there was a principle of “mark to market” in Accounting Standards – or does that only apply in the UK and US?

    Also, if the ECB is buying up bonds in weak countries, what happens to the write downs it must, or should, be taking? Or are they wrapping the toxic assets up with assets from strong areas and, as if by magic, the resulting package becomes an AAA rated security? Now, haven’t I heard that somewhere before…?

    Toddle pip

    Reply: Some accounting conventions allow you not to write down bonds if you plan to hold them to maturity. The public sector is not part of the deal to accept 50 cents in the Euro repayment on Greek bonds. The markets, however, when v aluing the equity of weak banks apply a large discount for this and other reasons – the markets often do n ot accept the stated value of the loan portfolios these banks own.

  17. oldtimer
    Posted November 26, 2011 at 12:13 pm | Permalink

    Thank you for that very clear description of the issue. Did anyone in your audience challenge your thesis? Or did anyone come up with an alternative, Houdini-like, escape mechanism – other than the trap door as the bond markets pull the lever?

    It is difficult to see the EUligarchs proceeding at a speed sufficient to forestall a bond buyers strike, let alone have time to consult the people they are said to represent on alternative financial, fiscal and monetary arrangements for the EU..

    Reply: I will take up the 3 most demanding quesitons I was asked and deal with them in subsequent blogs. The first was Why do the EU elite and member states governments disagree with you over breaking up the Euro?

    • zorro
      Posted November 26, 2011 at 5:14 pm | Permalink

      The matter of their own self interest will I am sure not be too hidden in your reasoning on that blog!

      zorro

  18. Martyn
    Posted November 26, 2011 at 12:24 pm | Permalink

    The political and economic actions taken by Germany and France over the Euro crisis caused the EU Commission President Barroso to complain to the EU parliament that ‘the Commission is the economic government of the Union’ and that EU nations are incapable of solving it on their own. But the agreements (or lack thereof!) reached by the elected leaders of Germany and France (‘Merkozy’) were taken in private and completely side-lined the EU Commission, its Parliament and the Council.
    Since the largely undemocratic EU commission and its subordinate divisions have demonstrated their inability to resolve the Euro crisis, it begs the question ‘what is the point of their existence’? Some influential political and economic people now seem to be thinking that if the EU is to ever become a federal state, as so many wish, then the Commission will have to be replaced by a proper government with Ministers and members elected to it by their own national electorates. I wonder if the concept of an elected EU supra-government is already being discussed behind closed doors and might that have some bearing on why our Prime Minister and the coalition are determined to avoid a referendum on Europe? Just think of the opportunities it would offer for higher and better paid office for national politicians.

  19. Denis Cooper
    Posted November 26, 2011 at 12:41 pm | Permalink

    Good slides, and I hope your audience took your points on board and will pass them on to others.

  20. Neil Craig
    Posted November 26, 2011 at 12:56 pm | Permalink

    I am a little surprised that germany is not offering to maintain these countries – in return for which they and any other countries would get control of the loser’s economies and they alone would control the Euro. Thus woukld get control over Europe. Not cost free but far cheaper than the traditional method of doing so.

    Quotation by Mayer Amschel Rothschild: Give me control of a nation’s money and I care not who makes the laws.

  21. Bob
    Posted November 26, 2011 at 2:12 pm | Permalink

    We really are at a low ebb.
    Sorry to go o/t, but I just heard about 79-year-old Nellie Geraghty being murdered by two young boys in Greater Manchester. A handbag believed to contain her late husband’s ashes was missing. Police think she might have put up a struggle to stop it from being snatched.

    The government need to stop kow tow’ing to the liberals and get to grips with the law and order situation. The softly softly approach has failed.

  22. Next move?
    Posted November 26, 2011 at 2:16 pm | Permalink

    Your slides are suitably to the point – my compliments.

    The question though is what is the next move for Cameron? He has the ball and chain of Clegg, talking about Europe (like other EUphiles) as if it were a country and not merely a continent.

    Immediately Cameron wants to get past Osborne’s tale of woe, but after that, with EU debt interest rates taking off he has not got long before the inevitable crunch.

    Has he a plan at all? or is it to be a re-run of the 1930s – having learnt nothing from history?

  23. Duyfken
    Posted November 26, 2011 at 2:16 pm | Permalink

    The expected demise of the Euro may come as a result of the markets turning against it. Once this occurs, if it does, I wonder if the next in line may be Sterling. So what does the future hold for Sterling?

  24. Kenneth
    Posted November 26, 2011 at 5:53 pm | Permalink

    Elites are indeed often proved wrong.

    Why?

    The reasons we end up with such poor government decisions is because the people informing the public have no grounding in real life.

    The people that are part of real life – the free marketeers – (I would say they are usually the bosses and most of the workers) are busy. They do not have the time or inclination to set up quangos, dreamy think-tanks, philosophical workshops or to lobby journalists.

    As such, the elite are left with a limited set of references and their stunted conversations and ideas are set within a sealed box beyond which they cannot reach.

    The BBC generally epitomises this.

    Free market think tanks are well behind when it comes to lobby power and media access and I fear that too many of them find they need to compromise their message in order to get a spot on tv or radio. Some of them get sucked into the elite too.

    In my view the Conservative Party should go about forming a rainbow between these groups. It must be the Conservatives as there is nobody better to do this job. A political party has the right connections and is well experienced in the balancing act of forming a broad church while keeping the message sharp.

    I understand that the Conservative Party must compromise while in the coalition. However there is no reason and no excuse why it should not work towards a more informed public in time for the next election.

    One key aim of such a lobby force in my view would be to gain affiliation from a trade union. Have I gone crazy? Well, many (I would say most) workers are well versed in the free market and appreciate what it is about. However they are led by communists/extremists. Many of them are livid that the government is spending so much of their money. Their trade unions are mute on this point and refuse to represent their views. I wonder if a trade union – either an existing one or one that will be created for the purpose – will one day decide that affiliation to a left wing cause is not good for their members and attachment to a free market group would bring better results?

    And who represents the unemployed? Unions do not. The Labour Party does not for it has priced and regulated them out of jobs. Isn’t it time a lobby group representing the unemployed was also affiliated to a free market grouping?

    Whether it becomes our own Tea Party or something else, the Conservatives – or at least the truly free market Conservatives – should be working hard to form this loose alliance before the next election.

    While our debt puts us in peril it is no longer good enough to allow these elite groups to coach public opinion. It is time that people who believe in the free market recognise that they must put money and time into playing these elites at their own game and set up a lobby force that matches or exceeds those that currently hold sway.

  25. waramess
    Posted November 26, 2011 at 6:16 pm | Permalink

    Carswells default and decouple represents the only possible way forward, Don’t even suggest to these morons an alterative, for they may well take it, and a united Europe under one monetary and fiscal authority is not only not in Britains interest but also represents a very unstable economic prospect .

    A United Europe in that sense will mean certain impoverishment of a large part of mainland Europe under a German dominance.

    Let’s not go there; it is a dark and unpleasant place that would be better not contemplated.

  26. Richard
    Posted November 26, 2011 at 6:23 pm | Permalink

    I think Sinosimon makes a very important point when he states above :

    “Given the political pressures to relieve what I think de Tocqueville called ‘the masses voting themselves largess from the treasury’ how can governments with elastic money ever be relied on to do the right thing? Whatever system of controls is supposedly chosen, if politicians cave in to demands for ever greater social benefits with no growth to underpin them the currency is debauched.”

    This is a fatal flaw in our current democratic system and has been getting worse as the voting age has been lowered and as more people are are either employed by the state or are on benefits.

    As far as I can see, the only way this situation could be corrected would be for the vote to be given only to those who pay tax, and I can never see this happening.

    In fact I think the tipping point has been passed.

    Furthermore, many politicians on the left have actively worked to bring about this situation. They promote themselves as working for the poor, the unemployed and illiterate. Now, in a democratic country they need votes. So in order to obtain and hold onto power it has always been their policy to increase the numbers of poor, unemployed and illiterate people and hence the number of their core voters.

    Once this idea becomes understood many of their policies become completely transparent.

    One of the first actions I can remember was the destruction of grammar schools because these schools provided what we call today “social mobility”. These politicians on the left did not and do not want any social mobility as it would mean the loss of potential voters.

    This is why it has not been a surprise to me that after many year of Labour government we are told that social mobility has declined if not actually ceased.

    They were originally against the EU when it was started as a trading area as the Common Market would bring financial benefits to the UK. But when it became clear the EU was going in the direction of being a socialist state they then changed their minds. Mr. Blair is an example of a left wing politician who changed his mind completely on the EU.

    In more recent times we have seen the selling of our gold reserves at a ridiculously low price, the taxing of pension dividends, the enormous amounts of borrowing, the massive use of PFI to keep some of the borrowing of the government books, the poor regulation of the financial sector, etc. etc. and all for the purpose of bringing the country to its financial knees (again).

    Uncontrolled immigration was also a method designed to bring more of their voters into the country and to increase unemployment, particularly of the young.

  27. zorro
    Posted November 26, 2011 at 6:30 pm | Permalink

    On a completely different subject, there is a dangerous rumour circulating on Wikipedia that you are an aficionado of Stoke City football club! Do you wish to confirm or deny this rumour? This may have a deleterious effect on your reputation for picking winners….

    zorro

    Reply: News to me!

  28. Gary
    Posted November 26, 2011 at 7:11 pm | Permalink

    Income tax on the interest on the bonds that were repo’d by the central bank when the money was created , does not reduce the amount circulating money, it just redirects some of it. It still causes inflation and those closest to the money creators still have first option to swap that money for inflation protection before it filters into the economy and raises prices. This is the skimming operation.

    Greenspan, before he lost his way, wrote:

    “In the absence of the gold
    standard, there is no way to
    protect savings from confiscation
    through inflation. There is no safe
    store of value. If there were, the
    government would have to make
    its holding illegal, as was done in
    the case of gold. If everyone
    decided, for example, to convert
    all his bank deposits to silver or
    copper or any other good, and
    thereafter declined to accept
    checks as payment for goods,
    bank deposits would lose their
    purchasing power and
    government-created bank credit
    would be worthless as a claim on
    goods. The financial policy of the
    welfare state requires that there
    be no way for the owners of
    wealth to protect themselves. This
    is the shabby secret of the
    welfare statists’ tirades against
    gold. Deficit spending is simply a
    scheme for the confiscation of
    wealth. Gold stands in the way of
    this insidious process. It stands as
    a protector of property rights. If
    one grasps this, one has no
    difficulty in understanding the
    statists’ antagonism toward the
    gold standard. ”

    -Greenspan,Alan (1966).
    “Gold andEconomic Freedom” .
    The Objectivist .

    • zorro
      Posted November 26, 2011 at 11:10 pm | Permalink

      That was when he used to feast at the Temple of Ayn Rand….

      zorro

      • Atlas etc, etc
        Posted November 27, 2011 at 7:50 am | Permalink

        … Ahh, Ayn Rand…

        “The thinking man’s piece of Thought” – Unlike Joan B.

  29. BobE
    Posted November 26, 2011 at 9:24 pm | Permalink

    Some members of the House of Lords have called for an inquiry into what the real cost of the UK’s membership of the European Union is.: http://www.economicvoice.com/house-of-lords-raises-stakes-in-battle-to-leave-the-eu/50025966#ixzz1eqh8Du9U

  30. BobE
    Posted November 26, 2011 at 10:02 pm | Permalink

    Can you belive this?
    Telegraph Politics
    £1 billion of UK aid to fight climate change in Africa http://tgr.ph/v22ruo

    • alan jutson
      Posted November 27, 2011 at 2:03 am | Permalink

      I would hope that this is not true.
      Otherwise we really have got OUR priorities very, very wrong.

  31. Peter van Leeuwen
    Posted November 26, 2011 at 10:40 pm | Permalink

    “Today we hear that Belgian bonds have been downgraded”
    Will market pressure on 25-11-11 be able to bring parties together?
    In Belgium – yes – on Saturday 26-11-11 there was a final break-through in negotiations between the six parties and a press conference is expected Sunday afternoon.
    Tightening the financial screws on the eurozone may have a similar effect before it will be too late.

  32. BobE
    Posted November 27, 2011 at 12:21 am | Permalink

    I may be too late for this snippit. (Gone midnight).
    ReutersReuters Top News
    Germany, France plan quick new Stability Pact http://reut.rs/uWisN4

    • Denis Cooper
      Posted November 27, 2011 at 11:22 am | Permalink

      I hope Germany, France and the other 15 eurozone states remember that:

      a) Whatever they may want to do they are bound by the EU treaties, which are superior to any treaty they may make among themselves; and

      b) Inter alia, the EU institutions belong to all 27 EU member states and the 17 eurozone states may not make unauthorised use of them.

      From Article 13(2) TEU, one of several EU treaty articles enshrining the principle of “conferral”, on page 22 here:

      http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2010:083:0013:0046:EN:PDF

      “Each institution shall act within the limits of the powers conferred on it in the Treaties, and in conformity with the procedures, conditions and objectives set out in them.”

      Hence from November 17th:

      http://euobserver.com/18/114314

      “There have been suggestions that if treaty changes would not be possible at the level of the 27 EU member states due to objections from the likes of the UK or the Czech Republic, both non-euro countries with powerful eurosceptic government factions and popular sentiment, Merkel would push for an intergovernmental treaty between eurozone states alone.

      However, Britain does not believe Germany will likely be satisfied by anything other than treaty change at 27, as the ECJ is the property of the full EU, not the eurozone.

      “It is difficult to see how they can achieve their objectives through an intergovernmental agreement if their key objective is the use of the court to enforce budget discipline.”

      The creation of a separate eurozone court would in theory be legally possible, but certainly messy.”

      In any case while the eurozone countries remained in the EU their new eurozone court would remain inferior to the ECJ.

      • Peter van Leeuwen
        Posted November 28, 2011 at 10:42 am | Permalink

        @ Denis Cooper: How about invoking the ultimate authority of the The Right Honourable William Jefferson Hague (“burning building, no exits”) to prove that this is an emergency which needs to be addressed. Remember your Dutch lessons: “Nood breekt wetten”.

  33. theyenguy
    Posted November 27, 2011 at 3:35 pm | Permalink

    You write: “If they wish to carry on with their currency they have to get much faster and bolder at creating their EU state and all purpose Central Bank, to give the currency chance of life, backed by a credible sovereign capable of making the necessary decisions. That poses all sorts of difficult democratic issues.”

    I reply, that in the linked article, A Revived Roman Empire Is Forming In The EU ….. Deflation Accelerates In Japan, I write, Out of sovereign armageddon, that is a credit bust and world investment breakdown, a new global economic and political regime will arise. At the appointed time, fate, not any human action, will open the curtains, and onto the world stage will step the most credible sovereign, Europe’s New Charlemagne, and his banking partner, who will provide the seigniorage of diktat, as the seigniorage of freedom, that existed under the Milton Friedman Free To Choose floating currency regime, is history. The word, will and way of these two will provide moneyness, and the people will be amazed and follow after it, placing their trust in it, giving it their full allegiance.

    David R Reagan writes that sovereignty will be sacrificed when the Revived Roman Empire rises out of chaos. “German Foreign Minister Joschka Fischer repeated his call for a European government in July, 2000, and said the European single currency, the Euro, was “the first step to a federation.” He added that he wanted a “powerful president.”1 Fischer said his aim was “nothing less than a European parliament and a European government, which really do exercise legal and executive power,” to operate under his powerful president. More sinisterly, he welcomed the progress made in removing the “sovereign rights” of nations which he defined as control of currency and control of internal and external security. In summary, Fischer said, “Political union is the challenge for this generation.”2 … (1 and 2 Ibid, “German Foreign Minister floats idea of elected EU president,” The Financial Times, July 7, 2000. This article was a report on a speech by Joschka Fischer to the European Parliament’s constitutional affairs committee.)

    As for some insights into who the most credible sovereign might be, I encourage a read of the linked article.

  34. Paul Danon
    Posted November 27, 2011 at 6:51 pm | Permalink

    I do hope the government changes its tune and, instead of saying how important a € fiscal union is, vetoes any treaty to bring those countries closer together, even if we’re not part of it. A monolithic Euroland would be a threat and go against previous British foreign-policy goals. We’ve never been comfortable with a united Europe, especially one led by France and/or Germany. Our veto can be used to help ourselves and our continental neighbours, though maybe the German constitutional court or the Irish people will do the same.

  35. Ralph McHendry
    Posted November 28, 2011 at 10:14 am | Permalink

    Thanks, Mr Redwood, for a very comprehensible exposition of an abstruse subject. You’ll never be Chancellor – you have an intellectual grasp of the issues. More’s the pity. All we Conservatives seem to want these days are sound-bites. Surely we haven’t descended to the depths of “Tony Cameron”? Yes, I think we have.

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