[Closed] Cameron kicks EU in the nuts - right decision?

Biking catastrophe - don't forget the influence of the eurosceptics.

Sure TJ. That probably plays a part too. But it is not the only reason for his decision. And not even the biggest reason either.

And no, I disagre that all decisions he makes should be seen in the light of his "promises" to the eurosceptics. Please tell me you really don't believe that?

Why would a polarised opinion be better than thinking about different issues and possibilities with an open mind?

I'm not suggesting it is. I was just intrigued by the different opinions binners was expressing on this. It's not the STW way!

your question makes no sense.

You're so right, TJ

Do you see independence as gaining sovereignty, or stopping sharing it?

makes so much less sense than:

do you see it as giving up sovereignty or sharing it.

🙄

Can't remember who said it yesterday but they described what the Euro politicians are doing as "saving the cancer and letting the patient die".

For most of the history of the Euro project the use of scare tactics has been the principle weapon for ensuring our participation. History has shown this to be a nonsense.

Today, there is the usual clap trap of a two-speed Europe. Unfortunately, they are confusing which one will be the fast track and which one will be the slow one.

The new treaty at best buys time for the Euro but it fails to address the fundamental problem at its core. To quote Martin Wolf in the FT:

The German faith is that fiscal malfeasance is the origin of the crisis. It has good reason to believe this. If it accepted the truth, [b]it would have to admit that it played a large part in the unhappy outcome.[/b]Take a look at the average fiscal deficits of 12 significant (or at least revealing) eurozone members from 1999 to 2007, inclusive. Every country, except Greece, fell below the famous 3 per cent of gross domestic product limit. Focusing on this criterion would have missed all today’s crisis-hit members, except Greece. Moreover, the four worst exemplars, after Greece, were Italy and then France, Germany and Austria. Meanwhile, Ireland, Estonia, Spain and Belgium had good performances over these years. After the crisis, the picture changed, with huge (and unexpected) deteriorations in the fiscal positions of Ireland, Portugal and Spain (though not Italy). In all, however, fiscal deficits were useless as indicators of looming crises (see charts).

Now consider public debt. Relying on that criterion would have picked up Greece, Italy, Belgium and Portugal. But Estonia, Ireland and Spain had vastly better public debt positions than Germany. Indeed, on the basis of its deficit and debt performance, pre-crisis Germany even looked vulnerable. Again, after the crisis, the picture transformed swiftly. Ireland’s story is amazing: in just five years it will suffer a 93 percentage point jump in the ratio of its net public debt to GDP.

Now consider average current account deficits over 1999-2007. On this measure, the most vulnerable countries were Estonia, Portugal, Greece, Spain, Ireland and Italy. So we have a useful indicator, at last. This, then, is a balance of payments crisis. In 2008, private financing of external imbalances suffered “sudden stops”: private credit was cut off. Ever since, official sources have been engaged as financiers. The European System of Central Banks has played a huge role as lender of last resort to the banks, as Hans-Werner Sinn of Munich’s Ifo Institute argues.

[b]If the most powerful country in the eurozone refuses to recognise the nature of the crisis, the eurozone has no chance of either remedying it or preventing a recurrence. Yes, the ECB might paper over the cracks. In the short run, such intervention is even indispensable, since time is needed for external adjustments. Ultimately, however, external adjustment is crucial. That is far more important than fiscal austerity.
In the absence of external adjustment, the fiscal cuts imposed on fragile members will just cause prolonged and deep recessions. Once the role of external adjustment is recognised, the core issue becomes not fiscal austerity but needed shifts in competitiveness. If one rules out exits, this requires a buoyant eurozone economy, higher inflation and vigorous credit expansion in surplus countries. All of this now seems inconceivable. That is why markets are right to be so cautious.[/b]

The failure to recognise that a currency union is vulnerable to balance of payments crises, in the absence of fiscal and financial integration, makes a recurrence almost certain. Worse, focusing on fiscal austerity guarantees that the response to crises will be fiercely pro-cyclical, as we see so clearly.

Maybe, the porridge agreed in Paris will allow the ECB to act. Maybe, that will also bring a period of peace, though I doubt it. Yet the eurozone is still looking for effective longer-term remedies. I am not sorry that Germany failed to obtain yet more automatic and harsher fiscal disciplines, since that demand is built on a failure to recognise what actually went wrong. This is, at its bottom, a balance of payments crisis. Resolving payments crises inside a large, closed economy requires huge adjustments, on both sides. That is truth. All else is commentary.

Of course, it is in everyone's interests that the € does not collapse in an disorderly fashion and that an element of fiscal discipline is restored, but this alone will not sort out the mess. It is not being euro-phobic to argue that you do not want to tie yourself into this mess, it is common sense.

People argue on here that the current government fails to address the lack of growth in the economy and is too focused on deficit reduction (possibly true) and yet want to tie us closer into a system that does exactly the same.

We all know why its in Germany's interests - the € makes their Xports much more competitive. But do they have the balls to take the other side of the equation ie, fiscal transfers to those they see as "idle, lazy, Southern Europeans"? This is the crux, the rest is a side show.

Maybe for Eurozone countries - one of the big causes of this particular crisis is that they weren't on a tight enough reign. I don't see any particular reason why the UK needs to be on as tight a reign when we have our own currency, so are in a position to make independent economic decisions.

But these economic decisions are only decisions that can be taken within narrow parameters that the market will "allow". That isn't independence

Whilst you're rewriting history, could you just go back to 1939 and get rid of all the uncomfortable stuff about Czechoslovakia and Poland. We wouldn't want to upset those fragile Germans.

Rewriting history?

Are you disagreeing that a major cause of the current economic crisis was the result of debts which had been graded AAA when they were actually very risky and should have been regarded as junk bonds? Simply collateralising risky debt together with other risky debt was enough to make the credit agencys give the combined debt AAA ratings which made it attractive for banks and governments to invest in as a relatively safe investment. But instead of that it just made the exposure to bad debt far greater than it would otherwise have been. It was a monumental oversight (and that is a kind interpretation) by the credit rating agencies.

These mistakes continue now - this year alone Standard and Poor accidentally downgraded France from their AAA rating and made a $2 trillion error in their accounting when they downgraded the USA. But none of this really matters, nor does their key role in the debt crisis, because they just continue on as before with all this power yet remain accountable to no-one.

Bikingcatastrophe

I do believe the influence of teh eurosceptics has a major role in Camerons decisions.

he is only leader because of promises he made to them, he withdrew the tories from the EPP because that was one of the promises. the law about having fa referendum was one of the promises. He knows that they are so deranged that if he does not toe thir line they will force him out.

surely if its a balance of payments crisis then having a solvent government that can bail out current accounts rather than going through the middlemen of the ECB is a better solution

is that not what the treaty is aiming for

id be wary of trusting anything written in the FT, they have a vested interest in maintaining the current deregulated casino system

Aracer

Do you see independence as gaining sovereignty, or stopping sharing it?

Whos independence?

Sharing sovereignty or stopping sharing it with who?

Are those the only possibilities? Is it a either / or?

The argument does seem to be getting quite polarised. I think one thing thats been demonstrated time and time again over the past couple of years in Europe is that nobody has a ****ing clue where this is all going to lead.

The law of unintended consequences seems to be dictating everything at the moment. I think that's the problem. We're in completely virgin territory. Both economists and politicians have absolutely no idea how this will pan out.

I think, without being too melodramatic, they are all painfully aware of what happened last time things started going a bit pear-shaped Europe-wide. The Second World War didn't happen! It was a decline into war after ten years of economic decline, and the subsequent political fall out. I'm not saying owt as drastic as that would happen, but I wouldn't like to make a prediction of what state Europe will be in in ten years. But I doubt its going to be pretty!

Cameron IS a Eurosceptic, he's not pandering to anyone. And he's right with public opinion on this.....anything from Labour? What would EdMil do?

TJ. Stop. You're doing it again. Repeating the same thing over and over in the hope you'll be right if you say it often enough. Ignoring the awkward questions others ask of you. Those who already agree with you agree with you. You're not going to change the minds of those who don't.

I'm far from being your biggest critic on here - I actually see you as a positive thing for the STW forum - but I totally understand the point of your critics.

Labour leader Ed Miliband

In a message on Twitter, Mr Miliband said: "Outcome at last night's EU summit was a sign of weakness from David Cameron - why did he fail to build alliances before the summit?"

In a further comment on Twitter, he said: "David Cameron should be building alliances. The UK went into the summit without them and the outcome showed we lacked influence."

from the bbc

THM you assume the euro fails and you consider this a fact at present even before the event. If they keep doing everything and never give up it wont fail no matter how much you want it to - I am not saying it makes sense but they seem to be just getting more and more entrenched and committed to the euro and sooner or later the markets may just realise this.

I dont know which will win out tbh and I would not like to bet on the outcome even if those on the right want to talk up failure in order to make it a self fulfilling prophecy.

Whos independence?

Scotland <sigh>

Sharing sovereignty or stopping sharing it with who?

The rest of the UK <sigh>

Are those the only possibilities? Is it a either / or?

I'm confused about the other possibility apart from sharing or not sharing. Though you're misquoting my question - I was wondering whether it was gaining sovereignty or stopping sharing it.

Kimbers - there is an element of truth in that and unfortunate that DC allowed himself to be put in a "confrontational' picture. But there is so much going on behind the scenes that he probably has little option.

In public, he should have stuck to one line, " we have one objective - to ensure that the € survives (no mention of time frame" and left it at that.

The real backbenchers that actually matter are not in Westminster - they are in Germany. If you think DC has a hard sell, just think what Merkel has to do!

If they keep doing everything and never give up it wont fail

The thing is, that's not what they're doing at the moment. So long as Germany keep failing to put their hand in their pocket to save it, there will always be some doubt over their real commitment.

I note that nobody seems to have challenged the claim that Germany isn't prepared to cough up the money they need to. Do I take it that this is an broadly accepted point?

a sign of weakness from David Cameron

He's a bit like TJ, that there Milliband (of the Ed variety). Does he think if he repeats that often enough (listen to PMQs some day and he's bound to say something similar at least half a dozen times) it will help deflect the idea that he's a weak leader himself?

Note for TJ: that's not a compliment 😉

THM you assume the euro fails and you consider this a fact at present even before the event. If they keep doing everything and never give up it wont fail no matter how much you want it to - I am not saying it makes sense but they seem to be just getting more and more entrenched and committed to the euro and sooner or later the markets may just realise this.

Yes - on any non political grounds, the € would fail. And there are good and obvious reasons for that. That is not to say that I wish that to happen BTW (at least not in the short run). If there is greater and greater political commitment to the Euro in its current (ie the new) format then I a more convinced than ever that DC should ensure that we remain on the sidelines. But maintaining the status quo (even with these latest adjustments) is merely consigning Europe the slow track of the global economy. If it takes a Euro-sceptic to point out what is good for Europe then so be it!

i think it would be fairer to say they dont want to and that they would rather avoid doing it. This is not to say they wont if they have to. What the German PM may be willing to do and what the German people want her to do are not necessarily the same thing so perhaps she is trying to entwine them to a degree where that become inevitable??

One cannot say with certainty that it will fail - I suspect all those who say it will also thought this form the start. Only time will tell us the answer and if the politicians and the people will swallow the medicine and pay the price it wont fail

THM your views are not neutral though and you just want this to happen. I dont know waht will happen and still think it depends.
I am neutral but mainly because i dont know enough economically or care enough politically.

JY - ultimately it may come down the the squeezed middle classes of Europe and what they are prepared to put up with.

Meanwhile, news from that other great European institution the EBA that European banks have a €115bn shortfall and Commerzbank may need to be nationalised.

"While Rome burns...."

[p.s. JY I want the Euro to collapse like a hole in the head. Honestly, c'mon, you're better than that???!!!??]

Aracer

I am not ignoring the awkward questions

Do you see independence as gaining sovereignty, or stopping sharing it?

Its still a meaningless and unanswerable question. Its not a simple bi polar yes / no situation.

gaining sovereignty or stopping sharing it.

Its not really the place to get diverted off into the Scottish independence question but scottish independence is partly driven by a pro EU stance. One thing the SNP want is for Scotland to have a voice in the EU which at the moment it does not have.

So - scottish independence would stop sharing some sovereignty with England, share more with the EU, repatriate some powers and share some.

So it would be stopping sharing some, gaining some and sharing some in a different way.

nationalising... comrade you say that like it is a bad thing 😉

Ask the German taxpayer, not me.

But I think YOU CAN assume my position in that one!!!

teamhurtmore - Member

Yes - on any non political grounds, the € would fail

really? Its stronger than teh £ and backed by ahuge % of world GDP in economies that are doing fine. By your definitions the £ must fail as well and as for the dollar?

is merely consigning Europe the slow track of the global economy.

Really - any evidence for that - given that the Eurozone economy as a whole is outperforming the UK.

Its not really the place to get diverted off into the Scottish independence question

Well it is quite a neat parallel if you're going to suggest that the UK is better off being more integrated with a larger political entity, rather than less.

One thing the SNP want is for Scotland to have a voice in the EU which at the moment it does not have.

Like the UK would no longer have a voice on the world financial market if it "shared" it's sovereignty with the EU?

So - scottish independence would stop sharing some sovereignty with England, share more with the EU

Ah - you want to be in the Euro? Well good luck with that one.

Oh Goody. Scottish Nationalism again!

[img] [/img]

glitchy thingy going on so fromthe other EU thread ( which might as well be allowed to die)
[img] [/img]

Glitchy, glitchy

Can I suggest to the STW developers that the make the code for putting a post on a new page, and the code for selecting the last page of a thread use the same algorithm? Hint: at the moment one appears to use the total number of posts made on a thread, the other the number of posts left after some have been deleted.

TJ - the exchange "rate" is not the issue, It is the structure of the exchange rate system that matters and that is why it will fail ultimately - actually probably split into two. Don't wish a strong £ on us on the thinking that this is a good sign. Why do you think all major economies are trying to weaken their currencies?

Germany is of course a huge beneficiary of the € since her xporters have a much weaker currency that would otherwise be the case...this is one of the key reasons for the rel. strength on the German econ. But for the rest of Europe (mainly the peripherary) its a disaster that has made them woefully uncompetitive.

Unlike you to support policies that will result in sustained UN and impoverishment for large parts of Europe?

Well it is quite a neat parallel if you're going to suggest that the UK is better off being more integrated with a larger political entity, rather than less.

No its not as there is no parallel as the SNP want more integration in the EU

Like the UK would no longer have a voice on the world financial market if it "shared" it's sovereignty with the EU?

Nope its teh complete opposite- as at the moment Scotland is excluded from EU talks in areas that affect it.

Ah - you want to be in the Euro? Well good luck with that one.

And I said that where?

No more on Scotland. its a whole other debate done many times over and the parallels you draw do not exist as one of the drivers for scottish independence is an internationalist viewpoint.

I'm happy to see an end to free trade and a franco DM kick people's butt. Trade barriers now! Bring back protectionism.

Unlike you to support policies that will result in sustained UN and impoverishment for large parts of Europe?

I am not.

No its not as there is no parallel as the SNP want more integration in the EU

🙄

Are you deliberately missing the point, or is it going straight over your head?

the parallels you draw do not exist

So one country wanting to be independent of a union of countries is totally different to a union of countries wanting to be independent of [s]a federal state[/s] another union of countries?

Neither - the point you see does not exist. The parallel you see is simply not there - you only see it because your assumptions about the drivers and case for scottish independence are wrong.

email me off list if you want to discuss this further

So one country wanting to be independent of a union of countries is totally different to a union of countries wanting to be independent of a federal state another union of countries?

Coprrect - because the motivations and desired end product are radically differnt

From Wolfgang Munchau at FT (admittedly a € sceptic - I will acknowledge this upfront :wink:)

So we have two crises now. A still-unresolved eurozone crisis and a crisis of the European Union. Of the two, the latter is potentially the more serious one. The eurozone may, or may not, break up. The EU almost certainly will. The decision by the eurozone countries to go outside the legal framework of the EU and to set up the core of a fiscal union in a multilateral treaty will eventually produce this split....

... The fiscal union likely to be agreed in March may not initially be very effective in resolving the crisis. It focuses on all the wrong issues, mostly fiscal discipline, which is not the real reason why the crisis has spread to Spain or Belgium, for example.

But the eurozone nevertheless made an important political statement. It will not allow outsiders to stand in the way when it needs to act. For the monetary union to survive, its one-sided, ill-conceived fiscal union will have to become more effective. Over time it will have to usurp central EU roles, especially in the internal market. I would expect it to create its own internal market inside the existing one. It will have to develop a highly integrated financial market with a single financial supervisor. In particular, I do not believe that the eurozone will allow a situation to persist where its main financial centre is located offshore. It will also want to set labour market rules and co-ordinate tax policies. In all of those areas, the eurozone and the EU will get into a permanent legal and political conflict, in which the EU acts as a break on the eurozone’s development.

One way or the other, this conflict is bound to lead to an eventual split of the EU. I have no idea when or how this will happen. The technicalities are not all that important. Of course, no member can be ejected from the EU. But there is nothing that can stop others from taking action that protects their interest. The new Lisbon treaty makes it possible for countries to leave the EU voluntarily, which means that legally it is possible for the eurozone plus the aspiring members to set up their own rival organisation – in theory. In pratice, that is not likely to happen, but the mere existence of a divorce procedure is probably sufficient to bring about this eventual outcome.

Thursday’s European Council meeting has demonstrated that a monetary union cannot co-exist with a group of permanent non-members in unified legal framework. The EU with its current treaties and institutions has proved to be an insufficiently flexible framework to run a monetary union and a disastrous framework for a monetary union in crisis.

These latest developments have reaffirmed my conviction that the only way to save the eurozone is to destroy the EU. But European governments may, of course, end up destroying both. All they did in the early hours of Friday morning was to create a new crisis without resolving the existing one.

FT today.

aracer
Sorry to pull your leg on that one, this does seem to be one of the more open minded STW debates I've witnessed. 🙂
I do like binners' Law of Unintended Consequences and think it quite appropriate for the complexity of all the different interwoven issues here.
There was a theory on BBC that maybe Cameron and Merkel over bluffed each other on what they were prepared to accept in the treaty, leaving a stalemate neither really wanted and no room for manouvre at all.
On the other hand, perhaps he had other reasons to want out completely.
Whatever happened, it doesn't reflect well on his negotiating skills to come out of a meeting of a 27 parties without having had any influence on the agreement, and know that he's effectively uninvited himself from the next meeting which now looks like being 26 parties.

so the EU cannot vote for the Uk/others to leave be booted out ...I would like to see Dave veto that vote and then not call a referendum

Nigel Farage, leader of the UK Independence Party, which campaigns for the UK's exit from the EU, said Mr Cameron could have obtained concessions by threatening to hold a referendum on Britain's EU membership.

"It's quite untenable for us to remain in a union alone, on the outside, having laws made for us, [while we're] in a permanent voting minority.

"This is the worst of all worlds for the UK."

see even UKIP see what dave has achieved as the worst possible scenario

Andrew Duff, Lib Dem MEP

"Cameron is to be warmly congratulated on reaching his goal of second-class membership of the EU."

Where will CRC and wiggle move their businesses to when europe have to pay import duty on their products?

JY - the dep editor of the FT phrased it much better than me (in terms of will it work)

Any supranational scheme, whether enshrined in treaty or otherwise, that condemns much of Europe to indefinite austerity will not survive the realities of national politics.

(and remember of balance the FT is pro-Europe)

and remember of balance the FT is pro-Europe

The FT plays to the crowd, its crowd being eurosceptics.

Sorry to pull your leg on that one

No apology needed - I'm not that easily offended!

There was a theory on BBC that maybe Cameron and Merkel over bluffed each other on what they were prepared to accept in the treaty, leaving a stalemate neither really wanted and no room for manouvre at all.

A Mexican stand-off? Yes, it certainly seems that way - though I'd argue that Angela had put down her line in the sand (one which she'll still have to cross someday - I'm assuming here she doesn't actually want the Euro to fail) well before Dave.

Whatever happened, it doesn't reflect well on his negotiating skills to come out of a meeting of a 27 parties without having had any influence on the agreement, and know that he's effectively uninvited himself from the next meeting which now looks like being 26 parties.

You assume there was scope for him to negotiate. From what I'm reading, Germany are immovable on the fundamental issues (I'm still shocked that nobody has challenged me on my anti-German rhetoric!) which still need to be sorted to solve the crisis. If there's somebody being really pig-headed here in the face of reality, it's not CMD. He had the option of signing up to an agreement he'd had no influence on or walking away. BTW, the headline figure appears to be 23, not 26, and at least one of those 23 is more than likely to pull out.

aracer - an intersting article in the Guardian today

[url= http://www.guardian.co.uk/commentisfree/2011/dec/08/eurozone-endgame-european-fiscal-union?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+theguardian%2Fcommentisfree%2Frss+%28Comment+is+free%29 ]no endgame in sight[/url]

Summed up with the quote:

[i]Tampering with the complicated EMU edifice resembles an attempt to repair a complex, many-sided piece of machinery where every component influences in a different way every other element in the mechanism. Apparently benign, constructive action to improve the workings of one small cog in the machine produces a negative outcome elsewhere. John Major, Britain's prime minister at Maastricht, referred then to juggling with different countries' sensitivities as "12-dimensional chess". Since then, with 27 countries in the European Union, the convolutions are still greater.[/i]

And I can't see all 26 other countries agreeing to this either. Dave won't be alone in saying enough IMHO. As I mentioned before, I think it'll be the Eastern European countries who won't bother. Why the hell should they subsidise the comparatively cushy welfare states of Italy and Greece? I mean: what are they actually getting out of this? Certainly not what they thought when they entered the EU, I imagine

I think the press are being somewhat disingenuous to suggest that its only Britain that has reservations about the whole project

aracer - Member
I note that nobody seems to have challenged the claim that Germany isn't prepared to cough up the money they need to. Do I take it that this is an broadly accepted point?

maybe they dont want to end up paying for the markets reckless behaviour

its a funny kind of communist capitalism they want, ie its fine to gamble away with other peoples money (or debt) until theres a crash at which point the ECB (germany) have to step in, bail out the countries theyve fuct over and let the games carry on