The Future of the Euro
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Should we secede from the European Union? Many claim that any action within the Union is doomed to failure.
The Evolution of the European Union
Euro-Exit to the Left? By Steffen Lehndorff 06 Dec 13 It is a well-known fact that the German right is divided over its attitude to the Euro. The Political Euro.
The common currency is ab used as a medium of wild speculation by freely operating players on the financial markets; what remains are investment ruins defacing beautiful landscapes and a population pushed into Not only European Commission President Manuel Barroso, but also Enrico Letta, recently mandated by Italian President Giorgio Napolitano to form the new government, have criticized her austerity policies, which have been An alliance of more than organisations — including trade unions, social movements, NGOs and political actors from all parts of Europe will publicly present a manifesto for the struggle for a democratic The Portuguese problem is democratic.
This problem is the democratic answer to the blackmail of debt and the austerity that results from it, with social effects that destroy Portugal. This is the problem of problems. If the debt is not overcome, Portugal will live through a period of social The Debt Crisis in Europe — Urgency for a Viable European Solution By Elena Papadopoulou 10 Jun 13 Since the outbreak of the financial crisis in and its transmission to the financial systems of the European economies, the Left argued that the global economy was faced with a structural crisis of capitalist reproduction.
Future of the eurozone
In this context, it viewed rising indebtedness as a facet of the crisis, But these economic arguments did not suffice to tip the political balance toward the euro. In addition there was the belief of leaders like French President Francois Mitterrand and German Chancellor Helmut Kohl that a single European currency would apply irresistible pressure for political integration.
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- The Origins of the Euro Crisis.
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- The Future of the Euro Currency?
It would lead eventually to their ultimate goal: a European political federation not unlike the United States. Their logic ran as follows. To function smoothly, monetary union requires banking union — in other words, a single supervisor for all the banks and a union-wide deposit insurance scheme. Otherwise banks overseen only by their national supervisors would be allowed to undertake cross-border lending operations irrespective of the impact on neighboring countries. And in the absence of a union-wide deposit insurance scheme, a run on the banks in one country could infect the banking systems of its neighbors.
Similarly, to operate smoothly, a monetary union requires an integrated fiscal system, like those of political federations such as Australia and the United States. States that give up their monetary policy to a higher authority can no longer adjust it to changing national conditions. They can no longer lower interest rates to spur investment when the national economy is slowing more than those of its partners.
But if the partners operate an integrated fiscal system, the more prosperous members can shift resources to the depressed region, substituting for the no-longer-possible interest-rate cuts. That means more power for the European Parliament — and less for national legislatures. It means that monetary integration creates a logic and therefore irresistible pressure for political integration.
They identify as German or Italian first and as European only second, if at all.
They have little appetite for pooling national sovereignty at the European level. And 20 years of the euro have done little to change this. Hence there was no banking union in the first decade of the euro.
When, in and , problems developed in the economies on the receiving end of these flows, the banks curtailed their lending. The Irish, Spanish and Greek governments, facing new constraints on their borrowing, were forced to sharply compress their spending, since there was no fiscal union to transfer resources to them from the more prosperous members.
In the absence of the political solidarity required for such transfers, the crisis countries were forced to double down on spending cuts. For them, the eurozone was transformed into an engine of deflation and depression.
New Ideas - France, Germany and the Future of the Euro Area | IIEA
The conclusion follows that absent a willingness to contemplate political union, banking union and fiscal union are not possible. And without them, monetary union by itself will not stand. It has survived for fully 20 years. It survived the mother of all stress tests, the global financial crisis. As the Greek, Irish and Spanish crises all showed , and as the Italian crisis is showing again, exiting the euro is even harder than exiting the European Union. As I explained more than a decade ago , abandoning the currency would ignite a full-blown financial crisis, as depositors frantically liquidated their bank balances and investors dumped their government bonds to avoid seeing their savings devalued.
But neither is the alternative of far-reaching institutional reform in the cards. At their summit last month, European leaders agreed only to modest future steps to build out the monetary union.