The Great Debate UK
-Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs. The opinions expressed are his own. -
Back in 1997, when I wrote about the prospects for the forthcoming European Monetary Union, I said I expected something like the Greek crisis to end with a wave of bailouts of ClubMed countries, and I followed the situation through to what seemed its logical conclusion.
I guessed that Germany and the other surplus countries would realise they were caught in a can’t-beat-‘em-may-as-well-join-‘em trap. On balance, I think I stand by that forecast today.
The problem is of course that monetary union without fiscal union requires a willingness to leave member countries to stew in their own juice when they become insolvent.
You might have thought that, with the Eurozone in turmoil, the EU would have its hands too full to pursue its vendetta against hedge funds.
Far from it, the latest proposals are even more wide-ranging than most observers anticipated, involving the establishment of a Europe-wide regulatory authority with the power (presumably) to dictate to the FSA how to police the UK financial sector, restricting the ability of hedge-funds based outside Europe to sell inside Europe and making it hard for European investors to invest in the rest of the world’s so-called alternative investment vehicles.
-Jane Foley is research director at Forex.com. The opinions expressed are her own.-
Next month’s UK general election is not the only one of significance in Europe. There is the possibility that the German regional elections in North Rhine-Westphalia on May 9 could result in the end of the CDU/FDP government’s majority in the upper house of parliament.
Forget about Greece for a moment. Just think about country X, which has lived well beyond its means for years thanks to loans from inattentive or foolishly optimistic lenders. When the crunch comes, the X-people will have to cut back on spending. And the X-lenders will generally suffer from the famous rule of banking: "Can't pay, won't pay."
If Herman Van Rompuy, the president of the European Council, has his way, Greece is not going to be country X despite its weak government, bloated civil service and poor trade position. Van Rompuy said on March 25 that a vague new support agreement should "reassure all the holders of Greek bonds that the euro zone will never let Greece fail". This default taboo should be reconsidered.
- Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs. The opinions expressed are his own. -
The (probably temporary) resolution of the Greek crisis seems to have produced a result which was unexpected – by me, at least. For the first time in the history of the EU, the German taxpayer has refused to be sacrificed on the altar of European solidarity.
Britons have never really got the euro zone. "Its not really going to happen, is it?" was a typical question from a City analyst to Reuters back in the mid-90s. The political drive behind the creation of the monetary union was beyond many in eurosceptic Britain.
So the results of a straw poll at an event sponsored by independent City advisers Lombard Street Research were somewhat suprising. A hundred or so mainly British investors were asked whether the euro would be around in five years with its current membership. Response was about 80 percent saying yes to 20 percent saying no.
from Global News Journal:
So there's no question Greece has work to do to improve its bookkeeping.
Not only must it get spending in check, but it needs to be a bit more honest about where its finances stand in the first place. After all, it's not often an EU country says one month that its budget deficit is a little over three percent of GDP and admits a few weeks later that, oh dear, it's actually nearer 13 percent.
Yet it's hard not to have a little sympathy for Greece at the same time.
Its government bonds have been hammered and the price it has to pay to finance its debt has soared as financial markets have relentlessly taken it to task over the past six weeks for its profligacy.
from Global News Journal:
Western responses to President Dmitry Medvedev’s proposal for a new European-Atlantic security body that stretches from Vancouver to Vladivostok have ranged from dismissive to lukewarm. None have been enthusiastic.
But some inside and outside Russia argue it would be unwise for Europe and the United States to reject the proposal out of hand, not least because, as one Russian official put it, this is one of the few occasions where Russia isn’t disagreeing but coming up with something constructive.
from UK News:
Once he was regarded as an obvious front-runner for the job of EU president, then it was pointed out that it was unlikely anyone would be chosen from a country that is not in the eurozone, not in the Schengen border-free area and which has an exemption to the bloc's charter of fundamental rights.
Ah, but if you don't choose someone with proven political clout to fight Europe's corner, a G2 of China and the United States will have things all their own way soon, declared Foreign Secretary David Miliband over the weekend.
from Global News Journal:
** This post is from Alertnet, the Thomson Reuters Foundation's global humanitarian news Web site.**
Earthquakes, floods, the global recession and recurrent famines have been keeping aid professionals across the world as busy as ever. Such crises hit poor countries the hardest, focusing increasing attention on preventing and preparing for disasters rather than dealing with their devastating aftermath.