12 thoughts on “The Eurozone”

  1. Don’t forget Spain and Italy. Spain has a newly elected conservative / free market liberal prime minister with a strong mandate to reform and who has already enacted major reforms. Italy has a widely respected free market liberal prime minister with a much more limited mandate, but who commands great respect among his fellow heads of state and government.

  2. I agree with Münchau that a eurozone-level bank resolution fund is desirable – though not fiscal union, a treasury secretary, and a common sovereign bond. Some sort of fiscal transfer is inevitable and a banking fund would be an opportunity to dismantle national banking fiefdoms and to address some of the root causes of the crisis.

  3. I heard some talking head with a Brit accent saying the new Socialist French President is promising the voters that they’re through with ANY austerity programs in France.

    And my very first reaction was, “…and how do you PAY for any more NON-austrerity, bigger spending, everybody loves the new Socialist President programs, you great big French monetary goof ball!?”

    When I hear these things I am stymied, flummoxed and bewildered that an ADULT can’t look around at history, or just over their shoulder in Europe for that matter, to see that

    A.) Communism / Socialism doesn’t and hasn’t ever worked.

    B.) WE should run to get away from people who think this way.

    Only stupid adults do NOT understand that to DO or BUY things you gotta have money, and no matter how much you want it to be true, money doesn’t grow on trees nor fall from the sky! H3ll, my 5, 7 and 10 y/o grand sons get this concept. They understand when they get $20 for a birthday, they can’t spend $200, $2000 or $2M.

    So then, how is it that a grown man, old enough to be elected to lead a country doesn’t understand what some children understand?

    2. You don’t need money. You just outlaw money and ask everyone what their ability and needs are.

      1. Bud you should copyright that line and print it on t-shirts and those magnetic bumper stickers.

    4. With most politicians it’s instructive to wonder whether there is a distinction between what they understand and what they want to appear to understand. If you want to improve a country or a subdemographic by taking a bunch of other people’s money, for example, and if you notice that “we’ll borrow it, then not pay it back” is an effective modern plan for taking money, then you’re also bound to notice that the extent to which you can execute this plan depends on how good you are at obfuscating it. You’re not just taking money, you’re “investing!” and getting a “multiplier!” and hasn’t sovereign debt always been just the safest thing ever?

  4. It will be…..interesting….to say the least.

    If Mssr. Hollande does what he says he will do: junks the austerity plan, jacks up taxes, increases gubbmint spending….then France falls into ruin and chaos in a year or so.

    If he doesn’t do the things he got elected to do…..then the banlieus will revolt.

    All of this puts Merkel in a tough position. Here you have a country [Germany] that has run their finances more or less correctly, and whose taxpayers will continue to be expected to bail everyone else out. So Merkel either taxes her own people to save the EU….destroying her economy. Or the EU goes down.

    Ahhhh these are interesting times indeed.

    1. One thing that tends to get lost in the debate is the issue of structural reform. Hollande argues more emphasis should be put on growth rather than austerity. He makes it sounds as if the two are antithetical, but that’s only the case if you don’t want structural reform. Which he of course doesn’t. But while it is true structural reform (and the consequent growth) is more important than austerity, the path forward requires more reform, not less austerity.

      One reason the German economy is in better shape than the French is that the Germans made some limited structural reforms in the labour market. Nowhere near enough, but it’s better than in France, which isn’t saying much.

      This is where I hope Monti and Rajoy will try to use their influence: forcing France and Germany to reform their labour markets and to open up their services markets. In theory inner-EU trade should be completely free already, but in practice there are major non-tariff obstacles to internal trade in the services sector.

  5. My bet is he’ll pull a Jerry Brown: crank up spending to absurd levels, run the debt all the way past the event horizon, and then demand that the EU bail him out or cancel the debt because if France goes under, it’ll guarantee the rest of Europe does too…

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