27 March, 2018
Dear Mr. Juncker,
I am writing to you on behalf of the European Constitutional Group following its meeting on March 1-3, 2018 and subsequent communication. We have discussed the Commission’s “Roadmap” for deepening the Economic and Monetary Union. Moreover, we have taken into account the Commission’s proposal for a European Deposit Insurance Scheme (November 2015) and its Reflection Paper on the Deepening of the Economic and Monetary Union (May 2017). We have built on the ideas first set out in our “Proposal for a Constitution of Europe” (1993) and applied them to the present situation. Our main purpose has been to discuss how the governance of the euro area can best be reformed.
“Open Letter to the President of the European Commission” weiterlesen
“If you can’t explain it simply, you don’t understand it well enough.” (Albert Einstein)
Germany is once again in the pillory. The charge is that of repeated excessively high current account surpluses. This year they are particularly high at almost 9% of GDP. Germany has once again failed to comply with the 6% recommendation of the EU Commission. The circle of prosecutors is illustrious: Southern European deficit countries, the chronically deficit USA, and the International Monetary Fund. The economic justification for the accusation is neo-Keynesian. The claim is that Germany is living with its surpluses at the expense of the deficit countries, drawing off their aggregate demand. They say that this doesn’t just take the axe to the Euro, it also destabilizes the global economy. But it isn’t the only culprit. China and Japan are thought to have aided and abetted.
“Germany in the pillory
Balances and imbalances in the current account“ weiterlesen
“Economists exert a minor and scarcely detectable influence on the societies in which they live.”(George Stigler)
The mess in the European currency area continues, and the Euro isn’t out of the woods yet. The three trouble areas infecting one another continue to smolder: a number of countries in the EU continue to be less competitive, debt is once again too high almost everywhere, and many banks are still undercapitalized. The threefold crisis in the Eurozone is being driven by multiple “moral hazards”, those of the politicians, voters and bankers (here). They had their beginnings in the periphery, in the PIIGS. The (German) center and the ECB saved the EMU from the collapse. This interpretation of the euro-crisis is, however, becoming less important and is held less and less commonly in politics and the media. The attempt to gloss over the story of the crisis is made much more often. The victim is now the periphery, and Germany in particular1 is the culprit. “Germany-Bashing” is meanwhile fashionable throughout Europe. Even American economists, like Alan Blinder and Paul Krugman, take part in the witch hunt against an “aimlessly wandering” Germany.
“The worst isn’t over yet for the Euro
Is Germany to blame?“ weiterlesen
At the end of last year the four presidents of the most important European institutions showed its true colours regarding fiscal policy. Manuel Barroso (EU-Commission), Herman Van Rompuy (European Council), Mario Draghi (ECB) and Jeroen Dijsselbloem (Eurogroup) propose to provide the Eurozone with its own budget rather sooner than later. This would be the only way to save the European Monetary Union which is still on the edge of the abyss. Economically stronger countries have to financially support weaker members. This applies not only to temporary asymmetric shocks, but is necessary on a continuous basis in case of asymmetric trends. Laslo Andor, the socialist EU-Commissioner for Social Affairs, does not relent concerning these plans for European unemployment insurance. However, constant financial equalisation inside Europe is at present politically inconceivable. Even the camouflaging German bail-out politicians would not be able to pass this on to voters. A temporary financial compensation in the event of asymmetric shocks seems the easier way. By implementing European unemployment insurance, politics would finally make the new world of the economy of transfers´ crooked plane socially acceptable.
“A Toxic European Cocktail
EU-Commission Plans Centralist Unemployment Insurance“ weiterlesen