Economic crisis - Prelude for EU Superstate

Skin

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For those of us who believe the fundamental aim of the whole European project is ultimatley to create a European Superstate, it should be noted that most historical seimsic shifts in political dispensations occur out of a crisis.

So is the economic crisis nothing more than a prelude to the formation of a European Superstate?

Notably, through all the furore of how German and French banks loaded Irish and other european banks with the deposits of their own banks, it appears to have gone unnoticed that during the period 1991-2010, German economic growth averaged at 0.28%pa. Despite the now known vast deposits held in German banks, and since the creation of the euro, which has led to extremely low interest rates, one wonders why such a large deposit base was not funnelled into the German economy itself, but instead into the smaller 'peripheral' countries?

The eurozone project was to tie the monetary policies of these states to the stronger EU currenices. The light-touch regulation policy has ensured that instead of being tied to this arrangement as equal partners, we are now dependents of this system fighting our place in the pecking order.

In summary, what should occur is an orderly default with an exit from the euro. But given the political will (remember the u-turn on Maastricht by the Danes, and the u-turn on Nice and Lisbon by the Irish), the position is to deepen the dependency on the euro. A default by tiny Ireland is not in their interests. A default by Portugal and Spain (perhaps Belgium and Italy?) is not in their interests either. But on the eve of a collapse of the euro, expect the push for full political integration of the euro zone countries by the political elite - in short, the surrendering of fiscal policy (in offical terms, and not by the back door of the IMF, as we have now).

The only outcomes of this economic crisis are - a break up of the eurozone, or the birth of the European Superstate. Which one do you think will occur?
 


Al.

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The latter, of course. Germany hasn't schemed and orchestrated this only to have it not become the "empire" its elites wanted it to be. There's no "prelude" to the superstate (just another name for "empire") since it's upon us.

I hope nobody's forgotten what Romano Prodi said earlier this year in the Financial Times...
Uncertainty will continue because many operational aspects of implementing the decisions are quite broad in outline. However, the ECB, the Commission and most eurozone countries have been given stronger powers and more far-reaching tasks and responsibilities than in the past, and markets will take this into account.
It's similar to what Prodi said a few years earlier. The leaders of the EU welcome the so-called "beneficial crisis". It's very similar to the techniques Bismarck used to build the German Empire.

On top of that, people have forgotten that Germany's elite still embrace militarism. Why else get rid of conscription, if not to turn their military into a professional one once more? These are two dangerous turns of events.
 

wilting

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It is true that crises tend to lead to deeper integration, however I sincerely doubt this will lead to the creation of a European state or even a single budget for the Eurozone. That would no so much be a deepening of integration as a total reordering of the the nature of it. It is certainly desirable from a good goverance standpoint, but it is highly improbable outcome. It is correct to state that the Euro will not be allowed to fail, but I doubt that the alternative is such a radical shift in the nature of integration.

Integration does not have any "fundamental aims," it is different things to different interests. The replacement of the current Integovernmentalist system of Member States is not in the self-interest of the dominant political parties whose electoral legitimacy and power is based upon the concept of the nation. Nor is it in the interest of the bureaucracies of the Member States; they don't want to be out of a job and institutions always seek to preserve as much power for themselves as possible. Nor is there much in the way of popular support for it given the indoctrination of the public into a national-centic viewpoint from birth.

I say all this as a Federalist.

In order for the current system to make the transition into a European State, the self-interest of the Member State governments and elites in forming such an entity would have to be greater than the self-interest in preserving their fundamenatal power foundations and relevance as institutions. Not to mention they would somehow have to convince the electorate to go along with it; who have been told all their lives that they belong to a particular nationality, and that the Nation-State is the fundamental political unit. This all seems unlikely. It would take quite a crisis indeed.

A European State? Desirable, yes, likely in the near future, no. Deepening of integration as a result of crisis? Likely, but probably of limited significance in broad terms, another step on a long road. The undemocratic and inefficient Intergovernmentalist system will likely remain for some time to come, due to a combination of reasons of self interest and ideology that are not going away any time soon.

I hope that helps, have a nice day. :)
 
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Skin

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Both points are valid, but if the euro is not allowed to fail (as I write RTE reporting that Spanish and Italian bonds are at record highs) what is the alternative? A continuous program of bailouts is simply unsustainable.
In Ireland, budgetary targets have effectively been ceeded to a political elite in the EU and IMF. Unelected, they have the power to veto any fiscal decsions made by an Irish administration if they deem it unlikely to result in reaching repayment/expenditure targets. If Portugal & Spain go the same way, the end game is a massive default on the euro and its break up.

But if a break-up of the eurozone is not politically desired, then what is the alternative? It has been stated above that it will likely result in a "deepening of integration". What does that mean in real terms?
 

wilting

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To be honest, I'm not really sure. Finance is not my strong point. Some kind of greater harmonization of member state budgets perhaps, the Council of Ministers signing off on the budgets of Member States maybe. That has been where the key decisions regarding Greece and Ireland were made, after all.
 

Skin

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To be honest, I'm not really sure. Finance is not my strong point. Some kind of greater harmonization of member state budgets perhaps, the Council of Ministers signing off on the budgets of Member States maybe. That has been where the key decisions regarding Greece and Ireland were made, after all.
In effect, in not fiscal control, fiscal approval?
 

tempest

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From RTE:

A row has broken out in the European Parliament over Ireland's 12.5% corporate tax rate.

"A row has broken out in the European Parliament over Ireland's 12.5% corporate tax rate.
It has emerged that eight mostly French and German MEPs have issued a declaration attacking Ireland's corporate tax rate and calling for a minimum EU-wide corporate tax rate of 25%.
What has heightened the dispute is the fact that the eight MEPs are all co-ordinators for the different political groupings in the parliament and are, as such, representatives for those groupings on an influential parliamentary committee.
The declaration invites signatures from other MEPs and if it can gather the support of 350 MEPs, it then becomes the position of the European Parliament.
The statement claims that European taxpayers and citizens have been put at risk 'in order to stabilise a financial system which has been profiting from the exceptionally low Irish corporation tax rate of 12.5%...'
It goes on to suggest that Ireland's corporate tax rate is unfair and goes against the spirit of European solidarity, especially given the fact Ireland is receiving a bailout.
The declaration concludes: 'We urge the European Commission to advance on the dossier of a Common Consolidated Corporate Tax Base. We urge the European Commission, the Eurogroup and its members to ensure that the corporation tax rate will be increased to the average EU level of 25% in a spirit of solidarity.'
Irish MEPs are understood to be furious at the declaration given that, as co-ordinators on the Economic and Monetary Affairs Committee (ECON), they technically represent the same political groups of which Irish MEPs are members."

More ...

MEPs attack Irish corporate tax rate - RT News
 

adrem

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A simpler solution (than the super state, USE or whatever) would be to alter the issuance of debt to a single EURO wide debt issuer - the ECB.

Sovereign states would then borrow off the ECB at a standard rate.

There would be a requirement for ECOFIN oversight of budgets and a need for some control mechanisms and "punitive measures" to prevent a free for all - manage the moral hazard and all that.
 

Skin

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A simpler solution (than the super state, USE or whatever) would be to alter the issuance of debt to a single EURO wide debt issuer - the ECB.

Sovereign states would then borrow off the ECB at a standard rate.

There would be a requirement for ECOFIN oversight of budgets and a need for some control mechanisms and "punitive measures" to prevent a free for all - manage the moral hazard and all that.
But we already have a european parliament, judicial system and monetary policy. Such a system would be tantamount to ceeding fiscal policy to Brussels. At that point, why not just call a spade a spade and say it for what it is, a European Superstate.
 

Doodah

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.......... So is the economic crisis nothing more than a prelude to the formation of a European Superstate?

............... The only outcomes of this economic crisis are - a break up of the eurozone, or the birth of the European Superstate. Which one do you think will occur?
Just from amateur observation. it can be seen that the EU banking system is becoming more and more centralised, with the ECB dictating day-to-day actions and policy across the euro zone.
One of the consequences of the post-2008 crisis is the higher frequency of banking mergers.
This pattern will accellerate following the present crisis, with plans already in place to sell Irish banks to larger banks, for example.

This centralisation of euro zone banking will facilitate the superstate.
In order to get there, the "core" (eg. France-Germany-Holland) will protect itself by whatever means possible.
Unfortunately for peripheral countries like Ireland, the Franco-German centre will protect themselves from crisis by firstly asset-stripping the periphery.
eg. The Irish pension fund has been claimed to protect Franco-German banks & bondholders.

Today's display by an alliance of French & German MEPs, attempting to remove the Irish Corporation tax advantage and deny Ireland any chance of economic recovery, is a slightly nauseating example of where the pain of superstate birth will be experienced.

The Irish economy is in the process of being sacrificed, because it is peripheral and stripping it's assets benefits the core in the short term.
Too bad for us.

Unless some form of ferociously competent intelligent life emerges from the political wasteland of this country to duck, dive, wheel, deal, undermine, overstep, knife, twist and most importantly lead the way to survival.

We do at least have world class duckers & divers in this country so that shouldn't be a problem.
 

adrem

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But we already have a european parliament, judicial system and monetary policy. Such a system would be tantamount to ceeding fiscal policy to Brussels. At that point, why not just call a spade a spade and say it for what it is, a European Superstate.

Because it isn't a spade !! If you want to call a fork a spade go ahead it won't change the fact that itis a fork !!

Centralising debt issuance would prevent inter-euro country debt arbitrage. It would also clearly put the combined strength of the euro economies behind the euro currency. The current problem is that the currency is exposed to the weaknesses in each individual economy and therefore can be attacked via each country's sovereign debt market. In the case of the smaller companies this is a very small and illiquid market and therefore easy to unsettle.

We already have an element of central budgetary oversight - the strength and stability pact (if properly implemented).

Also the mooted changes in ultimate liability from the current position (issuer only unless they default) to collective will destroy peripheral bonds. That model would and could only work in a centralised bond market with EURO bonds issued to the market by the ECB and then sovereign governments borrow their requirements solely from the ECB.
 

Skin

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Because it isn't a spade !! If you want to call a fork a spade go ahead it won't change the fact that itis a fork !!

Centralising debt issuance would prevent inter-euro country debt arbitrage. It would also clearly put the combined strength of the euro economies behind the euro currency. The current problem is that the currency is exposed to the weaknesses in each individual economy and therefore can be attacked via each country's sovereign debt market. In the case of the smaller companies this is a very small and illiquid market and therefore easy to unsettle.

We already have an element of central budgetary oversight - the strength and stability pact (if properly implemented).

Also the mooted changes in ultimate liability from the current position (issuer only unless they default) to collective will destroy peripheral bonds. That model would and could only work in a centralised bond market with EURO bonds issued to the market by the ECB and then sovereign governments borrow their requirements solely from the ECB.
I agree. But centralising debt issuance, would in effect be the proper implementation of the stability pact. Yes? No? And if debt issuance is centralised, then it is incumbent on each nation state to achieve fiscal prudence within the parameters of this system. Yes? No?
So as we are seeing, it is the EU/IMF who can approve/disapprove our loan draw-downs in this 'bailout'. We are in effect an experiment as to how your proposed system might work. If applied on a eurozone wide basis (triggered by the on-coming financial crisis in Portugal, Spain etc), it would lead to fiscal surrender in every way but name.

As is being reported elsewhere, Irelands 12.5% corporation tax rate is under attack (albeit from a bunch of MEPS), but nevertheless it is an attack.
 

Skin

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Just thought, in line with supposed "re-negotiations" of the bank bailout, and a failure of either FG/Lab to outline what will consist of this re-negotitation, I thought it apt to bring this subject back up again.

Media reports suggest that all EU states will formally have to resolve the banking crisis that is threatening the euro as a currency. But in reality what does this mean? I think it is time for the Eurozone to get real.

Either, the euro collapses, or we surrender fiscal authority to Brussels - The completion of the EU Superstate is closer than we think.
 
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Its worrying that two people hold so much power! Germany and France are meeting on their own to take decisions effecting all of Europe. Doesn't sound like the Europe I want anything to do with!!
 

seanmacc

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How shall we welcome our neo-colonial oppressors? This is another step in the one world government.

How long until we have a new Irish Republican Army?
 

Green eyed monster

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Let the Eurozone collapse if it must.

It was a bad idea to begin with and has led to this mess - the creation of a single European fiscal policy is too large of a step to rescue just this nuisance of a currency.

The superstate United States of Europe was the goal since before the 1960's.

I would declare some kinds of financial speculation on a par with terrorism as they should have been all along because that is what they are (manipulation of millions through fear and panic) - especially types targetting currencies for political reasons (eg the pressure on the Euro is coming from rich people working to create the conditions for the birth of a United States of Europe).
 

Elvis jaffacake

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How shall we welcome our neo-colonial oppressors? This is another step in the one world government.

How long until we have a new Irish Republican Army?
Why...so the French/Germans can thoroughly penetrate that one too. Will their codename for this neo IRA's head of internal security be called soupspoon?
 


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