Euro Area

[Nowake]

Pff, this thread moved fast - of course, mainly because a stupid old chestnut full of antique British politics had to be brought forth ewww!

As for being a pseudo- external observer IMDHO the EU had to be more transparent and accountable (...) Also no laws should be morally binding without representation... Proxy and implicit is not good enough when talking of a first world meta-nation.

/theatrically pretends to faint My dear chap, where do you get these ideas?!
Europe is not ready for direct democracy. Petty nationalism would run rampant.
In general, the people are ignorant and misguided. Case in point: it is the people who elect the politicians you so despise in the first place.

A year may be a long time for in politics, yet a decade is a short time in government.

hidden reference The goal we should aim for in the next half a century is to run a civilised, technocratic government machine, only tempered by occasional general elections. Brussels is for the next few decades a supra-national organism. Therefore, it must seek to gradually exclude the voter from government, up to the point where it picks every few years whichever pack of incompetents will volunteer to interfere with European policy and send them to Brussels, where we will let them panic over this and that and the other. Politicians love to panic, they need activity, it’s their substitute for achievement.

We joined a trading bloc. Confirmed by the referendum in 1975. We did not join a fledgling superstate.

And this is why the public is ignorant and misguided.

You should have been cheering Germany’s initiatives.
Angela Merkel has not tired of repeating that member states’ budgetary policies should be placed under the authority of judges in Luxembourg with the power to sanction “fiscal sinners” - the compromise established on 5 December between Angela Merkel and Nicolas Sarkozy has sidelined this solution.
This is a policy that is based on one of the most well-established schools of liberal thought, “ordoliberalism”, which emerged between the wars in Germany and was popularised in the postwar period as “the social market economy” by the influential Christian-Democrat Ludwig Erhard.
Michel Foucault identified the originality of this school of liberalism, which makes constitutional regulation and judges the levers and principle guarantors of the construction of a political order founded on a strict respect for economic freedom and free competition.
In the context of ‘a politics’ that is deemed incapable of creating a stable and predictable environment for economic operators, constitutional regulation (the much vaunted ‘golden rule’) is the sole instrument to combat the “temporal incoherences” of democratic governments. And it is in this context that the German proposal to place in the hands of judges budgetary power, which is a core competency of parliament, should be evaluated.

This school of thought is not new in Brussels. In the wake of several decades dominated by the ‘Monnet method’ which advocated entrusting the economic and political modernisation of the continent to an enlightened technocracy - that is not to say said technocracy cannot exist in the presence of ordoliberalism - it is easily forgotten that the European project also has roots in a judicial and economic ordoliberal credo that is still very much alive in Germany.
It is impossible to understand one of the pillars of European construction, which is the policy of free competition, without taking into account the close links maintained over many years with the milieu of German ordoliberalism. It should be said that these ideas provide the basis for a “strong Europe” and the reinforcement of supranational institutions: but only on the express condition that such institutions maintain an apolitical independence, along the lines the European Central Bank or the European Court of Justice.

In short, the German proposal is much more than an ephemeral solution to an emergency situation. It is based on an authentic European federalist doctrine that aims to call a halt to the slow deployment of a democratic logic in the heart of supranational institutions, whose initial goal was economic modernisation.
As such, it would definitively put an end to repeated attempts to create a European political constitution, and pave the way for construction of an economic constitution in its stead.

As to Germany, while it's true that an intentionally solid manufacturing base has benefited that country well in comparison to the economies of the US and UK, it's quite arguable that the Euro itself and the resulting artificially low "deutschmark" is mostly responsible for German export strength over the past years. Without the PIIGS to keep the Euro low, Germany would have found its goods far less competitive in the global market. Which is an irony when you consider your point that we shouldn't copy Italy and Greece, for without them there would be no 'Germany' in the sense that you mean it.

Correct. What’s more, I was reading a Der Spiegel article recently which made a lot more incisive assertions, especially documenting the way Germany is in fact one of the least fiscally disciplined members of the EU, below the level of Spain and demonstrating less repentance than Italy.

Financial market investors and German politicians don’t really have a lot in common. Normally, the former don’t understand why the latter need so much time to implement the decisions they reach at a crisis summit. Conversely, the investors serve the politicians as the scapegoat of choice when it comes to who caused the crisis of the day.

There is one point, however, where both are unusually united: in their view of Germany’s fiscal policy, regarded as solid and a role model for all the southern countries in debt. Even when the facts look very different, it’s a boat no one really wants to rock.And so the Christian Democratic Union’s chief whip, Volker Kauder, recently got away with declaring at the CDU convention that “Europe is speaking German now“. With this bit of chauvinist swagger, Kauder neatly summed up the politics of his Chancellor. Since the euro crisis broke out early in 2010, Angela Merkel’s mantra has been that if everyone could just save like the Germans, there wouldn’t be any problems.You have to grant it to Merkel: apparently, she’s been rather convincing. In any case, the investors in the financial markets seem to believe the Federal Chancellor. While they’re demanding higher interest rates to buy government bonds from almost all the other eurozone countries, they’re giving their money to the German finance minister virtually at zero cost.

Germany is not saving

It’s hard to explain this rationally. Anyone who looks just a little deeper, of course, will naturally observe that countries like Spain or Italy are not nearly as badly off as the high interest rate spreads suggest. But he will certainly also discover that Germany is not the savings poster boy it claims to be.In its latest 2011 forecast for Germany, the European Commission estimates a debt ratio of 81.7 percent of gross domestic product. That’s significantly more than the 60 percent the European stability pact sets out as the debt ceiling – that pact that the federal government regularly uses to beat the southern European countries about the ears with, and that it wants to swing even harder. A country that wants to bring in other tough rules would do well to stick to them itself first. Luxembourg Prime Minister Jean-Claude Juncker is therefore right to get worked up about German domineering. Spain, for example, with a debt ratio of 69.6 percent, is considerably closer to complying with the Stability Pact than Germany is. Even the Dutch (64.2 percent) and the Finns (49.1 percent) have more right to put themselves forward as European disciplinarian than the Germans do.The only thing that currently justifies trust in Germany’s public finances is the relatively low budget deficit ratio, i.e. the new borrowing relative to economic output. That the ratio is significantly less than it is in the southern states has many causes – but none of them has anything to do with the image of the “iron-willed savers” that the federal government loves to play up to.

Arrogant hymns to the discipline of the German state

On the contrary, Germany is not saving. Federal budget spending has gone up recently and, according to the financing plans, will stay relatively steady in the coming years at around 300 billion euros. The austerity package that’s part of it, and which was adopted last autumn with great deal of fuss, has changed as little as the “debt brake” that the Germans love to hawk around Europe.The fact that the deficit ratio is nonetheless dwindling is due solely to the strong economy of the past year and a half, which has given the federal government unexpectedly high tax revenues and also driven GDP strongly upwards. Since the deficit ratio is calculated as the ratio of debt to GDP, it’s therefore falling. That has very little to do with saving.Even the good economic situation has, so far, not been a result of Teutonic asceticism – at least not by the state. The high demand for German goods abroad is mainly due to the firms that make good products at relatively low cost.The current government, however, with their arrogant hymns to the discipline of the German state, are bringing down much of Europe. In Greece, Spain or Italy – where the Germans were once valued for their virtues, at least – they are now seen primarily as arrogant taskmasters who want to tell the people on the rest of the continent how to live and how to work. That can’t bode well for the future.

[InsaneApache]

Blimey you don't like freedom much do you?

[Furunculus]

True. More to the point though, all this talk of "punishment" and "marginalisation" is foolish.

agreed, there is more to it than just mere treaties, there is the simple fact they want our £50b/year:

http://blogs.telegraph.co.uk/news/ch...d-when-not-to/

PVC, I'm not currently living in England and haven't for some years to I'm not best placed to comment on the party political situation, but it does appear that Cameron is being held hostage by the crazy right wing of his party (see John Redwood's leadership bid in 1995 and the living dead that supported it - these are the people currently in charge of Britain!) and that Clegg is better placed to put up and shut up...his protestations are merely grand standing for the benefit of his own party as he cannot afford to force an election and go to the polls.

see any opinion polls lately from the times and the mirror?

Depends who you ask! Even among the Tory party there are those who believe in a federal europe. .......... (so was Winston Churchill by the way although I don't think he would have envisaged his 'United States of Europe' being quite so run by the Germans).

sure he was, but he didn't envisage britain being part of it.

'United States of Europe' would be a good thing. First would be the destruction of the nation state, dissolving everyone into regional bodies. ..........
Now, we revamp European Parliament system to make it at least AV, if not STV voting system, electing representatives across Europe from the areas they reside in........
As for "Economical Policy", I think it is safe to say that it should be copied more from Germany and China than Britain or the United States. (Especially not Italy or Greece)..............
I doubt it would even be Britain anymore, it would simply be "England" with Scotland seceding and rejoining the European Union and Northern Ireland re-uniting with it's Irish neighbours......

Only if people want that................. Wait, do they want that, or should we just impose those choices upon them?

[gaelic cowboy]

I see we have an arguement over Blighty and it's position again hmm anyone notice the Banksters aint taking a blind bit of notice of the new Treaty Intergovermental Agreement crackpot plan.

Yes lets save the burning house by putting in place a plan to buy a new fire engine next year to give people "Confidence"

This new plan does nothing to fix a banking problem which has now become the problem for the whole Euro both North and South.

There plan of course to avoid referendum is doomed in Ireland as we cannot change our constition without one.

Is Mise Gaelic Cowboy, beidh mé ag vótáil

Níl

[Philippus Flavius Homovallumus]

Well, if I ever needed proof Nowarke was an elitist with no connection to the general population, I have it now in sapdes. I know you're ignoring me Nowarke, but you might like to consider how close your rhetoric is to classical political facism, particularly the bit about the ignorant plebs.

'United States of Europe' would be a good thing. First would be the destruction of the nation state, dissolving everyone into regional bodies. The dissolution of all the states into regional bodies would quell regionalism feeling such as Scania, Scotland, Basque Country, Catalonia, and a great many of for like across Europe. Great thing about this also is that a great many nations already have regional bodies already existing! Britain, France, Spain, Germany... so it would simply be the total eradication of a tier of government across the board. Great savings too! No need for 26 identical governmental departments, simply one, the European one.

Now, we revamp European Parliament system to make it at least AV, if not STV voting system, electing representatives across Europe from the areas they reside in based on population, then with a second house 'Senate' based from the local regional parliaments which would be the counter balance with the Parliament. There would be a constitution safeguarding the rights of the citizens of Europe. The areas are mostly autonomous in nature anyway, the nation/European parliament would only deal with issues that affect everyone as a whole such as Defence (Armed Forces), Foreign Office, and those typical departments you would expect.

Ultimately, the system is built in a way that people can simply get on with their lives without having to worry too much about what happens in Brussels as nothing really that meaningful occurs, other than the odd speech saying dictator x should stop being a naughty boy.

As for "Economical Policy", I think it is safe to say that it should be copied more from Germany and China than Britain or the United States. (Especially not Italy or Greece)

Ultimately even if people are refusing to accept it, Britain isn't some great powerful mystical nation, it is a husk of its former self, a complete joke in many regards and in the next decade or so, I doubt it would even be Britain anymore, it would simply be "England" with Scotland seceding and rejoining the European Union and Northern Ireland re-uniting with it's Irish neighbours and the Falklands being sold off to Argentina for the fraction of the price in efforts to 'Fix the Debt'.

So, really you invisage a herd of 50 to 100 cats instead of 27, and you assume that this new "national" EU government will keep itself nice and unobtrusive. That didn't work in the US, the Federal Government is one of the post powerful and controlling regimes in the world. Not necessarily a bad thing, but not your objective.

As to economics, the economics of Northern and Southern Italy aren't even harmonised, good luck imposing a one size model on the whole of Europe.

Another thing, while we're here: Are you going to ask before "destroying" these nation states, or are you going to do it with tanks?

I see we have an arguement over Blighty and it's position again hmm anyone notice the Banksters aint taking a blind bit of notice of the new Treaty Intergovermental Agreement crackpot plan.

Yes lets save the burning house by putting in place a plan to buy a new fire engine next year to give people "Confidence"

This new plan does nothing to fix a banking problem which has now become the problem for the whole Euro both North and South.

There plan of course to avoid referendum is doomed in Ireland as we cannot change our constition without one.

Is Mise Gaelic Cowboy, beidh mé ag vótáil

Níl

Well said, stick it to them again Ireland.

[phonicsmonkey]

see any opinion polls lately from the times and the mirror?

You must be joking, I don't read either of those rags! I gets me left wing from the grauniad and me right wing from the economist...

gaelic cowboy is (as quite often in this thread) entirely correct - this will do nothing to solve the actual problem, but what it will do is provide a figleaf which will finally allow the ECB to step in.

With Merkozy having chastised the naughty children and laid down the 'rules' by which they must now all behave, they should now be free to print money with wild abandon without fear of moral hazard.

[Furunculus]

You must be joking, I don't read either of those rags! I gets me left wing from the grauniad and me right wing from the economist...

gaelic cowboy is (as quite often in this thread) entirely correct - this will do nothing to solve the actual problem, but what it will do is provide a figleaf which will finally allow the ECB to step in.

With Merkozy having chastised the naughty children and laid down the 'rules' by which they must now all behave, they should now be free to print money with wild abandon without fear of moral hazard.

nor do I, but being a willing recipient of news i have at least become aware of the polls conducted by those papers. you should try it. *

gaelic cowboy is often right, but if he said that in the post just above i have failed to see it, and that fig-leaf is limited to bank support.

lol, that is not what i am hearing from Draghi and Merkel!





*

A Populus poll for the Times showed support for Cameron's position. The survey showed 57% felt he was right to use the veto while only 14% disagreed with the move. While 56% of voters felt the UK would lose influence in the EU, only 24% felt that it would weaken the prospect of economic recovery in Britain.

http://www.guardian.co.uk/politics/2...reat-coalition

So just over 80% of those who fell one way or another approved.

[Philippus Flavius Homovallumus]

You must be joking, I don't read either of those rags! I gets me left wing from the grauniad and me right wing from the economist...

gaelic cowboy is (as quite often in this thread) entirely correct - this will do nothing to solve the actual problem, but what it will do is provide a figleaf which will finally allow the ECB to step in.

With Merkozy having chastised the naughty children and laid down the 'rules' by which they must now all behave, they should now be free to print money with wild abandon without fear of moral hazard.

Try the Telegraph. Really. I read the Telegraph and the Guardian daily, I find that to be the most economical balance, as the only remaining mainstream broadsheets both strive for respectability, and that means they print the facts and figures. The Telegraph is the only place where you will see it in print that Clegg was "bitterly disapointed" with the "result" and not "the Prime Minister".

Regardless, Britain is more Eurosceptic than when you last lived here, and Cameron's move will (at least) play to the public almost as well as a referendum would have.

[Beskar]

As to economics, the economics of Northern and Southern Italy aren't even harmonised, good luck imposing a one size model on the whole of Europe.

General guideline. The idea is to produce and sell more than you import and to shore up a surplus for rainy days. This is what countries like Germany and China do, and then they even lend some of that surplus away to other Local regions are responsible for their own areas bur as there is a fiscal union, it isn't so bad compared to the status quo.

Only if people want that................. Wait, do they want that, or should we just impose those choices upon them?

Another thing, while we're here: Are you going to ask before "destroying" these nation states, or are you going to do it with tanks?

"With tanks" is silly and completely infeasible. Main aim is to hope enough people are convinced and see the merits of the grand plan and wilfully sign up for them.

[Philippus Flavius Homovallumus]

General guideline. The idea is to produce and sell more than you import and to shore up a surplus for rainy days. This is what countries like Germany and China do, and then they even lend some of that surplus away to other Local regions are responsible for their own areas bur as there is a fiscal union, it isn't so bad compared to the status quo.

That's nice in theory, but many countries (Brtain included) only sell and do not actually "produce" much, also, economic policy must vary with the actual economy.

"With tanks" is silly and completely infeasible. Main aim is to hope enough people are convinced and see the merits of the grand plan and wilfully sign up for them.

Outside the intelligencia there's no support for your ideas. What you are asking is for people to change their identities, people don't do that willingly. Just look at the Welsh, the Scots, or even the Cornish with relation to "Great Britain".

[Beskar]

Outside the intelligencia there's no support for your ideas. What you are asking is for people to change their identities, people don't do that willingly. Just look at the Welsh, the Scots, or even the Cornish with relation to "Great Britain".

Actually, my plan would give more credit to those regional identities and give those regions greater influence over themselves and in their greater autonomy. Europe is simply a knitting net which holds the collective will of the 'West/Europe' in terms of foreign policy in regards to powers who are not part of Europe. Whilst I do believe in that we should be "united", I don't think we should sign up for a very centralised government, system or federation.

Though ideologically speaking, it isn't 'simply that', it is only a stepping stone to further changes, this is model replicated in other large geographical areas, such as North America, South America, Africa, Asia, etc. Then ultimately once they harmonised to a sufficient degree. These large areas end up merging into a Global Federation based on this model. Once this is in place, the Federation government is weakened furthermore (due to lack of there being anything 'Foreign', unless Aliens come randomly.)

[gaelic cowboy]

gaelic cowboy is (as quite often in this thread) entirely correct - this will do nothing to solve the actual problem, but what it will do is provide a figleaf which will finally allow the ECB to step in.

gaelic cowboy is often right, but if he said that in the post just above i have failed to see it, and that fig-leaf is limited to bank support.

lol, that is not what i am hearing from Draghi and Merkel!

Regardless if they had a whole Fig tree forest to hide behind I do not see the ECB acting as lender of last resort.

I get the sense that were probably past the whole lender of last resort arguement the ECB could buy all the bonds it wants now all that will happen is people will sell to it then refuse to buy new ones. This is like announcing to the whole village you will buy all there cattle at the mart in the back end and that you will be back to sell the same ones in the spring, your price per kilo next Janurary baring a massive move in beef prices globaly would tank.


So in a strange way Germany has a point but for the wrong reason inflation will not be the problem, the problem will be the price offered next spring if the taps are opened now.

The problem as we can all see is that with Britains veto they cant change the Lisbon Treaty but they also couldnt finish the meeting without having something to show the Bankster for todays bond auction, hence the intergovernmental agreement there flashing around like a voodoo doll at the bond markets.

We know the European banks are exposed to private losses so they have bought sovereign bonds (encouraged to do so by there governments and the ECB) as a way to offsset potential future losses by having supposed secure government assets on there books.

Now it looks like governments and banks all over the place may get downgraded which leads to more capital requirements for banks which could mean more government bailouts.

Except the governments may get downgraded leading to the banks supposedly secure government assets being worth less meaning more bailouts.

Basically we are a hairsbreath away from a systemic debt/death spiral and they are they are still talking up the Austerity Confidence Fairy it's like the bulldozer is outside and were arguing over what colour paint should be in the sitting room.

Keep this in your mind at all time about this crazy situation if Italy goes the Euro is over therefore if we keep on the present course expect to see Greece, Ireland and Portugal peeled off to appease the Banksters.
It has it's appeal as a solution and it might just work IF the countries stayed on the path to reform of there respective economies at there own pace. (it also might just save Italy)

[Furunculus]

bagehot (the old europhile charlamagne) has just come out with this corker:

"I think that a big part of the problem of Britain's relationship with Europe is that we genuinely are different. To simplify, as I said on the BBC this morning, I think that to some extent what happened on Thursday night was the logical end-point of a relationship based on distrust. Successive British governments have believed that on balance membership of the EU is in their interests (or is worse than non-membership). But because we are different (and because we take a common law as opposed to Napoleonic view of regulation, favouring a world in which everything is allowed unless it is expressly prohibited), we seek at every turn to pin down every detail of new rules or schemes being proposed, in case some of it turns out to be harmful. What was on the table on Thursday night was not clear in all its details when it came to the implications for the single market, so it was genuinely a tricky document for Mr Cameron."

http://www.economist.com/blogs/bageh...itain-and-eu-2

and remember, he's a europhile!

[gaelic cowboy]

bagehot (the old europhile charlamagne) has just come out with this corker:



http://www.economist.com/blogs/bageh...itain-and-eu-2

and remember, he's a europhile!

Excellant observation and entirely correct in my view, all the news media want to know is the nitty gritty of the deal which apparently does not exist yet so we have apparent;ly agreed to something but we dont know or are not allowed to know yet what it is.

Unfortunately they can agree among themselves all they want they still have to get it past the voter here so it's all academic really.

I still for the life of me cannot figure out why they wont just accept the need take losses or failing that to extend the terms of the loans etc etc.

How can these people think that the voter will accept this stupid plan with no detail and no apparent real need for it either.

[rory_20_uk]

General guideline. The idea is to produce and sell more than you import and to shore up a surplus for rainy days. This is what countries like Germany and China do, and then they even lend some of that surplus away to other Local regions are responsible for their own areas bur as there is a fiscal union, it isn't so bad compared to the status quo.

Germany keeps its currency artificially low by being in the Euro - if it were the DM it would have shot up, which would have most likely adversely impacted on exports; Greece and Italy would have been helped by a far lower currency. China hardly has a free floating currency and this again allows it to export more than would otherwise be the case.

[Furunculus]

"Germany keeps its currency artificially low by being in the Euro - if it were the DM it would have shot up,"

Perhaps not by as much as sometimes assumed, i have seen estimates as little as 7% up for germany, and 25% down for spain.

[gaelic cowboy]

General guideline. The idea is to produce and sell more than you import and to shore up a surplus for rainy days. This is what countries like Germany and China do, and then they even lend some of that surplus away to other Local regions are responsible for their own areas bur as there is a fiscal union, it isn't so bad compared to the status quo.

Germany's much vaunted debt brake is anything but a stop on borrowing, apparently the legislation is full of loopholes etc etc they just havent needed to use it lately due to a weak Euro driving there exports.

Unfortunately were all ignoring the reality of the fact were in a balance sheet recession.

on one side we have assets that have devalued and on the other we have some government debt.

The solution they have picked is to drive down spending to engender confidence in the consumer, except the consumer is weighed down with debt and the government is hammering him for taxes to pay it's own debt.

So for a while back there the savings rate increased and the export rate shot up leading to a trade surplus so far so Austerity Confidence Fairy unfortunately now the savings rate has started to go down as people are litteraly paying the gas bill with there savings.

These by the way are the savings the government keeps telling us we will need to regain market confidence except there not being lent productively or spent in the wider economiy cos there servicing ever increasing debts.

It's easy talk about producing more than you buy when some people are buying from you, lets see the same chat next januray if a failed Italian bond auction sinks the Euro.

[InsaneApache]

Oh dear, those dastardly ratings agencies just won't play ball. Le Bastards.

The communiqué issued by European policymakers after the recent euro area summit offers few new measures and therefore does not change our analysis of the rising threat to the cohesion of the euro area and the further shocks to which it and the wider EU remain prone. As we announced in November, unless credit market conditions stabilise in the near future, our ratings of all EU sovereigns will need to be revisited. The communiqué does not change that view, and we continue to expect to complete such a repositioning during the first quarter of 2012.

http://www.zerohedge.com/news/moodys...s-euro-area-co

[rory_20_uk]

"Germany keeps its currency artificially low by being in the Euro - if it were the DM it would have shot up,"

Perhaps not by as much as sometimes assumed, i have seen estimates as little as 7% up for germany, and 25% down for spain.

If those who are purchasing one's goods - such as other nations in the Euro - are looking at a "saving" of 32% that is going to make a massive difference to where the goods are bought.

[Furunculus]

If those who are purchasing one's goods - such as other nations in the Euro - are looking at a "saving" of 32% that is going to make a massive difference to where the goods are bought.

granted, but those purchasing nations are locked in debt-deflation because the euro/ECB prevents them clawing back productivity, then they won't be buying anyway.

and the difference is less extreme in many cases, far less.

[gaelic cowboy]

granted, but those purchasing nations are locked in debt-deflation because the euro/ECB prevents them clawing back productivity, then they won't be buying anyway.

and the difference is less extreme in many cases, far less.

plus the single market allows you to open a bank account anywhere in the EU which negates capital controls.

Hence the massive capital flight by both ordinary individuals and industry at large in Ireland and I imagine the same is true of the rest of the PIIGS.
Clearly people are voting with there feet and current account even though only one bank has actually failed in Ireland and even that one has been bailed out in order to pay huge promisary notes to speculators in the unsubordinated debt market.

Apparently this will show the markets were serious about paying our way or some such god awful rubbish like that, thanks a bunch you clowns in the ECB thanks a hundred billion indeed.

[gaelic cowboy]

Kenny: No referendum decision before March

The Taoiseach has said no decision will be made before next March on whether or not a referendum will be needed in relation to EU Treaty changes.

Speaking in Westport, Co Mayo, Enda Kenny said if a referendum was necessary it would be held. "Between now and then a great deal of technical work, of legal work and wording to be gone through."

Spoiler Alert, click show to read: 

Referring to Britain's Veto to Treaty changes Mr Kenny said he would have preferred that all 27 EU member states continue to be involved in the discussions.

"Ireland is very interested in seeing that the Prime Minister retains a deep interest in expanding the single market."

Mr Kenny said he was not suggesting a situation where Ireland would set up a conduit for back channel discussions between Britain and the other EU member states, but he said: "We are anxious that every country be involved in the process because of its importance to the 500 million people who live in the EU member states."

European Economics Commissioner Olli Rehn earlier said he "very much regrets" Britain's decision not to sign-up to the deal.

Mr Rehn said Britain's decision would not prevent the City of London's bankers and financial corporations from being regulated.

The new measures, known as the six-pack, will come into force tomorrow. They are aimed at tightening the economic governance of the eurozone.

Mr Rehn described the deal as bold and effective and dismissed media speculation over the legality of the plan as unfounded.

He said Brussels wants a strong and constructive Britain in Europe, for Britain to be at the centre of Europe and not on the sidelines.

British Prime Minister defends decision

British Prime Minister David Cameron has defended his decision to break with European partners by vetoing a change to the EU treaty, insisting that remaining a member of the 27-nation bloc was in Britain's national interest.


Cameron's decision not to take part in an EU treaty change aimed at tightening fiscal rules for countries using the euro has isolated Britain in the 27-nation bloc and created the biggest rift in his coalition since he took power in May 2010.


The prime minister's ambiguous answers last Friday to questions over Britain's future membership of the EU sparked speculation that the UK may now be contemplating a future outside the EU, although analysts say that would damage Britain's economy.

Cameron said the choice he had faced was a treaty without proper safeguards for Britain's important financial services industry or no treaty. "The right answer was no treaty," he said. "It was not an easy thing to do but it was the right thing to do."


Yesterday, Cameron's deputy Nick Clegg, the Lib Dem leader, said he was "bitterly disappointed" with the outcome of the summit, which he said was "bad for Britain."


Credit rating review

Meanwhile, credit rating agency Moody's has said it will review the credit ratings of all EU countries in the first quarter of next year after last week's summit of European leaders failed to deliver what it called "decisive policy measures".

"The absence of measures to stabilise credit markets over the short term means that the euro area, and the wider EU, remain prone to further shocks and the cohesion of the euro area under continued threat," the ratings agency said in a statement.

Ratings agency Standard & Poor's last week warned the eurozone of a downgrade if the EU summit did not come up with a viable plan.

Moody's said last week's announcement by EU policymakers offered "few new measures".

It said what was announced did not change its previously expressed view that the eurozone crisis was "in a critical and volatile stage".

Europe's main stock markets dropped in opening deals today, with London's FTSE 100 index down 0.38% to 5,508.20 points.

Frankfurt's DAX 30 slid 0.69% to 5,945.19 points and in Paris the CAC 40 shed 0.67% to 3,150.84.

translation "obviously if it got around too much that Ireland needs a referendum this deal would be busted before it started so we will pretend till march and hope something turns up"

Notice how most the article is about Britain in relation to Ireland and it's place in the EU, basically if the UK pulls plant we will have to do the same we cant afford not too.

[InsaneApache]

basically if the UK pulls plant we will have to do the same we cant afford not too.

All your base now belong to us.

hehe.

[gaelic cowboy]

All your base now belong to us.

hehe.

Well there is the matter of you lot hanging on to the backgarden for some reason????

[Philippus Flavius Homovallumus]

Actually, my plan would give more credit to those regional identities and give those regions greater influence over themselves and in their greater autonomy. Europe is simply a knitting net which holds the collective will of the 'West/Europe' in terms of foreign policy in regards to powers who are not part of Europe. Whilst I do believe in that we should be "united", I don't think we should sign up for a very centralised government, system or federation.

Though ideologically speaking, it isn't 'simply that', it is only a stepping stone to further changes, this is model replicated in other large geographical areas, such as North America, South America, Africa, Asia, etc. Then ultimately once they harmonised to a sufficient degree. These large areas end up merging into a Global Federation based on this model. Once this is in place, the Federation government is weakened furthermore (due to lack of there being anything 'Foreign', unless Aliens come randomly.)

A world without conflict?

Unlikely, you'd just get Civil War, unless Aliens landed. I think you're massively underestimating how much people invest in their national identities, especially the bits they claim not to like.

[phonicsmonkey]

I do not see the ECB acting as lender of last resort.

Why not? That is one of the primary purposes of a central bank after all.

I get the sense that were probably past the whole lender of last resort arguement the ECB could buy all the bonds it wants now all that will happen is people will sell to it then refuse to buy new ones. This is like announcing to the whole village you will buy all there cattle at the mart in the back end and that you will be back to sell the same ones in the spring, your price per kilo next Janurary baring a massive move in beef prices globaly would tank.

If the ECB says it will stand behind all euro-zone issued debt it will not have to outright buy many bonds anyway, at least nothing like the amount on issue. Confidence will be restored and the markets will normalize with the backstop of the strong central bank. All bondholders want to know is that they will get their money back as planned. Italy is solvent, it's just illiquid in the near term. The ECB can provide the support it needs to carry it through until it is liquid once more.

But even if it did massive bond purchases and took all this debt on its balance sheet, so what? It can just create euros out of thin air to use to repay or cancel the loans! It can do that because it is a central bank and has the ability literally to print money.

The reason it has not done so? Fear of inflation and fear of moral hazard.

Inflation is not the eurozone's problem right now. Output is so far below potential capacity that it can surely be dismissed as a serious issue for at least the coming years. And once we're through this, if we want to rein in inflation the good old ECB can just raise interest rates!

Moral hazard? Well I think to some extent that issue has been dealt with by the hard line taken by Merkel and Sarkozy so far. Governments have fallen rather than been allowed to get away wtih fiscal profligacy.

The ECB should act like a proper central bank. Look at the Fed. There's a reason that every time bad news comes out about the US economy there is a flight to US treasuries. It's because the markets have faith in the Fed to set policy.

Is any of this desirable? No, of course not, it would be far preferable not to be in this position in the first place.

Have there been massive errors in political leadership in Europe which have led us to this point? Yes, the eurozone is now clearly structurally unsound and needs serious reform to avoid more issues like these in the future.

None of this changes the fact that the right thing to do, right now, is for the ECB to announce it will provide unlimited support to otherwise solvent eurozone governments with liquidity issues. Like Italy, Spain, France and Germany.

Countries that are clearly insolvent should be allowed to default in a controlled manner - Greece, Portugal.

sorry gaelic, I'm not clear on the position of Ireland in this analysis but it would probably now fall into the first group wouldn't it?

[InsaneApache]

Utter fantasy.

[phonicsmonkey]

Utter fantasy.

How so old chap?

[Papewaio]

What is being touted is the government read taxpayer covering all the risks of the brokers.

So the multi billion banks can play high risk high yield. Payout the shareholders, execs and brokers get massive pay for performance but if they collapse they don't cover the costs... The middle class gets to cover the costs in taxes to the central bank which is doing the bailing out.

Great plan!

[phonicsmonkey]

What is being touted is the government read taxpayer covering all the risks of the brokers.

So the multi billion banks can play high risk high yield. Payout the shareholders, execs and brokers get massive pay for performance but if they collapse they don't cover the costs... The middle class gets to cover the costs in taxes to the central bank which is doing the bailing out.

Great plan!

Erm...a central bank doesn't levy taxes and no-one has to pay for its balance sheet if it is in "deficit". It literally creates money from nothing. That is exactly what the Fed has been doing these past three years (you can see it charted here, just push the start date back to 07 sometime) and do you see inflation rampant in the US? Nope! Because without the monetary stimulus there would be a massive recession and probably deflation - like the one which Europe is heading for if it doesn't wise up.

EDIT: just to clarify it's not the case that nobody pays for this largesse. The effects of QE2 in the US have been to flood emerging market currencies (including the AUD Pape!) with capital chasing yield and no doubt inflate asset bubbles which will later have to be dealt with. This is not an ideal situation to be sure but I think the collapse of the US under a staggering debt burden and a freeze of the financial system would have worse effects for everybody. Add Europe into the mix and you have a massive turd sandwich that we all have to take a bite out of.

There is also of course the risk of hyperinflation but as I've pointed it this has not happened so far and I don't think it's a risk in the near or even medium term in the US or Europe.