Two key points stood out to us:
First, she wants a Eurozone “banking union” to be agreed – and possibly up and running – at some point during 2014. However, as we noted in our pre-German election briefing, and which is most certainly being borne out by events, this is a watered down, very German version of banking union. This was clear from last night's (partial) deal on banking union (more on this later). So if you’re the typical Anglo-Saxon economist hoping for a big, joint backstop – don’t hold your breath. This one will be messy.
Secondly, she again hinted at EU treaty change. It’s interesting that Merkel just won't let that idea go. She said,
“Those who want more Europe, also have to be prepared to reregulate new competences…We have a situation in Europe where everyone says, ‘We can do everything to evolve, but they one thing we can’t change are the treaties.’ I don’t think we will develop a Europe that functions in this manner.”Third, Merkel again pushed for so-called "reform contracts" arguing:
"It is necessary to ensure that the required structural reforms are pushed through...[there must be] contractual agreements...We will be discussing such contractual agreements at the European Council for the umpteenth time... [I expect] to see progress."
Translation: if you want us to underwrite the euro, we need 'see-you-in-court' style supervisory powers, firmly grounded in law. That means, EU treaty change.
3 comments:
1. The proposed 'Banking union' is not a union at all and will prove to be ineffective (read useless). Eurozone nations have to decide to share their balance sheets for this to work which implies shared budgets and ONE decision making body. This is just not going to happen (thank goodness).
As for Treaty Change and the EU handling more competences - they have proved incompetent at handling their existing competencies so NO MORE as far as I am concerned.
3. Until the EU and member states confront the yawning gulf between themselves and their electorate (remember them?) all of this is just guff and hot air.
Free trade and NO sovereignty.
SC
Several basics for a reneg seem to be falling in place for 'Dave'.
1. Seen the Sun poll it looks clear that there is a platform for a reneg. This is the first time a poll like this is coherent/consistent with outcome of those with simple questions.
There was simply confusion with the electorate (not unexpected I might add).
Probably people will see it still as taking somewhat too long, but that is the next thing.
2. Becomes clear that if you donot want to lose the population in several countries and want to solve several of the underlying problems (that are partly the cause of the former as well btw), you need treatychange.
Probably Draghi's remarks are of similar relevance. If you make it a political compromise it ends up in a mess and you are likely to pay the bill later. And inplicitly you probably donot get a second chance seen the approvalrate trends, so you need to get it right the first time.
Further change might require btw a referendum in Germany, doubt if Merky wants that.
Strategic disaster to tie yourself tighter to a bunch of natural born losers like Europe's South btw. Including the Eastern European ones (plus the Ukraine). Merge with structural basketcases how stupid can you get?
Probably these kind of points have to be in place somewhat before the negotiations really start. Otherwise it simply gets too complicated. Difficult to negotiate with people who donot oversee the playingfield as most on the EU side now clearly donot do. Also for the media attention.
An UK exit should preferable be seen as a big negative for Europe at that point. Now it is not as 90+% of the media and the market simply donot oversee the consequences. You need pressure on the other side, the more the better.
This 'good news' was hardly created by a clever communication strategy of the Cameron bunch btw. You simply cannot expect these things happen by themselves. Stll a lot of room for improvement.
I like the way he is handling the immigration file now. Donot know if it is the standard modus operandi or (turnip) clever strategy. Blunder into victory/ Kerry into Syria or really turnip clever.
Starting late has a lot of advantages imho:
-makes EU opposition more difficult will anyway delay it. They need a legal text to respond against.
-get the media attention at the right time (the time people consider to pack their caravan and move to the UK or somewhere else). Likely this will reduce numbers anyway somewhat and as if not more important sends the message to the welfaretourists: take your caravan to Sweden or Germany (food is better there anyway, booz and fags are cheaper (well not in Sweden, but you can make your own) and they have the EPL on telly there as well).
You likely will have several groups from most welcome to not to touch with a pole and especially the latter groups will be stimulated to move somewhere else. This is about not getting groups that go without a job in the UK which are nearly all undesirable (from lightly to completely but undesirable nevertheless). Basically it put the more pressure the more undesirable the group is. An Rumenian engineer wont be stopped. Entitlementseekers will likely donot take the chance if the risk is lower in Malmstromland.
Anyway by making it look like last moment stuff it is hardly the the 2 braincells in Brussel will see it as a Baldrickian plot.
Or put more simply Germany will take over running the economies of all eurozone nations because that is the only chance it has of working other than for germany to go back to the mark.
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