Post EU?

Discussion in 'Economics & Trade' started by snapper46, Aug 23, 2011.

  1. snapper46

    snapper46 New Member

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    I think we should seriously start to consider some scenarios regarding a post EU Europe. I present one possible scenario here:

    As some may have noticed I am not particularly hopeful about the future of Euro... To quote a current MP "They have rejected the least bad answer – asking the most heavily indebted countries who broke their sensible rules on debts and deficits to leave the currency. They have rejected the answer of Germany leaving to re-establish the DM with a handful of smaller stronger countries. Just as they did with the ERM, so they are doing with the single currency. Inflict maximum pain on as many as possible, until the markets make the whole thing impossible. Watch unemployment rise, incomes fall, and say it is all worth it." (Why did the markets crash?).

    The only way out of the demise of Euro seemingly is fiscal union, but the loss of sovereignty would be unacceptable politicaly unless the all the current European Charters and procedures were replaced by a 'federal European system'. IF such a plan were started now, even if their was sufficient public and political will for such a scheme (which is doubtful) it would take at least 5 years and probably more than 10 to implement a working European Government acceptable to all. This then is clearly not going to save the Euro in the short term.

    If or when the Eurozone falls apart the French and German banks will be hit worst as they have the most invested in 'PIGS' bonds (Portugal, Ireland, Greece, Spain). The UK, I believe, is the third largest investor. Germanys economy has 0% growth in the last quarter as is the French... UK at 0.5%.

    Other fractures are also appearing, the French very nearly opted out of the Schengen Agreement (freedom of travel) earlier this year as their did not want Tunisian refugees who had landed in Italy. The UK is considering withdrawing the European Covention on Human Rights over issues like alowing convicted prisoners to vote etc...

    Without the Euro all European economies will fend for themselves, the PIGS will devalue their currency, the stronger economies (Northern) will doubtless again (misgudedly in my opinion) refinance their banks. So the Northern economies will face cheap imports from the PIGS when their own Government borrowing is at risk from a second bank bail out. This is when the EU will collapse and trade tarrifs be reintroduced. The EU and it's expensive administration and expenses bill and petty laws and red tape will then become irrelevant and not worth the expense.

    What then? One potential post EU organisation exists already; the Visegrad Group (Poland, Czech Republic, Slovakia and Hungary, see: The Visegrad Group: the Czech Republic, Hungary, Poland and Slovakia). These are smaller EU countries; Poland is the largest (1/4 the GDP of Germany) and is not in the Eurozone. These countries will probably suffer least in the event of the failure of the Euro and any subsequent fall out and could potentialy continue free trade within the group. This 'group' has the potential to resume the Pilsudski vision of 1918-20 a a federalist union in the East along ancient lines.

    It is likely that other such 'groups' will be formed with presumably a Franco-German core including Belgium, Luxembourg and possibly Holland. The 'PIGS' would perhaps include Italy etc...

    I present one possible scenario only. Evidently there are worse scenarios that would see the reliving of the 1930s and again there are better ones where the Euro is miraculously saved. I merely suggest that it would be wise to start considering these alternatives now.

    I welcome discussion
     
  2. Reiver

    Reiver Well-Known Member

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    Right from the beginning the origins of economic integration have been political: from the US's manipulation to control the threat posed by Eastern Europe to 'Old Europe' attempting to maintain their worldwide influence. Despite being a Europhobe, I'd suggest that they've invested too much in it to allow simple economics to dictate the optimal choice.

    Fiscal union wouldn't be rational. There has been insufficient convergence in the European countries, from housing tenure to the labour market. Divergent fiscal policy is then a must.
     
  3. Someone

    Someone New Member

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    There is very little chance of that happening at this point. The players involved have spent too much time, and too much money, building their economies in ways that wouldn't work without the EU. They'll pay the price to keep it together until this rough patch is over. What is certain is Turkey's chances of getting into the EU are shot, and there won't be another round of expansion for twenty years.
     

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