tag:blogger.com,1999:blog-6406430766424642773.post647679183007188992..comments2023-09-28T12:28:57.598+03:00Comments on Grahnlaw: European Union: Economic and monetary policyRalf Grahn http://www.blogger.com/profile/02156293782163802007noreply@blogger.comBlogger14125tag:blogger.com,1999:blog-6406430766424642773.post-50254096232589659692008-07-20T05:12:00.000+03:002008-07-20T05:12:00.000+03:00Anonymous, One gets the impression that Trichet's ...Anonymous, <BR/><BR/>One gets the impression that Trichet's phrase has been honed for a while - not what you would call impulsive. <BR/><BR/>The truths you you find to be more or less self-evident seem to be less so in a plebiscitary democracy.Ralf Grahn https://www.blogger.com/profile/02156293782163802007noreply@blogger.comtag:blogger.com,1999:blog-6406430766424642773.post-46251797177453873682008-07-19T23:29:00.000+03:002008-07-19T23:29:00.000+03:00In fact, for the record, I wrote my contributiosn ...In fact, for the record, I wrote my contributiosn before I read what M. Trichet had to say. Either great minds think alike (which is doubtful in my case) or some of the facts are so self-evident that anyone with a little knowledge could write them down. However, few could match M. Trichet's turn of phrase e.g. "We have a primary mandate enshrined in a treaty which has been negotiated, signed and ratified - either by parliaments or by the people, by 27exemplary democracies, 25 without an opting-out clause". Quelle delicatesse!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6406430766424642773.post-59402122154408623782008-07-19T20:54:00.000+03:002008-07-19T20:54:00.000+03:00Anonymous, Thank you for the suggestion to read th...Anonymous, <BR/><BR/>Thank you for the suggestion to read the interview with Jean-Claude Trichet. <BR/><BR/>After the various snippets reported here and there, it was interesting to read a more or less consistent whole.Ralf Grahn https://www.blogger.com/profile/02156293782163802007noreply@blogger.comtag:blogger.com,1999:blog-6406430766424642773.post-88234291877088620322008-07-19T16:52:00.000+03:002008-07-19T16:52:00.000+03:00Anonymous, Thank you for your comment. In my view ...Anonymous, <BR/><BR/>Thank you for your comment. In my view the texts about Ireland and Finland were parallel constructions, where I started with the euro countries (without specifically mentioning the fact)and then went on to describe their neighbours.<BR/><BR/>Perhaps I should have shown more care.Ralf Grahn https://www.blogger.com/profile/02156293782163802007noreply@blogger.comtag:blogger.com,1999:blog-6406430766424642773.post-88291291235549086192008-07-19T16:09:00.000+03:002008-07-19T16:09:00.000+03:00Your post reads "Only Germany along the Baltic has...Your post reads "Only Germany along the Baltic has the euro today".Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6406430766424642773.post-22599856652166126322008-07-19T15:33:00.000+03:002008-07-19T15:33:00.000+03:00Anonymous, Thank you, I will try to find the inter...Anonymous, <BR/><BR/>Thank you, I will try to find the interview. <BR/><BR/>Your question on geography may be more subtile than I understand, but the Gulf of Finland and the Gulf of Ostrobothnia are, as I understand it, parts of the Baltic Sea.Ralf Grahn https://www.blogger.com/profile/02156293782163802007noreply@blogger.comtag:blogger.com,1999:blog-6406430766424642773.post-37327863950068938222008-07-19T12:15:00.000+03:002008-07-19T12:15:00.000+03:00Double take. Surely Finland is on the Baltic?Double take. Surely Finland is on the Baltic?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6406430766424642773.post-61020143939385571792008-07-19T12:11:00.000+03:002008-07-19T12:11:00.000+03:00Coincidentally, there is s very lenghty and highly...Coincidentally, there is s very lenghty and highly informative interview with Jean-Claude Trichet in some of Europe's leading newspapers of 18 July. A full transcript is to be found in the Irish Times. www.irishtimes.com.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6406430766424642773.post-1888174865378597602008-07-19T05:52:00.000+03:002008-07-19T05:52:00.000+03:00Anonymous (Seachtu), Thank you for your reasoned c...Anonymous (Seachtu), <BR/><BR/>Thank you for your reasoned comment. <BR/><BR/>I agree that ordinary people seem to reflect on the euro mostly when they travel abroad. Convenience, not symbolism or effects on trade and lending, are the things experienced by people in general. <BR/><BR/>Being on the geographical fringe of the EU (Eurozone) means that you have go farther to appreciate the convenience of using the same money. <BR/><BR/>For Ireland the closest country is Great Britain with its pound. Finland has as its closest neighbours Russia completely out, the Baltic states and Poland not yet qualified, Denmark with its opt-out, Sweden out without an opt-out, and Norway outside the EU as a whole. <BR/><BR/>Only Germany along the Baltic coast has the euro today. <BR/><BR/>What you say about the governments brings us back to the question of economic policy coordination. <BR/><BR/>President Sarkozy chooses to lambast the European Central Bank, but electoral expediency seems to dictate the fiscal and economic policies of member states' governments. <BR/><BR/>Despite the coordination exercises a number of governments seem to achieve more divergence than convergence.<BR/><BR/>The strains on a unitary monetary area with decentralised economic policies are considerable.Ralf Grahn https://www.blogger.com/profile/02156293782163802007noreply@blogger.comtag:blogger.com,1999:blog-6406430766424642773.post-60639232594579054212008-07-18T21:17:00.000+03:002008-07-18T21:17:00.000+03:00No Member State can be forced out of either the EU...No Member State can be forced out of either the EU or the euro (although Ireland would not qualify for the latter were it to try to join now, excessive inflation being the main problem).<BR/><BR/>The following explanation for economic developments within the Euro Area is generally accepted, at least by the commentators that I have been reading.<BR/><BR/>The interest rates in the early days of the euro were too low because the main economy - Germany - was skirting recession. This fueled a property boom, in Spain and Ireland in particular. This is now unwinding at a dramatic rate in both countries. But the fault lies with the two governments, who failed to rein in the boom, not the euro. <BR/><BR/>Everybody thought they were making money because house prices were rising. The US set the pattern with the catastrophic results we are all now trying to deal with.<BR/><BR/>It would, in summary, be true to say tha Germany conducted an export-led economic policy (trade surplus of $811 billion at the moment, matched almost exactly by deficits in the other major economies), France a consumer-led one and Spain a construction-led one (with Italy, as usual, as it is several economies rather than one, muddling through). It is hard to know which government to fault most but all are to blame.<BR/><BR/>What recent events have shown is that, whatever the economic pain, membership of the Euro Area is an enormously important anchor. (Ask any UK citizen who has seen Sterling fall by 20% vis-a-vis the euro and who has to pay 1-2% interest premium for London to hold funds and prevent the pound falling further).<BR/><BR/>In short, the pain of staying in is outweighed by the certain greater pain of leaving. In any case, Ireland's public debt situation is very sound, second only to Luxembourg as against being one of the worst 15 years ago. Unfortunately, this improvement in public debt has been counterbalanced by an enormous surge in private borrowing (see above) with Irish banks, in the view of some investors at least, dangerously exposed to construction lending.<BR/><BR/>The "confusion", or contradiction if you like, is that the euro is the most powerful expression, in terms of both symbolism and reality, of European integration and the Irish electorate still voted no. In other words, populations are evidently indifferent to the political implications of a common currency area. That was my point.<BR/><BR/>As I have mentioned in various postings, states pursue their interests. What the EU provides is a framework governed by the rule of law within which they can do so withou going to war with one another. To assume that their relations have become innocent would be the biggest mistake of interpretation anyone could make. No tears would be shed either in the City of London or Wall Street were a member state of the Euro Area to be laid low. The Irish electorate was blissfully unaware of this. Not some of the participants on the no side. Seachtu.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6406430766424642773.post-47437389977960803092008-07-18T13:10:00.000+03:002008-07-18T13:10:00.000+03:00Anonymous, To me, the monetary and economic aspect...Anonymous, <BR/><BR/>To me, the monetary and economic aspects bring to mind a man with a wooden leg. <BR/><BR/>You say that the Irish took to the euro, but what is your take on frequent commentator Tapestry and others who have suggested that the downturn in the economy would either force Ireland out of the Eurozone or offer an opportunity to leave it?Ralf Grahn https://www.blogger.com/profile/02156293782163802007noreply@blogger.comtag:blogger.com,1999:blog-6406430766424642773.post-66471325887340941202008-07-18T11:39:00.000+03:002008-07-18T11:39:00.000+03:00Another point worth mentioning is that it is not p...Another point worth mentioning is that it is not possible to separate the economic and monetary policy aspects, the two must be considered together. The procedures are opaque but the fact that the BEPG (Broad Economic Policy Guidelines)and Excessive Deficit Procedure apply to all MS underlines that you cannot run a monetary union confined solely to the EU member states that have joined it. The economic policies of all MS impact on each other.<BR/><BR/>On the other thread dealing with the economic policy texts, the HOL Impact Assessment did not dwell on the issue of EMU as to do so would have simply underlined the growing isolation of the UK in the matter.<BR/><BR/>And Ireland! Confusion reigns. The Irish rejected Lisbon but took to the euro like a duck to water. This simply confirms that people are not emotionally attached to national currencies, only to sound ones.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6406430766424642773.post-22509828052635085802008-07-17T04:54:00.000+03:002008-07-17T04:54:00.000+03:00Seachtu, Thank you for a competent summary. Admitt...Seachtu, <BR/><BR/>Thank you for a competent summary. <BR/><BR/>Admittedly, going through the treaty versions Article by Article means that many of the posts lack exiting novelties, but they are there for me and others for writing on additional aspects.Ralf Grahn https://www.blogger.com/profile/02156293782163802007noreply@blogger.comtag:blogger.com,1999:blog-6406430766424642773.post-60316722004984539462008-07-17T00:31:00.000+03:002008-07-17T00:31:00.000+03:00Seachtu. The amendments to the EMU Chapter are lar...Seachtu. The amendments to the EMU Chapter are largely technical.<BR/>They consolidate the position of the euro and remove the transitional language inevitable in the Maastricht Treaty (as the euro was still an objective not a reality).<BR/><BR/>Their main political import is easy to discern.<BR/><BR/>The really significant changes are in the [new] Chapter 4 'Provisions specific to Member States whose currency is the euro' (Articles 115A to C = Article 136 in the Consolidated Text) and the Protocol on the Eurogroup. These provide a foundation for deepened economic integration for members of the Eurozone and for a common external representation.<BR/><BR/>The Eurogroup, on UK insistence, can still meet only informally but its role is strengthened by the Protocol.<BR/><BR/>There is also a significant change in the voting arrangements for the decision on admitting new members (Article 117A - Article 140.2 in the Consolidated Text).<BR/><BR/>In short, the fact that the euro is part of the acquis and not a form of variable geometry is confirmed. Member States that are not members have a "derogation" but with both a right and an obligation to join while two (the UK and Denmark) having "permanent derogations". (Sweden continues to "succeed" in not meeting the entrance criteria; in relation to the status of her national bank).Anonymousnoreply@blogger.com