Will the UK be part of a US of Europe and in the eurozone within a decade?

[Millennium3]

This from Richard North today - it seems he would vote for a eurozone crash. I am not so sure - I think there are too many very powerful global players who want all EU nations in a US of E - including some who are still not members.

"It is hardly a secret that, with one exception, I have lost confidence in the British media and am relying more on the German press for reporting on the eurocrisis.

And here, Die Welt does not disappoint, dismissing Draghi's press conference yesterday as: "Not much more than rhetoric". Even though it is less than a week since it was being hinted that the ECB has an "inexhaustible" supply of money, it turns out that the bank has no big cash to bring to the table. Draghi did not deliver, says the paper, at least not yet.

The point, as we well know, is multiple commentators have remarked that European law has been stretched to its limits. Thus, the ECB is already at the limit of is power and if it is restricted to its mandate, then it has nothing to offer which will help the current crisis.

Thus, Speigel decides that Draghi's performance was disappointing while Handelsblatt reports that the cautious attitude of the ECB has left Italy and Spain helpless. Monti and Rajoy are now teaming up to to create an axis against Merkel, aimed at breaking German resistance to support measures.

However, if they think they can achieve anything, they are wrong. Merkel is in the grip of the constitution and confronts a population that is increasingly hostile to further financial support.

This supposed rescue really is going nowhere. The crash is that much closer and it is now touch and go whether we make it through August without at least one country dropping out of the euro. The bluff is being called."

http://www.eureferendum.com/blogview.aspx?blogno=83003

[Millennium3]

Just when it seemed all was lost! - hope is restored - from the Telegraph:

New hopes on debt crisis boost markets

Global markets roared back to life today on hopes that Europe’s leaders will make drastic efforts to stave off the worst of the debt crisis and amid evidence that the US economic slowdown has not been as sharp as feared.

Stock markets in Spain and Italy jumped more than 6pc after Spanish prime minister Mariano Rajoy signalled he may request a full bail-out to shore up the battered nation’s finances – though optimism was tempered after the market closed by Standard & Poor’s downgrade of 15 Italian banks.

The bounce was given extra lift later in the day by US jobs data, which were far better than expected and underpinned a 2pc gain on Wall Street and a 2.2pc rise in the FTSE 100 to 5,787.28.

Since traders decided Spain cannot survive without a bail-out, bond yields have rocketed to unsustainable levels of more than 7pc. Uncertainty about whether Madrid would have the stomach to request a rescue, though, has weighed on confidence — as have concerns that Europe’s package of measures would once again fall short.

Mr Rajoy’s promise today to do whatever “is in the best interest of the Spanish people” helped settle concerns, as it moved Madrid closer to securing vital support from the European Central Bank. Markets also appeared to rethink the pledges made by ECB president Mario Draghi on Thursday.

Mr Draghi said the central bank would buy as much sovereign debt as necessary to get “unacceptable” bond yields under control, but only if governments first applied to Europe’s official rescue fund and accepted new conditions to deal with their debts. He also promised to resolve private investors’ fears that they would be subordinated to any bail-out debt. By inching closer to a formal request for aid, Mr Rajoy focused attention on the relative stability such a rescue would bring.

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[BCG Jason]

I've voted Don't know, I think Mil III makes interesting posts but just can't see which way this is going to go, just too many factors. The politicians keep bringing in QE every few months once the noise dies down after each one, I suspect they might let / encourage a couple to leave but like I say so many factors, If there isn't major war in the Middle East in the next 18 months I would think the Eurozone will break.

As for us getting a referendum depends on how they market it and the timing. If the UK banking/ financial industry falls over I think no matter what packaging comes with the referendum we would vote to get out.

So many ifs and buts.

[youngian]

"Will Labour try to take us into a US of Europe after the next GE?"

What exactly does this question mean?
If it assuming the Eurozone will merge into a full fiscal and monetary union in the next two years, that's a big if, so the question is a bit of a parlour game.

[Millennium3]

BCG Jason
I've voted Don't know, I think Mil III makes interesting posts but just can't see which way this is going to go, just too many factors. The politicians keep bringing in QE every few months once the noise dies down after each one, I suspect they might let / encourage a couple to leave but like I say so many factors, If there isn't major war in the Middle East in the next 18 months I would think the Eurozone will break.

As for us getting a referendum depends on how they market it and the timing. If the UK banking/ financial industry falls over I think no matter what packaging comes with the referendum we would vote to get out.

So many ifs and buts.

"Will Labour try to take us into a US of Europe after the next GE?"

What exactly does this question mean?
If it assuming the Eurozone will merge into a full fiscal and monetary union in the next two years, that's a big if, so the question is a bit of a parlour game.

It is a parlour game anyone who is vehemently against our being a member of a US of Europe and adopting the euro needs to play.

These are the odds on the next election result from Paddy Power:


Labour Majority
7/4
Conservative Majority
9/4
Labour Liberal Democrat coalition
4/1
Labour Minority
9/2
Conservative Liberal Democrat Coalition
6/1
Conservative Minority
7/1

A Labour majority or a Lib/Lab pact raises the chances significantly that the next government will try to take us into a US of E [if it exists] and by necessity - adopting the euro. The Lib/Dems are wholeheartedly in favour of being at the heart of Europe, and this is the term used by Miliband when Cameron was in conflict with the other EU leaders. Blair, Milibands new advisor, most certainly wanted us to join the euro.

I believe the euro crisis is being engineered to force those nations that are most against giving up their independence into a position where they have no choice but to join a US of E - or face bankruptcy.

Should we have a Labour or Lib/Lab government after the next GE and a US of E has been formed - it would be relatively plain sailing for them to take us in - via a referendum [who could complain if one is held?]. Once the euro and the European economy had recovered - it would not seem such a foolish idea. So if the timing is right and the government can create the fear that we could not survive outside [as in Greece] - a referendum could be won - and game over!

If this is a likely order of events, some effort is required now, before the next GE, to see if Labour's plans can be disrupted - for the fragmentation and constant fighting within the anti EU movement [e.g BDF] ensures it would have little chance of countering such a plan once Labour are in office.

[Millennium3]

RN is more cautious!

"After the heady events of the last few days, the Grauniad finishes off the week by telling us that the stock markets in Europe and the US have decided they now like what Draghi is proposing.

The rally, we are told, "was assisted by upbeat news from the American labour market", leaving shares to close at their highest level in three months. But the biggest driver, it seems, was a "rapid reappraisal" of Draghi's plan to end Europe's long-running sovereign debt crisis.
Analysts said the promise of action if countries were prepared to sign up for tough deficit-reduction programmes was a sign that Europe was at last getting to grips with its problems.

Holger Schmieding, economist at German bank Berenberg, says: "On 2 August, the ECB finally stepped up to the plate meaningfully. It announced that it would do all it takes to repair the transmission mechanism of its monetary policy. At the moment, turmoil in sovereign bond markets is preventing the ECB's monetary policy from working".

"Central bank interventions", he says, "work if they impress markets. If the ECB convinces markets that it is providing a reliable safety net for solvent sovereigns which stay on the reform path, it may lure more investors back into these markets. In that case, the ECB may not have to buy many bonds".

But, if that is the Grauniad "take", the famous Handelsblatt is a little more diffident. It saw the immediate market reaction to the Draghi press conference as "excessive", but explains the rally as investors expecting, sooner or later, that the ECB will do the business.

The evidence for this, though, is slight - and the ECB is working at the fringes of its mandate, so we are talking about a belief system here. Economists surveyed by Reuters expect the ECB will conduct purchases starting in September, with the acquisition of Italian and Spanish government bonds. It will then lower its key interest rate to 0.5 percent and from the current 0.75 percent.

Nevertheless, market strategist Joerg Rahn of Marcard, Stein & Co, conceded that the markets remain volatile, "because the ECB has announced no concrete measures". In the next few weeks, he adds, there will be a lot of speculation about whether, when and what is to come.

The best Reuters can offer is that Draghi didn't fire the fabled "big bazooka", instantly to neutralise the euro crisis, but "he cocked the gun" and may yet have transformed world markets' view of euro risks".

This really is "wing and a prayer" stuff. The markets believe the ECB will do its stuff, because the markets believe the ECB will do its stuff. There is no more substance to the Friday rally than that.

Despite the fact that effluvia from politicians is increasingly unreliable and always untrustworthy, the markets want to believe that help is at hand. This has the makings of madness."

http://www.eureferendum.com/blogview.aspx?blogno=83006

[youngian]

I believe the euro crisis is being engineered to force those nations that are most against giving up their independence into a position where they have no choice but to join a US of E - or face bankruptcy.

The way the wind is blowing, enthusiasm for a fiscal union among Germany and other Northern states is getting less and less. Add to that many of Hollande's cabinet are openly hostile to the idea.

There is little political support among the PIIGS to quit the Eurozone for various cultural and political reasons and the likely outcome is they will chug along in recession for a decade or more, rather than the EZ agreeing some common resolution through a common Euro bond.

There would be no economic or political urgency for the UK to join the Euro is such circumstances.

[Millennium3]

The way the wind is blowing, enthusiasm for a fiscal union among Germany and other Northern states is getting less and less. Add to that many of Hollande's cabinet are openly hostile to the idea.

There is little political support among the PIIGS to quit the Eurozone for various cultural and political reasons and the likely outcome is they will chug along in recession for a decade or more, rather than the EZ agreeing some common resolution through a common Euro bond.

There would be no economic or political urgency for the UK to join the Euro is such circumstances.

I think it has to be accepted that the Germans do have ambitions for the EU [as a greater Germany] - if not they would have returned to the mark once they realised that there was no way that the southern states were going to mend their financial ways through their own efforts. Also that they will not give up on those ambitions easily so will continue to press for a US of E - even if this starts with just a small group of nations.

I think it also has to be accepted that the US want as large and powerful a US of Europe as possible to provide a large and powerful political block to take care of business this side of the Atlantic. UK and French involvement in the downfall of Gaddafi was an early example of this ambition in action.

For such a political force to work it has to be bound together more closely than it is at present. With more functions being included in Qualified Majority Voting from 2014 - clearly the concept of a US of E will have taken another step further on the road with regard to political union. Monetary union is the missing bit - the aim is to get the ECB to become the controlling force for all banks in the eurozone [as the Bank of England is for UK banks] - and agreement to this is being forced through creating circumstances where those most reluctant are likely to go bankrupt if they don't sign up.

Perhaps the most dangerous aspect from our prospective is that the leaders of the three main parties are also, almost certainly committed to the same outcome - although their outward show of support has to be tempered by the enthusiasm of their party members for this eventuality. That is why Clegg can be very supportive and Cameron far less so.

What is very likely to be the case is that ambitious politicians in the UK are likely to support the idea of a US of E - because it provides plenty of well paid political jobs for promotion. The most ambitious will support the idea even more because it offers a chance to stride the world stage [Blair being the obvious example] and it is these that will be most intent of seeing the UK included. Hence my concern that if, as seems more than likely - Labour win the next GE, we will be just a referendum away from being absorbed into this new superstate - with little chance of ever escaping.

[youngian]

Germany has shown little appetite to get involved in increasingly integrated Franco-British foreign and defence policy posturing which is a contradiction in European politics but one that will not change whether there is greater fiscal union or not.

Interesting watching Hollande's charm offences to both Cameron and Milliband-Is this a fear that a UK drifting away from the EU will be bad for future of Europe's balance of power as Germany grows even richer?

German trade in China has now over taken France and another contradictory fear of German power is that it stops looking west and concentrates on its relationship with the BRICS. A more independent wealthier Germany scares France and other neighbours more than a dominant Germany within a US of E.

I don't think this generation of German politicians are obsessed by Kohl's visions of a united Europe or meglomaniac dreams of Germanic hegemony.

The PIIGS's economies are not crucial to Germany's increasingly global economic game plan, just a huge annoyance to it. If they did go for fiscal union (a big if) it would be to finally nail down the PIIGS economies into a financial straight jacket to prevent future debt crisis.

Ultimately the PIIGS will have to accept whatever deal the Germans put on the table or leave the Euro which none of them, other than Greece's Syriza, are prepared to contemplate at the moment.

If fiscal union does go ahead in the next few years it will be formed out of crisis rather than any positive vision. I don't see any British politician racing to join unless Sterling reverts to becoming the hopelessly unstable currency it was until the mid 1990s.

[Millennium3]

Germany has shown little appetite to get involved in increasingly integrated Franco-British foreign and defence policy posturing which is a contradiction in European politics but one that will not change whether there is greater fiscal union or not.

Interesting watching Hollande's charm offences to both Cameron and Milliband-Is this a fear that a UK drifting away from the EU will be bad for future of Europe's balance of power as Germany grows even richer?

German trade in China has now over taken France and another contradictory fear of German power is that it stops looking west and concentrates on its relationship with the BRICS. A more independent wealthier Germany scares France and other neighbours more than a dominant Germany within a US of E.

I don't think this generation of German politicians are obsessed by Kohl's visions of a united Europe or meglomaniac dreams of Germanic hegemony.

The PIIGS's economies are not crucial to Germany's increasingly global economic game plan, just a huge annoyance to it. If they did go for fiscal union (a big if) it would be to finally nail down the PIIGS economies into a financial straight jacket to prevent future debt crisis.

Ultimately the PIIGS will have to accept whatever deal the Germans put on the table or leave the Euro which none of them, other than Greece's Syriza, are prepared to contemplate at the moment.

If fiscal union does go ahead in the next few years it will be formed out of crisis rather than any positive vision. I don't see any British politician racing to join unless Sterling reverts to becoming the hopelessly unstable currency it was until the mid 1990s.

We clearly have contrasting views. I think the difference is of what is presented to the people in the EU nations and what is agreed behind closed doors.

If the intentions were as I have depicted and they were declared - very soon national alliances would be formed to prevent this new superstate of a US of E - with once independent nations becoming subservient to a EU parliament - being formed.

If you look back on how the EU has developed from its beginning, you will see it has been a constant move towards a US of E. This has been achieved through taking a couple of steps forward and then, when there has been a public outcry, a step back - until another forward step could be taken.

It is impossible for either of us to prove that our 'take' on these events is true - we will just have to agree to disagree. Future events will determine what is the case - I just hope that, if I am right, that realisation is not too late for any truly effective response to be made - that would be after a Labour government had been ellected.