The EU’s money troubles

Guest Contributor

Guest blog from Lord Harrison:

Lord Harrison-copyright Dods

The European Union has money troubles. The banking crisis in 2008 was a global disaster whose impact on the EU is still being felt. Just days ago Portugal’s government fell when its plans to cut Portugal’s enormous budget deficit were rejected. It is now paying over 8% interest (that’s compared to under 5% for the UK – an enormous difference when a country’s public debt is approaching 90% of its GDP) on its public borrowing.

I chaired a Select Committee inquiry that looked into the EU’s economic problems. We found that the euro area is paying the price for creating a half-way house monetary union in which monetary policy (such as interest rates) is set by a single authority, the European Central Bank, while Member States are allowed to set their spending and tax plans independently. At the same time, some countries such as Germany have become far more competitive than others such as Greece. These differences are cracking the euro area apart.

What’s the answer? Well, some people think there isn’t one – that the euro area is doomed to fail. Some have suggested that competitive countries such as Germany and the Netherlands might leave and start their own monetary union leaving behind uncompetitive and fiscally irresponsible countries such as Greece and Portugal.
I don’t believe that will happen, but something needs to be done – and soon. The European Commission has made suggestions about how to coordinate economic policy and defuse differences in competitiveness between countries such as Germany and Greece.

My Committee looked at these plans in detail, and the good news is that we think they’re a step in the right direction. If the EU sticks to the rules and makes them work they should make a real difference.
The bad news is we’re not sure that this is what will happen.

It hasn’t happened in the past. In 2002-3, France and Germany simply changed the rules to avoid being punished for breaching the EU’s Stability and Growth Pact.

That can’t happen anymore.

If the euro area is going to survive and grow, its leaders will have to enforce the rules properly. If not the euro may limp through the current crisis, and perhaps even the next one, but eventually it won’t be able to go on in its current form. That would be a disaster for countries in the euro area – and it would be bad news for the UK whose own economic health depends so much on countries in the euro area.

I’ll be keeping my fingers crossed that politicians in the euro area don’t disappoint.

Lord Harrison is Chairman of the Lords EU Economic and Financial Affairs and International Trade Sub-Committee. Its report on the future of economic governance in the EU has just been published, and can be found at: http://www.parliament.uk/hleua

9 comments for “The EU’s money troubles

  1. Lord Blagger
    28/03/2011 at 10:38 am

    That would be a disaster for countries in the euro area – and it would be bad news for the UK whose own economic health depends so much on countries in the euro area.

    Depends on your view as to whether they will succeed or not.

    Given the problem is the same in the Eurocountries as in the UK, namely government’s running fraudulent accounts and massive ponzi schemes, you have to work out how to solve that problem.

    Given the scale in the UK, there isn’t a solution. The debts are escalating, and the government isn’t cutting. Growth just means growth in taxes, because that’s all that solves it from that side, namely taking more money off people.

    So the conclusion is pretty obvious. Its not if, its when.

    Do the UK and the EU governments default now or latter when the problem is even larger, and the mess even greater?

  2. Carl.H
    28/03/2011 at 10:51 am

    but something needs to be done – and soon.

    Yes a referendum on the EU.

    • Dave H
      28/03/2011 at 5:31 pm

      I’ll second that. If we vote to stay in then the government has a mandate to jump in with 100% commitment and join the EU fast lane. If we vote to get out then the government can work to make that a reality too. At least it will let us move on and argue/complain about something else.

      As for the Eurozone, let them fund each other’s debt. We didn’t join the Euro for good reasons, so we should not now be sucked into paying for its problems.

    • Chris K
      28/03/2011 at 6:47 pm

      Yes!

  3. Gareth Howell
    28/03/2011 at 11:00 am

    The noble lord Harrison has an interesting committee to work with!

    I quote him:

    monetary policy (such as interest rates) is set by a single authority, the European Central Bank, while Member States are allowed to set their spending and tax plans independently. At the same time, some countries such as Germany have become far more competitive than others such as Greece. These differences are cracking the euro area apart.

    I don’t think they are cracking the Euro apart. there are those who would like it to.

    There is no doubt that the great financial capitals of Europe, Frankfurt, London and so forth, will come to assumed greater and great
    Centralised power over the more distant state economies such as Portugal and Ireland.

    I wonder who has expertise on this geographical, and economic, effect of

    ” a single authority European Central Bank (ECB),while Member States are allowed to set their spending and tax plans independently.”

    The only possible consequence of this in a fiercely capitalist world, is greater and greater centralization.

    If the Brits do not like it, because it gives too much power to the mainly German dominated
    ECB, they should be honest about it, and not complain that it is “cracking the euro apart”, which has the effect of so doing!

    “It”, noble lord, “ain’t!”

    • MilesJSD
      milesjsd
      29/03/2011 at 9:21 am

      – Cracking apart
      (just to pre-empt debate-negative-side attack on grounds of Enthymemism, my Lord Harrison and Gareth)

  4. MilesJSD
    milesjsd
    28/03/2011 at 6:58 pm

    Hello, ord Harrison;
    and welcome.

    In certain domains we always need to ‘dig deeper’;

    and whilst we know that this practicum is not so with some domains, such as the most valuable lifeupport on Earth namely Its Topsoils,

    we do know that most if not every one of our artefactual or civilisational domains does need its depths to be thoroughly plumbed, evidently quite regularly;

    and Money,
    since on the one hand stands-for civilisational-lifesupports and on the other for Natural-Lifesupports,,
    both now very evidently falling advancingly under two other major ciivilsation-domains namely our Power to Support & Nurture and our Power to Destroy & Kill,
    has become,
    not just for our Human Race but probably for All Life on Earth and hereinafter for our longest-term survival-and-thrival via a ‘Noahs Ark Space Emigration Starfleet’ somewhere-else-out-there among the Stars,
    the Dominant domain.

    That Human-Civilisational-Money needs to be continually better-evaluated, controlled, and conservationally-utilised should have long ago become self-evident.

    The fact that conservational Utilisation of Money has not yet become self-evident is due to one underlying Cause:
    not God, nor Forces-Majeures,
    but Human Failure:
    and that is comprised of Leadership-, Governance-, Democracy-, & Individual-Human-Development-, failures.

    ————
    Consider the (non) conservational-sense of the increasingly tumour-like Growth of the Individual-Capitalism Money-Pyramid:

    that one human being “needs” more than £300 per day as a “living”, whereas other and “equal” human beings must maintain themselves alive, secure, healthy, citizenlike, environmentally-supportive, and physically/mind-functionally/& spiritually productive, upon only £30 per day, is not simply an insanity it is to its very root a Life-threatening Phantasmagoria.
    ============

    The EU’s Money Problems do not end just there;
    because the whole world predicates Business, Governance, and Lifestgyling, upon further major falsehoods, two of which are

    (1) the notion that “earnings” can be individualised –
    (The Wrich Corporation’s owner Pat Wrich didn’t “earn” a billion-dollars, the workers did;
    Wrich is only being handed-out that billion-dollars by the Overarching Philosophy, and the Underpinning Constitution and Law, of the State or the European ‘Union’, respectively);

    (2) that “Rights”
    – be they a Government’s, Property-Owner’s, Employer’s, Worker’s, or pure, plain and
    simple “Human’s” –
    are not simply more important, and urgent, than “Needs”, they are so absolutely vital
    as to make “Needs” unimportant, un-necessary, dispensable.

    That all indicates a Failure of Individual-Capitalism, worldwide.
    ======================

    Whether or not the EU has the willingness and ability to address that Failure is arguably in all of our European Democratic hands, and might have to be done with or without the Rest-of-the-World’s cooperation.

    Whether any Nation, any University, indeed any School or Local Community Centre, could attempt to constructively discuss, and perhaps even scrutinise this Problem, might be further false-imagination.

    Surely we can not depend upon the United Nations having successfully addressed it first; it hasn’t.

    ————
    PS That the EU has been allowed, encouraged and supported, to build two super-costly Houses of Parliament appears to be only of “Peanuts” dimensions compared with all of its other wastefulnesses and its Member-States’ and Peoples’ various neglects, abuses and failures.

    ZZZZZZZZZZZZZZZZZ
    1957M28Mar11.JSDM.

  5. MilesJSD
    milesjsd
    28/03/2011 at 6:58 pm

    Hello, Lord Harrison;
    and welcome.

    In certain domains we always need to ‘dig deeper’;

    and whilst we know that this practicum is not so with some domains, such as the most valuable lifeupport on Earth namely Its Topsoils,

    we do know that most if not every one of our artefactual or civilisational domains does need its depths to be thoroughly plumbed, evidently quite regularly;

    and Money,
    since on the one hand stands-for civilisational-lifesupports and on the other for Natural-Lifesupports,,
    both now very evidently falling advancingly under two other major ciivilsation-domains namely our Power to Support & Nurture and our Power to Destroy & Kill,
    has become,
    not just for our Human Race but probably for All Life on Earth and hereinafter for our longest-term survival-and-thrival via a ‘Noahs Ark Space Emigration Starfleet’ somewhere-else-out-there among the Stars,
    the Dominant domain.

    That Human-Civilisational-Money needs to be continually better-evaluated, controlled, and conservationally-utilised should have long ago become self-evident.

    The fact that conservational Utilisation of Money has not yet become self-evident is due to one underlying Cause:
    not God, nor Forces-Majeures,
    but Human Failure:
    and that is comprised of Leadership-, Governance-, Democracy-, & Individual-Human-Development-, failures.

    ————
    Consider the (non) conservational-sense of the increasingly tumour-like Growth of the Individual-Capitalism Money-Pyramid:

    that one human being “needs” more than £300 per day as a “living”, whereas other and “equal” human beings must maintain themselves alive, secure, healthy, citizenlike, environmentally-supportive, and physically/mind-functionally/& spiritually productive, upon only £30 per day, is not simply an insanity it is to its very root a Life-threatening Phantasmagoria.
    ============

    The EU’s Money Problems do not end just there;
    because the whole world predicates Business, Governance, and Lifestgyling, upon further major falsehoods, two of which are

    (1) the notion that “earnings” can be individualised –
    (The Wrich Corporation’s owner Pat Wrich didn’t “earn” a billion-dollars, the workers did;
    Wrich is only being handed-out that billion-dollars by the Overarching Philosophy, and the Underpinning Constitution and Law, of the State or the European ‘Union’, respectively);

    (2) that “Rights”
    – be they a Government’s, Property-Owner’s, Employer’s, Worker’s, or pure, plain and
    simple “Human’s” –
    are not simply more important, and urgent, than “Needs”, they are so absolutely vital
    as to make “Needs” unimportant, un-necessary, dispensable.

    That all indicates a Failure of Individual-Capitalism, worldwide.
    ======================

    Whether or not the EU has the willingness and ability to address that Failure is arguably in all of our European Democratic hands, and might have to be done with or without the Rest-of-the-World’s cooperation.

    Whether any Nation, any University, indeed any School or Local Community Centre, could attempt to constructively discuss, and perhaps even scrutinise this Problem, might be further false-imagination.

    Surely we can not depend upon the United Nations having successfully addressed it first; it hasn’t.

    ————
    PS That the EU has been allowed, encouraged and supported, to build two super-costly Houses of Parliament appears to be only of “Peanuts” dimensions compared with all of its other wastefulnesses and its Member-States’ and Peoples’ various neglects, abuses and failures.

    ZZZZZZZZZZZZZZZZZ
    1957M28Mar11.JSDM.

  6. maude elwes
    30/03/2011 at 1:19 pm

    The EU is used by our governments to bring into GB, through the back door, what they would not be able to get the voters to go along with in the ballot box.

    Example cloned meat, agricultural policies using GM products, the kick backs to ‘gentlemen farmers’ that run into billions of pounds of tax payers money, said to be paid to ‘run’ the EU. When the truth is, their pay offs are so outrageous they refuse to expose them to scrutiny. And when you read the names of those who benefits, guess who they are in the main. Aristocrats. Many of them, those unelected peers we hear so much of.

    The cloned animals are now to be sold in the UK without any labeling or knowledge of to the purchaser. And the reason is, Washington money men will be unhappy if they don’t allow the European people to be guinea pigs, akin to the grotesquely obese US citizens, which is spreading here rapidly. At a cost to the NHS in the millions.

    But, billionaires need more money don’t they, so the people will be used to supply them with it.

    http://www.newsweek.com/2008/01/17/would-you-like-fries-with-your-clone.html

    Now here is the reality of greed, they are not labeling it because they know the European and British consumer will not buy it if it is known what they are getting.

    Supermarkets will be flooded with this stuff, even though it is common knowledge that cloned animals suffer from various deformities and diseases that can be passed along the food chain. Remember mad cow disease and Gummer?

    Now hushed up. And they hush up the results of this method of farming to the point of threats should an employee blow the whistle.

    The answer has to be, buy only local and where you can verify the place it came from. Hard, I know, but only you can make a decision that suits your senses. For, you can no longer rely on the truth coming your way.

    Supermarkets will buy the chaepest and blame government if the outcome is horrendous.

Comments are closed.