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Not Even Mass Death Can Forge A Fiscal Union In Europe
Markets were mixed Wednesday as traders digest the latest news flow around the virus and ponder a fa
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European Union fundamentally flawed from the beginning.
ECB controlled euro and amount of euros available.
Each country set their own fiscal policy/budget.
As long the economy was growing, that worked.
This is somewhat simplistic. The EU as a political and economic union is one of the real positives to arise after the second World War. There has been peace on the continent for 75 years, outside of the wars around the dissolution of Yugoslavia, which shouldn’t be taken for granted.
The differing fiscal and monetary controls in place regarding the Euro are, no doubt, a problem.
Maybe we could just say a monetary union was never a good idea and will be the doomsday device that destroys us all after one of these once in a decade disasters. A GFC, a pandemic, a war, something will push it off the cliff.
Having a European Union is a huge positive for the people of Europe and for that matter- the entire world- but it only works for the long term if fiscal and monetary policy are both handled jointly by elected, not appointed, officials.
So, is it just a matter of time at this point for Salvini, and others like him around Europe, to gain power, and unravel the EU for good? Are there any close followers of Italian politics here that care to suggest a time frame for such a development? Germany sure knows how to run a domestic economy (the US should have studied their model more closely), but is seemingly incapable of leading Europe.
Having lived in Europe for a large chunk of my working life this torturous process of reaching an agreement is par for the course. Even a crisis that is as existential as this cannot focus the minds. “Whatever it takes” was the answer a few years ago. With the ECB doing what it can, there burden is clearly on European government leaders. They are found wanting time and time again. Eventually, they do stumble into doing the right thing. It is so painful to watch. This is far from a well oiled machine. Having said that those companies located in Northern Europe are going to be the winners. It is not a level playing field. Germany, Netherlands, Finland are never going to assent to Eurobonds, which Coronabonds are in everything except name, When will Club-Med countries face the reality that Europe is a noose around their necks and leave. EUR at 1.50, if and when that happens.