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Euro crisis: “Europe’s common currency is its formative element.”

Mon 4 June 2012, 5:32pm

The president of the European Council, Herman Van Rompuy, has a plan.  Or, at least, a timetable.

Herman Van Rompuy told a news conference in St Petersburg, Russia that, by the next summit of EU leaders at the end of June, he and three other EU officials would present “the main building blocks for this deepened economic and monetary union” and “a working method to achieve this objective”.

“In those building blocks, banking integration is an important chapter… I will deal at this stage on supervision, on deposit insurance and on resolution,” Mr Van Rompuy said.

“So we are working on it. It is the beginning only of the work… and hopefully we can present results of that work already by the end of this year,” he said.

[As agreed at the Bilderberg meeting!? - Ed]  Possibly…

In the Irish Times, Derek Scally, notes Frau Bundeskanzlerin’s comments that “Europe will face a debate “sooner rather than later” over closer political union.”

Another challenge for the plan is to clarify what is meant by its proposed “fiscal union”. From Berlin’s perspective a fiscal union involves closer oversight of euro zone budgets – as regulated by the fiscal pact.

However, German officials know many others understand eurobonds – mutualised euro zone debt – to be a vital part of such a union. Berlin is likely to insist such a move can only come after institutional change as Germany’s constitutional court is likely to prevent any integration of social systems, or pooling of financial liability, until there is a clear boost of democratic legitimacy at EU level.

Where Berlin and Brussels are in agreement, insiders told the German newspaper, is that nothing can happen without further treaty change. With fiscal treaty ratification ongoing, that makes short-term progress on further integration unlikely.

Nevertheless, most officials involved in the talks – besides Brussels’ participants – seem prepared to push ahead with the reforms at euro zone level if necessary, creating a de facto two-speed Europe.

But it’s not quickly enough for some…

Billionaire investor George Soros has warned European leaders they have a “three-month window” to save the euro.

He said he believed Greece would elect a government willing to abide by loan conditions imposed by the EU in this month’s elections.

But he said the German economy would begin to weaken in the autumn, making it much harder for Chancellor Angela Merkel to provide further support.

He said leaders did not understand “the nature of the crisis”.

And he doesn’t mean the European Project’s democratic deficit.  From the same BBC report

“The crisis is likely to come to a climax in the [autumn]. By that time, the German economy will also be weakening, so that Chancellor Merkel will find it even more difficult than today to persuade the German public to accept any additional European responsibilities.

“That is what creates a three-month window.”

A timely point to recall those historical references – “Rome wasn’t built in a day and it didn’t fall in a day either…

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Comments (3)

  1. duthealla (profile) says:

    George Soros’ speech in full:
    http://www.georgesoros.com/interviews-speeches/entry/remarks_at_the_festival_of_economics_trento_italy/

    What do you think?
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  2. Pete Baker (profile) says:

    duthealla

    Thanks for that.

    So Soros is an advocate of Krugmanomics?

    Which is fine, depending on how much of a reliable witness you think Soros actually is…

    What do you think?
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  3. That Soros link is dead, however there is a Google cached version here: https://webcache.googleusercontent.com/search?q=cache:fYxgNGX2kKAJ:www.georgesoros.com/interviews-speeches/entry/remarks_at_the_festival_of_economics_trento_italy/

    What do you think?
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