"...German Chancellor Angela Merkel and Sarkozy are pushing hard to get the text finalized and agreed to by March—before the French election. But it won’t be binding at that stage, and Hollande could do what he vowed in writing he’d do.
Growth is his mantra. Not austerity. While he considers reducing deficits an imperative, “nothing serious will be possible without growth; it’s the big missing element in the agreement.”
Democracy is “the other big missing element.” Going around the European Parliament as well as national parliaments and granting the European Court of Justice final say over national budgets, as the agreement calls for, “would be unacceptable.”
And this: “The Eurozone must arm itself with a veritable financial force de frappe”—the term for France’s land-, sea-, and air-based nuclear strike force. Out: the bazooka. In: maximum force. Specifically, he wants effective means to impact the financial markets:
Britain, on the sidelines after last week’s debacle, vehemently opposes any kind of financial transactions tax, as well as other points on his list. Already, David Cameron seems to be trying to form alliances with other countries that support his views.
And the war of words between France and Britain is heating up. Finance Minister François Barois shot the latest salvo today when he said on Europe 1, a nationwide radio network, that “one prefers to be French rather than British,” and then he went on to disparage Britain’s economy.
If this scenario were to play out, the Eurozone could crack into groups of countries: one clustered around Germany, another around France, with a few countries perhaps falling by the wayside. The EU too might fissure as Britain and a few other countries drift away. But Hollande is on the campaign trail, and a lot of rhetoric gets bandied about. If indeed he wins the presidency, it is possible that he will back off a confrontation with Germany, as Sarkozy has largely done. It is also possible that he will try to bring Britain back into the fold, though that seems unlikely."
at http://www.nakedcapitalism.com/2011/12/wolf-richter-political-realities-threaten-to-split-the-eurozone.html
Growth is his mantra. Not austerity. While he considers reducing deficits an imperative, “nothing serious will be possible without growth; it’s the big missing element in the agreement.”
Democracy is “the other big missing element.” Going around the European Parliament as well as national parliaments and granting the European Court of Justice final say over national budgets, as the agreement calls for, “would be unacceptable.”
And this: “The Eurozone must arm itself with a veritable financial force de frappe”—the term for France’s land-, sea-, and air-based nuclear strike force. Out: the bazooka. In: maximum force. Specifically, he wants effective means to impact the financial markets:
• A much more aggressive ECB (while “respecting its independence”).Practically every point of his plan (except for the financial transactions tax) violates Merkel’s dictate. Barring a miracle, Germany is unlikely to fall in line with his desires. A handful of other countries might side with Germany and form a bloc.
• Much more powerful bailout funds to “discourage speculation.”
• Eurobonds to spread the risk “of at least part of our debt.”
• Interventions by the European Investment Bank (owned by member states, it lends out €50 billion a year to support weaker regions and various projects).
• A larger European budget with new sources of revenues, particularly a financial transaction tax, to drive industrial policy.
Britain, on the sidelines after last week’s debacle, vehemently opposes any kind of financial transactions tax, as well as other points on his list. Already, David Cameron seems to be trying to form alliances with other countries that support his views.
And the war of words between France and Britain is heating up. Finance Minister François Barois shot the latest salvo today when he said on Europe 1, a nationwide radio network, that “one prefers to be French rather than British,” and then he went on to disparage Britain’s economy.
If this scenario were to play out, the Eurozone could crack into groups of countries: one clustered around Germany, another around France, with a few countries perhaps falling by the wayside. The EU too might fissure as Britain and a few other countries drift away. But Hollande is on the campaign trail, and a lot of rhetoric gets bandied about. If indeed he wins the presidency, it is possible that he will back off a confrontation with Germany, as Sarkozy has largely done. It is also possible that he will try to bring Britain back into the fold, though that seems unlikely."
at http://www.nakedcapitalism.com/2011/12/wolf-richter-political-realities-threaten-to-split-the-eurozone.html
