There is a certain lack of clarity at the moment about what is meant by EU economic governance.
Or to be more precise, everyone seems to know what France’s Nicolas Sarkozy would like. And it is relatively clear what Germany does not want. Beyond that, the lines remain unclear even though the phrase is bandied about freely.
In brief, Paris has indicated it would like regular summits of eurozone countries, plus some permanent structures including a secretariat. A more politicised running of the 16 countries with the single currency.
Berlin, mindful of the ECB’s independence, would rather keep all 27 member states involved. But an equally pressing concern is to ensure that the Greek situation is never allowed to happen again.This entails revising the euro rules to include greater prevention measures, surveillance and sanctions.
So is this the basis of a forthcoming Franco-German compromise? The one in return for the other. Some seem to think so.
Casting a somewhat jaded eye over the putative economic governance landscape, one veteran EU diplomat noted:
“My prediction would be that somewhere down the line, there is going to be one of these grand Franco-German compromises, in which you probably get agreement on tougher sanctions and agreement on new permanent structures and a declaration that France and Germany together have saved Europe.”
Whatever about exactly what Chancellor Angela Merkel wants, practicalities may play into Sarkozy’s hand.
The last eurozone summit, on Friday 7 May, was by all accounts a rather chaotic affair. The leaders were unprepared and met late into the night. Policy and decisions – including to tell finance ministers to sign off what by Sunday had become the massive 750 billion euro EU-IMF aid mechanism – were made on an ad hoc basis.
After the meeting there was much muttering about how it was not the right way to be dealing with affairs of this scale. And making the relatively safe assumption the need for eurozone leader meetings will continue, a solution a la sarkozy could see a secretariat that would prepare policy papers and forecasts for such gatherings. This, presumably, would lend a more informed and less panicked atmosphere to the talks.
But if such a Franco-German plan is in the offing – and both sides are keen to their economic governance view prevail – they will have to work a little on their PR.
While some outside the single currency are worried about an economic governance elite (or eurozone council as Sarkozy is wont to have it) several eurozone member states are also reportedly getting irritated by eurozone policy being thrashed out by Paris and Berlin.
Although to be fair, I am not sure where we would be if France and Germany were not taking some sort of initiative, even if late, reactive and quarreled over.
#1 by Pedro on June 14, 2010 - 10:32 am
Thank you Mz. Mahony.
#2 by Marcel on June 14, 2010 - 8:32 pm
Another attack on democracy is coming, France is looking to subvert democracy again and gain power by stealth.
Why doesn’t it ever stop? We the peoples don’t want a political government and don’t want more integration. The corrupt arms dealer Sarkozy should get lost.
If we cannot stop the enemies of democracy pushing integration via the ballot box, perhaps other measures are needed to let these Hermann Goering (plenipotentiary for the economic four year plan, which is similar to what the EU wants to create) wannabes know we do not approve of political union or economic government by the EU in any way.
We said NO!
#3 by theyenguy on August 26, 2010 - 2:56 am
Perhaps today, August 25, 2010, there is greater clarity as to what is meant by European Economic Governance.
Tyler Durden quotes from the Arnaud Mares, Morgan Stanley, August 25, 2010 report … Sovereign Subjects: Ask Not Whether Governments Will Default, But How … ”Debt/GDP ratios are too backward-looking and considerably underestimate the fiscal challenge faced by advanced economies’ governments. On the basis of current policies, most governments are deep in negative equity. This means governments will impose a loss on some of their stakeholders, in our view. The question is not whether they will renege on their promises, but rather upon which of their promises they will renege, and what form this default will take.”
“So far during the Great Recession, sovereign (and bank) senior unsecured bond holders have been the only constituency fully protected from partaking in this loss. It is overly optimistic to assume that this can continue forever. The conflict that opposes bond holders to other government stakeholders is more intense than ever, and their interests are no longer sufficiently well aligned with those of influential political constituencies …. Investors should be prepared to face financial oppression, a credible threat against which current yields provide little protection.”
I have to agree that investors should be prepared to face “financial oppression” (in addition, people should be prepared to face austerity measures) as a credible threat, against which, current yields, provide little protection.
For my financial protection, I am invested in gold bullion. Gold, $GOLD, traded up today, August 25, 2010. Silver, $SILVER, said to be the poor man’s gold, soared.
The gold, ETF, GLD, traded up 0.83%, closing at 121.36. The silver ETF, SLV, broke up and out of consolidation triangle, rising 3.06% to 18.54; this as base metals, DBB closed down 0.31%.
As I look at the chart of the 20 to 30 year US Government Bonds, TLT, I see just part of the massive amount of total debt, BND; which closed lower today August 25, 2010 at 82.69.
I believe investors have blown the debt bubble so large, there is going to be a mad rush to the exit doors to sell, where there will not be enough buyers for sellers, resulting in a liquidity evaporation, and a liquidity crisis.
Today in early morning trading, August 25, 2010, a number of carry trades were down again, these include the AUD/JPY trading to 74 as seen in Yahoo Finance chart, and the EUR/JPY trading to 106.6 as presented by ForexInstructor in ActionForex Daily Technical Analysis article.
The Euro, FXE, closed at lower 1.2625 … iForex in ActionForex article Technical Analysis Daily EUR/USD relates that the Euro/Dollar continued decreasing till the weak US home sales pushed the Euro up. The European currency appreciated from 1.2588 to 1.2705 yesterday, and closed today lower at 1.2625.
The Yen, FXY, closed lower at 116.89.
World stocks, VT, traded unchanged. Stocks dropped in the morning on the falling currency carry trades; but recovered in the afternoon.
The ongoing Yahoo Finance chart of Japan, EWJ, Mexico, EWW, Europe, FEZ, Asia, DNH, and the US shares, VTI ….. EWJ, EWW, FEZ, DNH, VTI shows the effect of debt deflation stemming from the sale of EUR/JPY and the AUD/JPY beginning August 19, and 20, 2010.
Carry traders recently ran natural gas up; then they turned massively short, causing UNG to fall sharply. Today it fell another 3.7%. Over the last year, it has provided a negative 55% return, according to Yahoo Finance.
Money flows out of Europe and into Switzerland continued today. The Swiss Franc to Euro Dollar, FXF:FXE, carry trade was part of a transfer of money out of European Financial Institutions, EUFN, that commenced in November 2009 and then exploded in March as concerns finally forced the hand of the EU Finance Leaders and Nation Leaders to announce European Economic Governance with a seigniorage grant to Greece and a call for a Monetary Union with seigniorage authority to issue Eurobonds.
The 20 to 30 Year US Treasuries, TLT, zoomed up this morning to over 109 and closed lower at today August 25, 2010 at 107.41. Today might be a top in the 20 to 30 Year US Government Bonds, as TLT has risen parabolically and is manifesting three white soldiers, a reversal pattern.
The interest rate on the 30 Year US Government Bond, ^TYX, closed up at 3.58.
The interest rate on the 10 Year US Government Note, ^TNX, closed up at 2.45.
The yield curve, $TYX:$TNX, now in its tenth day of flattening; it flattened some more today to 1.409.
The 300% inverse of the 30 Year US Government Bond, TMV, closed up at 33.10.
I believe that once interest rates start to rise, TMV will start to rise faster than TYO, which one can follow in the combined chart of TMV and TYO.
Those invested in Junk Bonds, JNK, have already started to jump ship to avoid financial pain. And the chart of Emerging Market Bond, EMB , shows it now is in a second day of trading lower.
For those who are into charts, I provide a listing of 16 ETFs to sell short and 10 ETFs to buy long for a debt deflationary bear market. As I look at the charts, I see US Government Debt, the ZROZ, and the 20 to 30 Year US Government Bonds, TLT, and municipal bonds, MUB, and California Municipal Bonds, CMF, topping out. Yes, even corporate bonds, LQD, is topping out as well.
I believe that soon, out of the chaos of “financial oppression” cited by the Morgan Stanley author, that here in the US a Financial Regulator will be announced who will oversee lending and credit, as well as money market and brokerage accounts. He will be what I call a credit boss or credit seignior who funds economic operations with an emphasis on seeing that the strategic needs of the country are met and that monies for food stamps keeps flowing. I believe the government will become the first, last and only provider of liquidity and money.
I believe that here in the US, the Financial Regulator will exercise Discretionary Governance, and announce a Home Leasing Program administered by the banks on their REO properties and those of Freddie Mac, Fannie Mae and the US Federal Reserve. Mortgage lending and securitization of loans will cease, and leasing of homes will be a public private partnership cooperative endeavor. Companies that have created and serviced mortgage-backed securities, such as Anworth Mortgage Asset Corporation, ANH, and Annaly Capital Management, NLY, will quickly disappear from the economic landscape, as mortgage bond funds such as Goldman Sachs Mortgage Bonds, GSUAX, tumble in value.
And I envision that in Europe, a continuing fall in the EUR/JPY from today’s 106.6, will result in further stock deflation, seen in the ETF, FEZ, falling below 32.50. Then a liquidity crisis will emerge, where there will not be enough buyers for sellers of stocks as well as bonds, causing small business failures and banks to become sorely decapitalized, resulting in the president of the ECB arising to be an “Eurozone credit seignior” and provider of liquidity to Europe.
I also believe that “framework agreements” will be announced in Europe providing for fiscal federalism, giving a whole new meaning to the term European Economic Governance.
Yes, I foresee a greater fiscal union in Europe.
Fiscal federalism will result in the Eurozone evolving into a region of global governance where national sovereignty will be a concept of a bygone era.
#4 by canon eos 600d kit on November 17, 2011 - 7:17 pm
יש לך אתר גדול מאוד, אני שמח שמתי לב שזה דרך yahoo.