To EU Or Not To EU?

[Big Guy]

The European Union (EU), that was once projected to be the next “empire” is showing signs of falling apart. Many members are beginning to rethink their participation with the election of new governments.

http://www.independent.co.uk/news/world/europe/european-elections-2014-will-surge-in-support-for-farright-parties-bring-down-the-eu-and-its-governments-9436454.html

Is there a future for the EU as a functional economic unit?

Is a strong EU a good thing or a bad thing for Canada?

[GostHacked]

Strong economies all over are good for everyone. The EU has been a failed experiment and is showing the sings of stress which could fracture the EU back into the individual countries instead of this 'super-country'. But this process is over 50 years in the making so, I don't see a reversal anytime soon. You will see implosions of countries before that is considered. More countries with unstable economies are being considered for entry into the EU. What is the purpose of that? It does not provide a benefit.

Well maybe to some. As Greece has sold off some of their beaches to private enterprises. Other public works are also being privatized and most likely foreign owned.

..

One of the problems is that the EU members are appointed, and not elected. So by definition this does not represent a democracy for Europe.

The moment some countries were allowed into the EU, they had problems. Those countries should never have been allowed to enter the EU. But it is a strength in numbers and the desire to control a larger area. That ends up straining the strong economies like Germany.

If the EU was strong, it could increase the demand for Canadian goods. When the economies are weak, they can barely afford to operate daily, let alone try to use their spending power for some good economic development and to promote some kind of fair trade.

I thought years ago, with the situation in the US, that Canada should have closer ties with the EU. Now I have reversed that, but still think that the US (and to some extent Canada) is still in economic trouble.

My problem with many of these articles is the portraying of the left and right. There is no left and there is no right. There are only people with expressed concerns and appointed government officials who love to take advantage of those groups for political gain.

However in the end, it is not just the EU that is in economic trouble. I'd say about 95% of the world is in dire economic straights.

[-TSS-]

In Sunday's euroelections the eurosceptics triumphed across the whole continent; most prominently the FN in France led by Marine Le Pen as well as the UKIP in Britain led by Nigel Farage. Both parties received the largest number of votes in their respective countries.

[overthere]

The EU is not about to fail, but the recent elections have given the big dogs in the Union a reason to step back and examine their future a little more closely.

Quite a few members are uneasy about the loss of sovereignty that is increasingly evident in EU direction. Most are Eurozone mebers as well, and some of those are not comfy with the creeping amount of fiscal policy coming from Brussels.

Adoption of the EU as a very strong financial buffer against global economic trouble has proved to be not nearly as effective as hoped, because there are key elements missing. Economic policies using a single currency are fine and can serve both weak and strong partners. But without accompanying fiscal policy the Union is far less powerful. But here is the rub: a joint fiscal policy means a serious loss of sovereignty, and nobody much wants to be told to turn over their entire economic direction to people they spent generations mistrusting.

Greece for example would be roughly equivalent to Zimbabwe if they leave the EU or are kicked out. If they stay, they are obliged to do what they are told, which galls them enormously. What has saved their asses is another factor entirely: the need for a huge exporting economy like Germany to keep the Euro less valuable. If the weak sisters are dumped in the EU, the Euro would shoot up in value and Germany would be in trouble overnight because their exprots would be so expensive. Even worse for Germany would be if the Euro were abandoned entirely and Germany went back to the mark.

So I think everybody will take a step back for a bit.

[monty16]

Definitely keep the EU but the first important step is to see Germany pull away from US influence. That influence has crept into politics the same as the Nato influence has and Germany is unable to make wise decisions on relations with Russia. That's hurting the entire EU. Germany pulls the EU's strings. The US is pulling Germany's strings.

[-TSS-]

The problem with the euro is that it is too strong a currency for countries such as Greece, Spain or Italy and many others. However, perhaps all this euro-crisis is a devious plan to destroy countries from the inside and drive them into the arms of the euro-federalists. This together with totally unfettered and accelerating immigration speaks on behalf of this assumption.

[dre]

We can only hope for the sake of the people that live there that the EU falls apart.

There IS some positive aspects... agreements on trade, the environment, and the treatment of workers are a good thing. But the idea of a common currency and monetary policy is a gigantic mistake. Its also a huge mistake to move more and more legislative power to Brussels, and to the European Central Bank.

And the centralization of banking and monetary policy is just flat out ugly... and brutally stupid. A first year economics student could have told you why this would cause huge problems especially for the smaller states in the union and especially for countries with more agrarian economies. It really just boggles the mind that something this stupid was even attempted.

Bottom Line... The failure of the EU would be a huge victory for democracy and representitive government.

Edited May 27, 2014 by dre

[WWWTT]

The European Union (EU), that was once projected to be the next “empire” is showing signs of falling apart. Many members are beginning to rethink their participation with the election of new governments.

Racist/biased comment.

European countries were at one time very strong, when they were able to plunder Africa, Asian and other regions in comparison.

Now that their grip has fallen, those European countries aren't looking so big anymore are they?

When you actually look at their resources and work ethic in many regions, they aren't going anywhere.

This was pretty much the case for post WW2 Europe, but the contrast now with other regions makes them look worse.

WWWTT

[-TSS-]

Not such an unthinkable idea any more: President of France Marine Le Pen.

Such would just mean adieu to a lot of North-Africans currently living in France. In fact, I expect a surge in citizenship-applications by North-Africans in the near future so that they couldn't be expelled if their worst nightmare became reality.

[jbg]

Racist/biased comment.

I saw nothing racist or biased in the part you just quoted.

European countries were at one time very strong, when they were able to plunder Africa, Asian and other regions in comparison.

Not that Africa or South Asia is doing so well post-colonialism, even with tons of aid.

Now that their grip has fallen, those European countries aren't looking so big anymore are they?

When you actually look at their resources and work ethic in many regions, they aren't going anywhere.

This was pretty much the case for post WW2 Europe, but the contrast now with other regions makes them look worse.

Europe has always focused more on borders and "who rules what" than accomplishments.

[-TSS-]

In many ways a US-state or a Canadian province has more say over its own affairs than a supposedly independent member-country of the EU, especially small countries, big countries can look after their interests.

Having a Lutheran mindset also doesn't help a country like Finland. A country can only succeed in the EU if it totally ignores the most ridiculous orders coming from Brussels instead of thinking that all rules and regulations are for to be obeyed.

[-TSS-]

This is so funny, if you were Europeans you would realize how funny this is and perhaps some of you do despite not being Europeans. All I can say that it is indeed true that many American journalists' knowledge of the European affairs leaves a lot to be desired for:

http://www.huffingtonpost.co.uk/2014/05/26/far-right-europe-election_n_5391873.html?1401104084

[overthere]

The problem with the euro is that it is too strong a currency for countries such as Greece, Spain or Italy and many others. However, perhaps all this euro-crisis is a devious plan to destroy countries from the inside and drive them into the arms of the euro-federalists. This together with totally unfettered and accelerating immigration speaks on behalf of this assumption.

The oppsoite is true: the strength of the Euro is salvation for those smaller memebers, but you cannot lump large economies like Italy/Spain in with small ones like Greece, Portugual or the Eastern European members.

Greece would be in desperate trouble if they left the Euro and reverted to the drachma. At the moment the EU is willing to keep supporting the Greeks with credit. If that ended, Greece would be on a strictly cash basis ionternationally and hard currency only- the drachma would be worthless and there would be great suffering in Greece.

If you are a fan of euro federalist conspiracy theories, it is more likely that a devious plan would involve a continued push towards joint fiscal policy. In some ways, the EU has little choice in that, it is a natural progression. It is hard to do though when several mebers are not using the Euro as their currency. That is not the biggest obstacle. The biggest obstacle is the loss of sovereignty that a joint fiscal policy must entail.

[-TSS-]

The oppsoite is true: the strength of the Euro is salvation for those smaller memebers, but you cannot lump large economies like Italy/Spain in with small ones like Greece, Portugual or the Eastern European members.

Greece would be in desperate trouble if they left the Euro and reverted to the drachma. At the moment the EU is willing to keep supporting the Greeks with credit. If that ended, Greece would be on a strictly cash basis ionternationally and hard currency only- the drachma would be worthless and there would be great suffering in Greece.

If you are a fan of euro federalist conspiracy theories, it is more likely that a devious plan would involve a continued push towards joint fiscal policy. In some ways, the EU has little choice in that, it is a natural progression. It is hard to do though when several mebers are not using the Euro as their currency. That is not the biggest obstacle. The biggest obstacle is the loss of sovereignty that a joint fiscal policy must entail.

Thank you for your good post even though I disagree with it.

Let me just ask one questions based on your post: Do you think the Greeks were mistaken to adapt the euro to begin with when the currency was started?

[GostHacked]

The oppsoite is true: the strength of the Euro is salvation for those smaller memebers, but you cannot lump large economies like Italy/Spain in with small ones like Greece, Portugual or the Eastern European members.

Greece would be in desperate trouble if they left the Euro and reverted to the drachma.

I guess we can ignore the desperate trouble Greece already went through. It was a fire sale!

At the moment the EU is willing to keep supporting the Greeks with credit. If that ended, Greece would be on a strictly cash basis ionternationally and hard currency only- the drachma would be worthless and there would be great suffering in Greece.

How would that be different from borrowing money from the World Bank or the IMF? Or it should do what other countries do, simply print money.

If you are a fan of euro federalist conspiracy theories, it is more likely that a devious plan would involve a continued push towards joint fiscal policy. In some ways, the EU has little choice in that, it is a natural progression. It is hard to do though when several mebers are not using the Euro as their currency. That is not the biggest obstacle. The biggest obstacle is the loss of sovereignty that a joint fiscal policy must entail.

Using the Euro over your own country's currency is a loss of sovereignty. The whole EU undermines sovereignty and democracy simply because the EU officials are not elected, they are appointed. And they get to call the shots for the countries like Greece going through financial hardships.

Also to note the EU has been a work in progress for 50+ years.

[overthere]

How would that be different from borrowing money from the World Bank or the IMF? Or it should do what other countries do, simply print money.

No, Greece would be in immediate and desperate trouble if they left the Euro. Their nationalist politicians posture and preen , but in the end they know: their country would be immediately bankrupt, pensions schemes woyuld be bvoid, and they would not be able to borrow a cent from anybody because their credit would be complete crap.

Using the Euro over your own country's currency is a loss of sovereignty. The whole EU undermines sovereignty and democracy simply because the EU officials are not elected, they are appointed. And they get to call the shots for the countries like Greece going through financial hardships.

You are overestimating the reach of monetary policy. It is not as strong as you make out, several countries in the EU do not use the Euro at all. It is a big problem for the EU, since the recent global financial crisis made clear that joint monetary policy accompanied by random and numerous fiscal policies do not make for a strong joint response. But a common fiscal policy is far more subversive toi individual nations than simply sharing the same currency.

Europe did not respond well at all to the globall financial crisis, and they need to sort out common mechanisms to prevent that from happening again. Their own structure limits what they can do.

I guess we can ignore the desperate trouble Greece already went through. It was a fire sale!

It was an example of the strength of the EU, more than it was illksutrative of weakness. They rest of the EU basically told Greece that if they wanted to survive without major and very real calamity, they'd do what they were told regarding many internal issues. And they did it, after some routine rioting and grumbling.

Let me just ask one questions based on your post: Do you think the Greeks were mistaken to adapt the euro to begin with when the currency was started?

No, not at all from their perspective. It has saved their asses bigtime now both to join the EU and to adopt the Euro.

One of the prime reasons for joining the EU(and for many joining the EuroZone too) is that the little fish member states get access to cheap and plentiful credit. It allows them to provide simialr and huge social contracts to their people, similar to those in Northern Europe, rich Europe. And they can do it despite not having anything really in their economies that would warrant having those benefits.

In return, the more industrialized North Europe exporting nations have what they need in the South and East: a ready supply of captive customers who have to buy their expensive goods first. There a a few hundred million people in the South and East that are trying desperately to move into the middle class, and the North has all the toasters, cars, TVs and washing machines ready for them to buy.

It's a model that still may work for Europe.

But right now, they have to sort out the limits on loss of sovereignty, and wait out this backlash.

[GostHacked]

No, Greece would be in immediate and desperate trouble if they left the Euro.

Have you even paid attention to what is going on in Greece since they got the bail outs from the EU? Joining the EU and using the Euro is the cause of all their ills in the first place.

You are overestimating the reach of monetary policy.

It's far reaching and has more impact than the majority of policies out there.

It is not as strong as you make out, several countries in the EU do not use the Euro at all.

Right one of the biggest supporters of the EU was the UK and they reject the Euro in favour of the Pound. I never said it was strong. In fact I suggested it makes the union weaker.

It is a big problem for the EU, since the recent global financial crisis made clear that joint monetary policy accompanied by random and numerous fiscal policies do not make for a strong joint response. But a common fiscal policy is far more subversive toi individual nations than simply sharing the same currency.

I think I said something like that in my post. So overall you agree with me.

They rest of the EU basically told Greece that if they wanted to survive without major and very real calamity, they'd do what they were told regarding many internal issues. And they did it, after some routine rioting and grumbling.

http://www.bloomberg.com/video/67527978-greece-s-asset-firesale.html

No, not at all from their perspective. It has saved their asses bigtime now both to join the EU and to adopt the Euro.

How did it save Greece? The Bloomberg video shows what is being sold off.

http://www.theglobeandmail.com/report-on-business/greece-prepares-for-asset-fire-sale/article592655/

Greece was in trouble before they entered the EU. Which should have disqualified them for entry. They needed to do things themselves to bring them up to a level where entry into the EU would be viable. That did not happen. And like other countries that had weak economies, they were allowed into the EU and similar situations took place there. This article is from 2011. So maybe some need to catch up on what is exactly going on.

Published Sunday, May. 29 2011, 7:43 PM EDT

Last updated Wednesday, Aug. 31 2011, 11:16 AM EDT

Greece is gearing up for its biggest privatization effort. The unions are gearing up to stop it. If they win, Greece’s ability to stave off a default is in serious jeopardy.

Under pressure from its paymasters – the European Union, the International Monetary Fund and the European Central Bank – Athens agreed to launch the aggressive privatization program a few days ago. Theoretically worth €50-billion ($70-billion), it would see everything from state investments in phone companies to shipping ports sold off.

Mass privatizations have emerged as one of the main conditions for the next instalment of Greece’s €110-billion bailout package, received a year ago, when the country hit the debt wall and was unable to fund itself. If the privatizations proceed, the EU might also agree to some other goodies, such as trimming the interest rates on Greece’s bailout loans, or extending their maturities.

It's a model that still may work for Europe.

But right now, they have to sort out the limits on loss of sovereignty, and wait out this backlash.

It was doomed from the start. There should be NO loss of sovereignty. But once you start down that road, you wont get off unless you have a revolution. And Greece is a perfect example of that sovereignty loss through monetary policies drawn up by a non-democratic entity called the EU, whose officials are appointed and not elected. I am not sure what yo would call the EU, but a democracy is not a fitting word.

[-TSS-]

Nobody cares about Greece. The big panic is about the French and German banks running into trouble after they had given Greece cheap credit. Profits are always private, losses are paid for by the tax-payers.

[overthere]

Have you even paid attention to what is going on in Greece since they got the bail outs from the EU? Joining the EU and using the Euro is the cause of all their ills in the first place.

Greece has been a gong show for decades. They don't collect taxes. The Greek ecomony would be about equal to Somalia without EU membership and help, help they got before and after their 'crisis'.

If they leave the EU, they are instantly bankrupt and in the worst possible way.

It's far reaching and has more impact than the majority of policies out there.

Monetary policy- really mostly a currency used by some but not all of the EU members, is teeny in impact compared to a joint fiscal policy, which they don't have and won't have now for some time.

Greece was in trouble before they entered the EU.

Nobdoy gives a shit about Greece really, they are a blip and a potential minor embarassment for the EU. Their economy is at best 40th in the world.

The countries that the EU worries about are Spain and Italy, much much larger economic players who have some of the same problems as Greece but on a much larger scale.

It was doomed from the start. There should be NO loss of sovereignty. But once you start down that road, you wont get off unless you have a revolution. And Greece is a perfect example of that sovereignty loss through monetary policies drawn up by a non-democratic entity called the EU, whose officials are appointed and not elected. I am not sure what yo would call the EU, but a democracy is not a fitting word.

Every international agreement or pact any country enters into entails a loss of sovereignty. NATO, trade agreements, UN membership- and the EU. Some more than others.

I thinjk you are confusing moneary and fiscal policy.

The Greeks don't toe the line because they want to keep the Euro, or because there is some larger toe the line kind of monetary or fiscal policy forced on them by somebody including the banks and the EU... They do it because they absolutely must have the money and therefore must follow orders from the moneylenders. They'd have to do that from inside or outside the EU, though they almost certainly would not get money if they weren't a member and were backed by some real economies.

It wasn't the EU that dforced Greece to piss away their future it was their own incompetence. The only reason they survived at all was not in spite of EU membership, it was because the EU - reluctantly- continued to back them. Would you have lent them a farthing if Bonn was not behind them?

[GostHacked]

Nobody cares about Greece. The big panic is about the French and German banks running into trouble after they had given Greece cheap credit. Profits are always private, losses are paid for by the tax-payers.

Welcome to corporate fascism.

[GostHacked]

Greece has been a gong show for decades. They don't collect taxes. The Greek ecomony would be about equal to Somalia without EU membership and help, help they got before and after their 'crisis'.

If Greece is no better than Somalia, then that should have instantly disqualified them for entry into the EU.

If they leave the EU, they are instantly bankrupt and in the worst possible way.

They are bankrupt now.

Monetary policy- really mostly a currency used by some but not all of the EU members, is teeny in impact compared to a joint fiscal policy, which they don't have and won't have now for some time.

So why has the UK not given up the pound in favour of the Euro?

Nobdoy gives a shit about Greece really, they are a blip and a potential minor embarassment for the EU. Their economy is at best 40th in the world.

Ranking 40th is not something to brag about. California is just a state and has an economic strength greater than most nations. Including Greece. The blip has been going on for a few years now. And when you see other blips, start to get worried. The global financial situation is going to rapidly change in the next 5 years.

The countries that the EU worries about are Spain and Italy, much much larger economic players who have some of the same problems as Greece but on a much larger scale.

Those are the other blips I was talking about. It's a domino effect.

Every international agreement or pact any country enters into entails a loss of sovereignty. NATO, trade agreements, UN membership- and the EU. Some more than others.

Where do you draw the line and maintain sovereignty, or throw in the towel and have someone else decide your fate?

I thinjk you are confusing moneary and fiscal policy.

Tied together. The ability to print money has an effect on the fiscal policy. Examples are the bailouts in the US.

The Greeks don't toe the line because they want to keep the Euro, or because there is some larger toe the line kind of monetary or fiscal policy forced on them by somebody including the banks and the EU... They do it because they absolutely must have the money and therefore must follow orders from the moneylenders.

And at that point you become someone else's bitch. You can no longer call the shots. And if Greece cannot pay it back, what do you think happens then?

They'd have to do that from inside or outside the EU, though they almost certainly would not get money if they weren't a member and were backed by some real economies.

So what are the benefits for the EU to allow Greece into the union? If they knew this was going to happen

It wasn't the EU that dforced Greece to piss away their future it was their own incompetence. The only reason they survived at all was not in spite of EU membership, it was because the EU - reluctantly- continued to back them. Would you have lent them a farthing if Bonn was not behind them?

I would not be lending Greece anything since they could not pay back their debts before this whole crisis began. They have even less capacity to pay back their debts. This is a ploy to keep some countries in perpetual debt so the moneylenders can rape and pillage. As they have done all through history.

Greece had a firesale to pay back the debt. They are selling private and public companies and infrastructure to foreign entities. It almost seems like the whole thing was on purpose to plunder Greece. The EU government is very dangerous.

Jesus got violent once, and that was to drive the money changers out of the temple. I think we could use a little Jesus action right now.

This kind of thing can eventually hit the whole globe, as it already has. The US financial and housing crisis of some years ago had huge ripple effects across the globe. The US got out of it by simple printing money which devalued their currency. The Federal Reserve doled out billions to failing companies, and yet some of the banks closed, and some merged. And we are still feeling the effects of that.

So why could Greece simply no print more money like the US does?

[overthere]

Where do you draw the line and maintain sovereignty, or throw in the towel and have someone else decide your fate?

That is the central question for the EU now. Until 2008 it was full steam ahead, members were ceding sovereignty slowly but surely, both the Eurozone members and others. The 2008 crisis made it clear that joint monetary policy was not nearly enough to fashion any kind of timely coherent response. The recession could have been mitigated had they been able to act decisively. But few were willing to take marching orders from Brussels(Berlin really), and now the European Parliament elections illustrate the reaction from the street.

Far too much is invested by far too many to back away from the EU entirely, so the next couple of years will be a period of laying low and retrenching. As for the Euro, it would be calamituous for the weak sisters like Greece to drop the Euro. You can print all the drachmas you want, but if your credit worthiness is nil they are worth absolutely nothing. It would be equally calamitous for Germany to revert to the mark. They are an exporting country and it is very much in their interest to keep the Euro at a moderate level- not too high, not too low. If they reverted to the mark, all their exports would be instantly unaffordable as the value of their standalone currency soared.

Greece is not bankrupt when they still have access to credit- and they do.

[monty16]

Such a difficult concept for Americans to understand when they can't understand the common good to begin with. Screw the other states even though they are part of what they call a country. It's a country for war making and little else.

[Rue]

With due respect we are not becoming a member of the EU just trying to establish a free trade agreement with it so whether some of its members want to quit or are essentially bankrupt may have impact between European members it would not have much impact with us not being members. All we are doing is establishing a free trade zone. We are not agreeing to be locked into the Euro. If we were then these concerns over Greece,Spain, etc., might be of course relevant..

In this day and age of global markets, the reality is international trade is inevitable so anything to make tariffs less of a barrier when trading is inevitable and necessary whether we like it or not.

The free trade agreement would presumably make it easier or less problematic to trade in Europe. It means we could compete on an even level as opposed to being shut out of some markets entirely I Europe in return for an influx of Euro products being sold here once our trade barriers go down as well..

People said free trade with the US would destroy us because we would not be able to compete with them. The doomsday scenario has not played out. The disappearance of small stores to huge predatory pricing outlets would have transpired anyways not because of free trade but because of Chinese predatory pricing that has dumped cheap inferior products onto the market that have replaced our consumer choices. We have chosen as consumers to buy cheap Chinese instead of locally produced or manufactured products simply because the Chinese ones are cheaper. We chose that. No one forced anyone into Walmart. No free trade agreement caused that. Our own short sighted behaviour did.

.

I think we have to be realistic that we need to trade with Europe because being completely dependent on a US market as we are now is not good for our economy.

More to the point the US will eventually come up with a free trade agreement with Europe. Its just a matter of time so it will make having one for us and the EU a moot point.

In fact the US, Mexico and Canada are one free trade zone and eventually all three will have free trade agreements with the EU.

We should also be looking for free trade pacts with other countries and I know that is the policy of this current government and I agree with it.

Because of the extremely complex constellation of jurisdictions involved ,the final draft of the EU agreement will not be easy, Some EU members are insisting they continue to be allowed to fix prices in favour of their farmers or meat producers.

Edited June 5, 2014 by Rue

[GostHacked]

Chinese predatory pricing? But hey if a US company decides to manufacture in China because of the cheap cost of doing so, is the company to blame, or China? Or certain regulations here at home?

And if you want to talk about price fixing. LIBOR (rate fixing by financial institutions in the UK) comes to mind. Heads are still rolling because of that.

And we are more dependent on the Chinese than the Americans at this state. The US is more dependent on China than Canada. Most of what I have says 'Made in China' even if it is an American company. My Mackie audio mixer, designed in Washington State, built in China.