I think you'll find the German court is actually challenging the sovereignty of the German Parliament (for accepting the ECB's actions). I'm quite surprised at this Brexiter enthusiasm for the ruling, which seeks to assert German influence over the ECB even though the ECB has been constructed as to be totally independent of governments.
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Another new Brexit thread
- Thread starter Ric
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Now - I have already said quite a few times recently that I do not want the implosion to happen anytime soon - the longer it is delayed and the more distance we can put/preparations we can make the better we will be able to ride the storm when it does collapse/implode - but that outcome is now and has been for some time, inevitable.Good post Vic. You are right that it was Sinn that first uncovered this around 8 years ago. What assets do you believe are being purchased and would they have value in the case of a crisis I wonder? My take was the German balance was €1trillion which was the sum at risk. Thanks for the Finnish article, it does seem to position the reasons for the balances differently to the paper I posted yesterday though. I watched and read all the stuff yesterday and was left with a feeling of ‘this looks pretty serious, but am I missing something’ it worries me that this has been around for years and very little is being made of it. We shall see.
As I mentioned in an earlier post - people - like Sinn - were drawing attention to this issue around 2011, in fact I said......
"I have recently found some other clips about this issue that are from years before the ones I posted - and it was described as something that could 'become' something to worry about if not addressed. Subsequently, it has not been addressed and therefore...………"
The paper you linked - if I have downloaded the correct one - covers this on page 30.....
Please check out that this is the document you meant - I found it as a download after following the link you posted
https://www.cass.city.ac.uk/__data/...748/target-2-bailout-system-euro-afloatv1.pdf
"......It was the German academic Hans-Werner Sinn101 who first discovered what was going on in early 2011 by examining the central banks’ balance sheets. He found that Target2 was far more than a simple payments system. It had become intimately involved with the emergence of systematic balance of payments surpluses and deficits amongst the Eurozone member states, with shifting the refinancing of commercial bank credit from the central banks of states with weak economies to the central banks of states with strong economies, and with facilitating cross-border private sector capital movements away from states with financially weak banks, such as those in Greece, Ireland, Portugal, Spain and Italy, to the stronger core banks.
The evidence for this was that the increase in Target2 liabilities of a member state equalled the sum of the current account deficit and net capital outflows (as equation (2) above shows). Sinn concluded that Target2 was a de facto a bailout system for the euro.102 This claim was strongly denied by the ECB. Jürgen Stark, a member of its Executive Board, even went as far as saying that some commentators could lose their reputation as serious academics by claiming that Target2 functions as a bailout system.103 The ECB refused to publish the Target2 balances of the individual Eurozone NCBs until September 2015....."
That is part of the issue, quite a few years ago, being...……"....described as something that could 'become' something to worry about if not addressed." but - "....it has not been addressed and therefore...………"
Now - fast forward a few years and the issue has become terminal - and again the paper that you linked sets this out......
For the Euro to have ever have a chance of working - as your linked paper excellently explains - it needed to satisfy the conditions of an 'Optimal Currency Area'. Such conditions are well understood - and whilst the Euro failed initially - the aspiration was to achieve that - but without fiscal and political union from the outset it has not only failed -the position has long since past the point at which it could be addressed and it has become terminal. Indeed, the situation was already accelerating in the wrong direction - and then along has come Covid-19.
The paper that you linked covers this in irrefutable depth - amongst the many compelling statements, you will find this on page 36 from Otmar Issing, the ECB’s first chief economist and one of the founding fathers of monetary union, who admitted that the ECB is becoming dangerously over-extended and the whole euro project is unworkable in its current form (emphasis on the final paragraph):
One day, the house of cards will collapse. The euro has been betrayed by politics, the experiment went wrong from the beginning and has since degenerated into a fiscal free-for-all that once again masks the festering pathologies. Realistically, it will be a case of muddling through, struggling from one crisis to the next. It is difficult to forecast how long this will continue for, but it cannot go on endlessly…The Stability and Growth Pact has more or less failed. The moral hazard is overwhelming. Market discipline is done away with by ECB interventions. There is no fiscal control mechanism from markets or politics. This has all the elements to bring disaster for monetary union. The no-bailout clause is violated every day and the European Court's approval for bailout measures is simple-minded and ideological.…The ECB has crossed the Rubicon and is now in an untenable position, trying to reconcile conflicting roles as banking regulator, Troika enforcer in rescue missions and agent of monetary policy. Its own financial integrity is increasingly in jeopardy.
The venture began to go off the rails immediately, though the structural damage was disguised by the financial boom. There was no speed-up of convergence after 1999 – rather, the opposite. From day one, quite a number of countries started working in the wrong direction. A string of states let rip with wage rises, brushing aside warnings that this would prove fatal in an irrevocable currency union. During the first eight years, unit labour costs in Portugal rose by 30% versus Germany. In the past, the escudo would have devalued by 30%, and things more or less would be back to where they were. Quite a few countries – including Ireland, Italy and Greece – behaved as though they could still devalue their currencies. The elemental problem is that once a high-debt state has lost 30% in competitiveness within a fixed exchange system, it is almost impossible to claw back the ground in the sort of deflationary world we face today. It has become a trap. The whole Eurozone structure has acquired a contractionary bias. The deflation is now self-fulling. The first Greek rescue in 2010 was little more than a bailout for German and French banks. It would have been far better to eject Greece from the euro as a salutary lesson for all. The Greeks should have been offered generous support, but only after it had restored exchange rate viability by returning to the drachma. [The fear was a chain-reaction reaching Spain and Italy, detonating an uncontrollable financial collapse. This nearly happened on two occasions, and remained a risk until Berlin switched tack and agreed to let the ECB shore up the Spanish and Italian debt markets in 2012.
Cloaking it all is obfuscation, political mendacity and endemic denial. Leaders of the heavily indebted states have misled their voters with soothing bromides, falsely suggesting that some form of fiscal union or debt mutualisation is just around the corner. Yet there is no chance of political union or the creation of an EU treasury in the forseeable future, which would in any case require a sweeping change to the German constitution – an impossible proposition in the current political climate. The European project must therefore function as a union of sovereign states, or fail.
I will post some other relevant extracts in another post - rather than make this one too long
Gray
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Funny how people are still willing to risk their lives in small boats to cross the English Channel to the UK, wouldn't they be better advised to stay in the EU?
In summary - all UK citizens should want the UK away from embroilment in what is going to be fucking nightmare
Once understanding even the basics of these threats, they should all want - even demand - full independence and absolutely zero linkage/obligations/controls to the EU.
Only what Otmar Issing describes as: "...obfuscation, political mendacity and endemic denial." has prevented these issues become more widely understood. People around the country, including on here, have been duped and still parrot the obfuscation of the EU and its acolytes at Westminster.
The EU wants desperately the UK tied in to share the burden - but that would only extend the period up to the implosion and then our position would be also terminal.
It may seem dramatic, but for me - I have seen the situation as the UK economy facing an existential crisis - and a clean break Brexit has come along just in time and against all odds to provide a chance of survival.
Once understanding even the basics of these threats, they should all want - even demand - full independence and absolutely zero linkage/obligations/controls to the EU.
Only what Otmar Issing describes as: "...obfuscation, political mendacity and endemic denial." has prevented these issues become more widely understood. People around the country, including on here, have been duped and still parrot the obfuscation of the EU and its acolytes at Westminster.
The EU wants desperately the UK tied in to share the burden - but that would only extend the period up to the implosion and then our position would be also terminal.
It may seem dramatic, but for me - I have seen the situation as the UK economy facing an existential crisis - and a clean break Brexit has come along just in time and against all odds to provide a chance of survival.
Funny how people are still willing to risk their lives in small boats to cross the English Channel to the UK, wouldn't they be better advised to stay in the EU?
Never been to France? You'd risk it too.
Saddleworth2
Well-Known Member
Thats the one. It was quite compelling. One thing I haven't done is research the authors. Will do that later.Now - I have already said quite a few times recently that I do not want the implosion to happen anytime soon - the longer it is delayed and the more distance we can put/preparations we can make the better we will be able to ride the storm when it does collapse/implode - but that outcome is now and has been for some time, inevitable.
As I mentioned in an earlier post - people - like Sinn - were drawing attention to this issue around 2011, in fact I said......
"I have recently found some other clips about this issue that are from years before the ones I posted - and it was described as something that could 'become' something to worry about if not addressed. Subsequently, it has not been addressed and therefore...………"
The paper you linked - if I have downloaded the correct one - covers this on page 30.....
Please check out that this is the document you meant - I found it as a download after following the link you posted
https://www.cass.city.ac.uk/__data/...748/target-2-bailout-system-euro-afloatv1.pdf
"......It was the German academic Hans-Werner Sinn101 who first discovered what was going on in early 2011 by examining the central banks’ balance sheets. He found that Target2 was far more than a simple payments system. It had become intimately involved with the emergence of systematic balance of payments surpluses and deficits amongst the Eurozone member states, with shifting the refinancing of commercial bank credit from the central banks of states with weak economies to the central banks of states with strong economies, and with facilitating cross-border private sector capital movements away from states with financially weak banks, such as those in Greece, Ireland, Portugal, Spain and Italy, to the stronger core banks.
The evidence for this was that the increase in Target2 liabilities of a member state equalled the sum of the current account deficit and net capital outflows (as equation (2) above shows). Sinn concluded that Target2 was a de facto a bailout system for the euro.102 This claim was strongly denied by the ECB. Jürgen Stark, a member of its Executive Board, even went as far as saying that some commentators could lose their reputation as serious academics by claiming that Target2 functions as a bailout system.103 The ECB refused to publish the Target2 balances of the individual Eurozone NCBs until September 2015....."
That is part of the issue, quite a few years ago, being...……"....described as something that could 'become' something to worry about if not addressed." but - "....it has not been addressed and therefore...………"
Now - fast forward a few years and the issue has become terminal - and again the paper that you linked sets this out......
For the Euro to have ever have a chance of working - as your linked paper excellently explains - it needed to satisfy the conditions of an 'Optimal Currency Area'. Such conditions are well understood - and whilst the Euro failed initially - the aspiration was to achieve that - but without fiscal and political union from the outset it has not only failed -the position has long since past the point at which it could be addressed and it has become terminal. Indeed, the situation was already accelerating in the wrong direction - and then along has come Covid-19.
The paper that you linked covers this in irrefutable depth - amongst the many compelling statements, you will find this on page 36 from Otmar Issing, the ECB’s first chief economist and one of the founding fathers of monetary union, who admitted that the ECB is becoming dangerously over-extended and the whole euro project is unworkable in its current form (emphasis on the final paragraph):
One day, the house of cards will collapse. The euro has been betrayed by politics, the experiment went wrong from the beginning and has since degenerated into a fiscal free-for-all that once again masks the festering pathologies. Realistically, it will be a case of muddling through, struggling from one crisis to the next. It is difficult to forecast how long this will continue for, but it cannot go on endlessly…The Stability and Growth Pact has more or less failed. The moral hazard is overwhelming. Market discipline is done away with by ECB interventions. There is no fiscal control mechanism from markets or politics. This has all the elements to bring disaster for monetary union. The no-bailout clause is violated every day and the European Court's approval for bailout measures is simple-minded and ideological.…The ECB has crossed the Rubicon and is now in an untenable position, trying to reconcile conflicting roles as banking regulator, Troika enforcer in rescue missions and agent of monetary policy. Its own financial integrity is increasingly in jeopardy.
The venture began to go off the rails immediately, though the structural damage was disguised by the financial boom. There was no speed-up of convergence after 1999 – rather, the opposite. From day one, quite a number of countries started working in the wrong direction. A string of states let rip with wage rises, brushing aside warnings that this would prove fatal in an irrevocable currency union. During the first eight years, unit labour costs in Portugal rose by 30% versus Germany. In the past, the escudo would have devalued by 30%, and things more or less would be back to where they were. Quite a few countries – including Ireland, Italy and Greece – behaved as though they could still devalue their currencies. The elemental problem is that once a high-debt state has lost 30% in competitiveness within a fixed exchange system, it is almost impossible to claw back the ground in the sort of deflationary world we face today. It has become a trap. The whole Eurozone structure has acquired a contractionary bias. The deflation is now self-fulling. The first Greek rescue in 2010 was little more than a bailout for German and French banks. It would have been far better to eject Greece from the euro as a salutary lesson for all. The Greeks should have been offered generous support, but only after it had restored exchange rate viability by returning to the drachma. [The fear was a chain-reaction reaching Spain and Italy, detonating an uncontrollable financial collapse. This nearly happened on two occasions, and remained a risk until Berlin switched tack and agreed to let the ECB shore up the Spanish and Italian debt markets in 2012.
Cloaking it all is obfuscation, political mendacity and endemic denial. Leaders of the heavily indebted states have misled their voters with soothing bromides, falsely suggesting that some form of fiscal union or debt mutualisation is just around the corner. Yet there is no chance of political union or the creation of an EU treasury in the forseeable future, which would in any case require a sweeping change to the German constitution – an impossible proposition in the current political climate. The European project must therefore function as a union of sovereign states, or fail.
I will post some other relevant extracts in another post - rather than make this one too long
Saddleworth2
Well-Known Member
I'm surprised there isn't an armada heading in the other direction.Never been to France? You'd risk it too.
Saddleworth2
Well-Known Member
In summary - all UK citizens should want the UK away from embroilment in what is going to be fucking nightmare
Once understanding even the basics of these threats, they should all want - even demand - full independence and absolutely zero linkage/obligations/controls to the EU.
Only what Otmar Issing describes as: "...obfuscation, political mendacity and endemic denial." has prevented these issues become more widely understood. People around the country, including on here, have been duped and still parrot the obfuscation of the EU and its acolytes at Westminster.
The EU wants desperately the UK tied in to share the burden - but that would only extend the period up to the implosion and then our position would be also terminal.
It may seem dramatic, but for me - I have seen the situation as the UK economy facing an existential crisis - and a clean break Brexit has come along just in time and against all odds to provide a chance of survival.
Your post is dramatic and given the problem is one that was recognised years ago there does seem to be a distinct lack of panic from the countries who will be most impacted. I will do more research and try and find a counter argument that places this in a less doom laden context. I may be some time....
As I said, I'm not expert, but the assets are financial instruments. It's quantitative easing. The ECB (or national central banks) buy bonds from (among others) commercial banks, so banks have more money to lend to businesses to invest (at lower interest rates) while other investors who may have bought bonds may instead look to invest directly in business. Or they buy government bonds (but not direct from governments). The bonds are repayable over long periods (up to 30 years) and the income from maturing bonds can be reinvested in buying new bonds. The APP scheme has bought about €3trillion of assets.Good post Vic. You are right that it was Sinn that first uncovered this around 8 years ago. What assets do you believe are being purchased and would they have value in the case of a crisis I wonder? My take was the German balance was €1trillion which was the sum at risk. Thanks for the Finnish article, it does seem to position the reasons for the balances differently to the paper I posted yesterday though. I watched and read all the stuff yesterday and was left with a feeling of ‘this looks pretty serious, but am I missing something’ it worries me that this has been around for years and very little is being made of it. We shall see.
Independently the Bank of England is currently expanding its similar purchases to £645 billion.
I can't find the ECB's "simple" explanation (there's plenty of the complicated stuff), There's this -
and there's always the Q&A from the Estonian central bank https://www.eestipank.ee/en/monetar...-purchase-programme-app-european-central-bank
Saddleworth2
Well-Known Member
Hold the front page..the paper I linked author is a leading Brexit supporter, Professor David Blake. Whilst that doesn't necessarily devalue what the paper outlines, it should be viewed through that lense.In summary - all UK citizens should want the UK away from embroilment in what is going to be fucking nightmare
Once understanding even the basics of these threats, they should all want - even demand - full independence and absolutely zero linkage/obligations/controls to the EU.
Only what Otmar Issing describes as: "...obfuscation, political mendacity and endemic denial." has prevented these issues become more widely understood. People around the country, including on here, have been duped and still parrot the obfuscation of the EU and its acolytes at Westminster.
The EU wants desperately the UK tied in to share the burden - but that would only extend the period up to the implosion and then our position would be also terminal.
It may seem dramatic, but for me - I have seen the situation as the UK economy facing an existential crisis - and a clean break Brexit has come along just in time and against all odds to provide a chance of survival.
Whilst you consider a counter I would draw your attention to my repeated comments on my not wishing for the collapse/implosion at all - but as it is clearly inevitable - for it to be delayed as long as possible.Your post is dramatic and given the problem is one that was recognised years ago there does seem to be a distinct lack of panic from the countries who will be most impacted. I will do more research and try and find a counter argument that places this in a less doom laden context. I may be some time....
So my mind was always on the medium - long-term
In a previous business life a oft-used comment was....
"It is generally not when you fall ill that you have taken the poison - this will have happened some time before."
The EU took the poison that will bring about the collapse when it established the Euro and enshrined in law that new entrants must also adopt it.
That did not need to be fatal - but the antidote was achieving political and fiscal integration and ensuring the ECB acted as a banking authority - free of political controls.
Lots of states never even attempted the necessary cultural changes and controls such as - just one example - the limit of 60% for government debt to GDP ratio enshrined in the Maastricht treaty. Page 16 and 17 is a real eye-opener and the graph scary. Of course the rules were fudged to allow new entrants into the EU without compliance - reflecting the political ambitions of the EU being in control
Without the required discipline and controls the situation has now become fatally toxic.
I have rarely had positive words to say about Gordon Brown (his obsession with PFI being the main cause) - but he will be remembered in the future as the individual that kept us free of the impending calamity.
Kazzydeyna
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I haven't been on this thread for ages, I didn't see the point. The arguments have been had, for years, the votes have taken place (2x general elections, 1x referendum, and euro elections) and the results tallied. A consistent, never-wavering of the working class to leave the EU forthwith.
I'm just wondering if anybody has been using the covid crisis as an excuse to call for an extension of an extension etc to our leaving date or has everyone pretty much settled for the fact that the British people desire to leave and the british govt have decided to grant them their wish.
I'm just wondering if anybody has been using the covid crisis as an excuse to call for an extension of an extension etc to our leaving date or has everyone pretty much settled for the fact that the British people desire to leave and the british govt have decided to grant them their wish.
Saddleworth2
Well-Known Member
From Reuters recently:
The recent drive to unity was a response to chaos, but it has many strong foundations. For two millennia there has been a European history of ideas, art, science and religion. This common culture gave the world imperialism and industrialisation, among many other things.
A full European banking union and some risk-sharing on sovereign debt would take history further along this already long journey. These changes, along with more flexibility on fiscal deficit limits in bad times, would probably be enough to keep the next euro crisis from being existential.
Still, while the euro did not spark the rise of nationalism, that rise could certainly doom it. The future of the single currency depends on which historical force proves stronger – the drive for nationalist independence or the momentum towards European unity. The latter, which brings peace and prosperity, is down but far from out. This drama could still have a happy ending.
The recent drive to unity was a response to chaos, but it has many strong foundations. For two millennia there has been a European history of ideas, art, science and religion. This common culture gave the world imperialism and industrialisation, among many other things.
A full European banking union and some risk-sharing on sovereign debt would take history further along this already long journey. These changes, along with more flexibility on fiscal deficit limits in bad times, would probably be enough to keep the next euro crisis from being existential.
Still, while the euro did not spark the rise of nationalism, that rise could certainly doom it. The future of the single currency depends on which historical force proves stronger – the drive for nationalist independence or the momentum towards European unity. The latter, which brings peace and prosperity, is down but far from out. This drama could still have a happy ending.
Saddleworth2
Well-Known Member
All of that precludes European unity. Political and fiscal. Who can say that faced with disaster, the main European nations won't be pushed into this either happily or reluctantly. It is a potential outcome that would form a solution. Germany has already had a successful pilot study after all. ;-)Whilst you consider a counter I would draw your attention to my repeated comments on my not wishing for the collapse/implosion at all - but as it is clearly inevitable - for it to be delayed as long as possible.
So my mind was always on the medium - long-term
In a previous business life a oft-used comment was....
"It is generally not when you fall ill that you have taken the poison - this will have happened some time before."
The EU took the poison that will bring about the collapse when it established the Euro and enshrined in law that new entrants must also adopt it.
That did not need to be fatal - but the antidote was achieving political and fiscal integration and ensuring the ECB acted as a banking authority - free of political controls.
Lots of states never even attempted the necessary cultural changes and controls such as - just one example - the limit of 60% for government debt to GDP ratio enshrined in the Maastricht treaty. Page 16 and 17 is a real eye-opener and the graph scary. Of course the rules were fudged to allow new entrants into the EU without compliance - reflecting the political ambitions of the EU being in control
Without the required discipline and controls the situation has now become fatally toxic.
I have rarely had positive words to say about Gordon Brown (his obsession with PFI being the main cause) - but he will be remembered in the future as the individual that kept us free of the impending calamity.
The short answer is yes - lots of people are clamouring for an extension and are using the Covid crisis as an excuse.........I haven't been on this thread for ages, I didn't see the point. The arguments have been had, for years, the votes have taken place (2x general elections, 1x referendum, and euro elections) and the results tallied. A consistent, never-wavering of the working class to leave the EU forthwith.
I'm just wondering if anybody has been using the covid crisis as an excuse to call for an extension of an extension etc to our leaving date or has everyone pretty much settled for the fact that the British people desire to leave and the british govt have decided to grant them their wish.
- The EU ruling class
- The EU negotiators
- The Irish
- The EU's sycophants at Westminster
- etc. etc.
Those staying resolute are:
- Brexit supporters on here and more widely and, thankfully
- The UK government
Just staining a fence at the moment - should have picked a less blowy day!!From Reuters recently:
The recent drive to unity was a response to chaos, but it has many strong foundations. For two millennia there has been a European history of ideas, art, science and religion. This common culture gave the world imperialism and industrialisation, among many other things.
A full European banking union and some risk-sharing on sovereign debt would take history further along this already long journey. These changes, along with more flexibility on fiscal deficit limits in bad times, would probably be enough to keep the next euro crisis from being existential.
Still, while the euro did not spark the rise of nationalism, that rise could certainly doom it. The future of the single currency depends on which historical force proves stronger – the drive for nationalist independence or the momentum towards European unity. The latter, which brings peace and prosperity, is down but far from out. This drama could still have a happy ending.
I can think of a couple of obvious issues with that commentary - but can you share the link please and I will look at it later
They may have all sorts of reasons for wanting to be here (e.g. family already) but they risk their lives because our asylum system is so awful.Funny how people are still willing to risk their lives in small boats to cross the English Channel to the UK, wouldn't they be better advised to stay in the EU?
Gray
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The rest of Europe's system must be even worse then?They may have all sorts of reasons for wanting to be here (e.g. family already) but they risk their lives because our asylum system is so awful.
Good riposte!!The rest of Europe's system must be even worse then?
No. That's why Germany has accepted a million refugees and we've taken a few thousand. Please don't pursue this nonsense. I'm sure you are happy we're not closer to Africa and Syria.The rest of Europe's system must be even worse then?
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