EU Proposes Intrusive Control of Euro Zone Budgets
Posted by WARREN MOSLER on November 23rd, 2011
Another prelude to Germany supporting the ECB funding support that will end the solvency issue falling into place:
EU exec proposes intrusive control of euro zone budgets
By Luke Baker and Jan Strupczewski
November 23 (Reuters) — The Commission, the executive arm of the 27-member European Union, presented a draft regulation which would allow it to review draft budgets of euro zone countries by mid-October and ask for revisions if they were not in line with EU budget rules.
The budget drafts of euro zone countries would have to be based on independent forecasts.
The second regulation would create a legal basis for heavy surveillance of policies of a country either already getting emergency financial aid from the euro zone or facing serious financial instability.
“To return to growth, member states need to raise their game when it comes to implementing their commitments to structural reforms, as well as embrace deeper integration for the euro area,” Commission President Jose Manuel Barroso said.
“The goals driving this package — economic growth, financial stability, budgetary discipline — are linked to each other. We need all of them if we are to move beyond the current emergency towards a Europe in which solidarity is balanced by strengthened responsibility,” Barroso said.
Once the tighter oversight and control of euro zone national fiscal policy is in place, the 17 countries now sharing the euro could jointly borrow from the market through “stability bonds.”
The Commission outlined three main options for such joint debt issuance without making any recommendations on which might be best.
“The Commission makes clear that any move towards introducing stability bonds would only be feasible and desirable if there were a simultaneous strengthening of budgetary discipline,” it said in a statement.
November 23rd, 2011 at 12:51 pm
Warren, how quickly do you think they could fashion something…days, weeks, months?
Reply
WARREN MOSLER Reply:
November 23rd, 2011 at 2:41 pm
don’t know, but just saying they will and that it will come with ecb support could put the solvency issue behind us
Reply
Art Reply:
November 25th, 2011 at 1:09 pm
@WARREN MOSLER,
Key question might be how high Bund yields have to go to move German public opinion?
Reply
WARREN MOSLER Reply:
November 25th, 2011 at 9:31 pm
Agreed!
;)
November 23rd, 2011 at 12:58 pm
When will this madness stop?
Reply
WARREN MOSLER Reply:
November 23rd, 2011 at 2:42 pm
mayan calander says next year?
Reply
November 23rd, 2011 at 1:35 pm
Yup Warren, they’re almost there.
Reply
November 23rd, 2011 at 1:41 pm
??
“To return to growth, member states need to raise their game when it comes to implementing [austerity].”
When they form a truly unified EEU, just call it Oxymoronia?
(and be sure to get a very cheap logo & seal)
Reply
JS Reply:
November 23rd, 2011 at 5:18 pm
@roger erickson,
No need of verbal tautologies. EU is an oxymoron in itself. For a taste of it, think AU – American Union. With a single currency that could be named the Columbus – making up the Columbus Zone or CZ…
Reply
November 23rd, 2011 at 2:54 pm
Do the europeans even pretend to have democracies anymore? The euro must be killed before the financial dictatorship becomes any worse.
Reply
November 23rd, 2011 at 2:56 pm
at least we can all rest easy now;
“Moody’s won’t lower US credit rating for supercommittee failure”
http://thehill.com/blogs/on-the-money/budget/195311-moodys-nation-still-aaa-for-now
turns out tryptophan makes raters [& turkeys] too sleepy to rate?
Reply
November 23rd, 2011 at 3:02 pm
dang, this just interrupted my nap
Moody’s warns U.S. not to skimp on deficit cuts
http://www.reuters.com/article/2011/11/23/usa-moodys-committee-idUSN1E7AM0R020111123
somebody please stuff something besides the ballot box – send another turkey to Moody’s
Reply
Unforgiven Reply:
November 23rd, 2011 at 11:08 pm
@roger erickson,
Or perhaps just a specific part of the turkey, rather opposite the head. Let’s call it the “Moody’s Cut”!
Reply
roger erickson Reply:
November 24th, 2011 at 11:22 am
@Unforgiven, great name!
but that already seems to be a ritual incision required by Harvard before acolytes may assume any Federal office
can’t faze the hazers; until some economy dies?
Reply
November 23rd, 2011 at 3:07 pm
“The goals driving this package — economic growth, financial stability, budgetary discipline — are linked to each other. We need all of them if we are to move beyond the current emergency towards a Europe in which solidarity is balanced by strengthened responsibility,”
Translation: expansionary fiscal austerity
Good luck with that, as David Cameron is learning the hard way.
Reply
November 23rd, 2011 at 4:24 pm
It is possible that the ECB going into funding support mode would give a window of opportunity to take money out of EZ before austerity will tank the whole thing.
Reply
November 23rd, 2011 at 5:47 pm
One thing I just found out: the Bundesbank is Germany’s last resort lender.
I guess that makes them hypocrites.
Reply
November 25th, 2011 at 3:30 pm
Interesting interview with Robert Skidelsky (Keynes’ biographer) at electricpolitics.com
Reply