If we want the EU to get stronger, now is the time to integrate our finance with Eurobonds, and a european stockmarket listing EUs top companies. Considering the risk of the dollar as safe haven status, we could not dream for a better moment to become the new world’s safe haven for bonds and assets.
Not going to happen. The few countries that have maintained a stellar credit rating through (at times painful) fiscal responsibility/austerity are not going to give up that rating and the cheap credit that comes with it in order to subsidise countries that have been spending more liberally.
Germany in particular just passed a €800 bn. special budget to catch up on missed investments of the last decades – this only works because it has a perfect rating and thus pays little interest on said credit.
We’re not going to have financially responsible countries (Benelux and the Nordics) pay for the countries that have structural deficits line France and the PIGS.
Such a nice feeling to get up in the morning knowing your tax Euros subsidair a jobless bloke in france.
The EU itself already issues said bonds.
I’m not remotely familiar with macroeconomics, so I’m curious: what “financial tools” do the ECB and other EU monetary entities possess to counter events such as the 2008 financial crisis? I would like to learn more about how a single currency shared by so many countries has been so resistant to financial shocks.
Apologies in advance if I am using the wrong terminology here. I really don’t know very much!
Good luck explaining the Germans why they should subsidise Italian or French insane and unsustainable pension spendings
I’m not sure why we are tying both of these together. You don’t need a Eurobonds to create a European stockmarket.
Never then.
Finally, yes please. This has been badly needed since forever.
Furthermore, the credit score of EU as of a whole would be even better than any of its individual countries, since the EU as a whole has a great economic diversification, as well as less likelyhood of being completely destroyed by, for example, a war.
Its the free lunch of diversification at work
The fundamental problem of Europe is, in a way, similar to US. We both need a new constitution.
A common constitution, giving common political will and power, based on common values is the foundation of a democratic federation.
All talk of a European security force or common debt is hallucination without it.
Before getting to a Eurobond, we should ask ourselves if a common fiscal policy is actually achievable. I don’t think my country will ever agree to adopt a normal fiscal policy. We’re taking too much advantage of being a subsidized, underperforming country.
Which political party here would ever dare to tell people that median pensions per capita shouldn’t be higher than the median salary, or that pensions shouldn’t keep growing while real wages are declining?
No one would vote for them if they said that.
And a Eurobond would just be used to sustain this nonsense, providing more targeted gifts to specific social classes in exchange for votes.
I don’t see this happening.
The financial responsible countries would lose the benefit of low interest rates which will have a significant effect on their own economy. At least initially, they will also have have to equalize debt within EU which would would mean that they will have to pay for debt other countries accumulated for – in some cases – decades.
The more liberal financial countries would have to make concesions on their spending habbits. Most likely countries will lose their financial sovernigty in favor of unified rules for everyone. This has been proposed in the past in order to reduce their debt to GDP ratio but they were met with high unpopularity.
The networth of an average Italian is almost twice than the networth of an average German (median value comparison). I don’t think merging finances is possible without imposing similar lifestyle and financial rules for everyone. It’s like merging financces with a friend who buys cars every 3 years wheres you take the bicyle to work.
Why does it feel like we are at the beginning of either fallout and cyberpunks timeline
I’m the first supporter of more brevity in the EU, but this is one of the things in which I think we need to impose it more gradually and not create eurobonds quickly.
If you do this immediately, you get fiscally responsible countries angry about having their works made useless and you get more indebted countries angry about the perceived pretentiousness of those countries.
Now, if you create eu laws, and slowly try to unite the member’s economic policies into a common model, you mitigate that feeling.
No thanks, I’m tired of subsidizing Southern Europe as it is.
EU-Bonds should be emitted by the EU as a whole, under permission of the EU-Parliament and paid back using EU-finances (either from tariffs or future EU taxations).
What I wouldn’t like is Greece emitting Bonds for which Finland has to guarantee, without Finnish parliament having any say.
What makes OP think there isn’t a current European stock market.
The European stockmarket is basically already there, you’ve got France, Italy, Portugal, the Netherlands, Norway and Belgium are already sharing a common trading platform accounting for the bulk of EU markets.
Clearing house are interoperable for cash instruments, and kind of the same for CSD.
The sooner Europe stands on it’s own two feet and quits relying on the US for ANYTHING the better off it will be. Prepare to face to NEW Axis of Evil yourself. NATO can survive without America, and so can the EU. Be mindful though, Putin and Erdogan are NOT your friends.
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If we want the EU to get stronger, now is the time to integrate our finance with Eurobonds, and a european stockmarket listing EUs top companies. Considering the risk of the dollar as safe haven status, we could not dream for a better moment to become the new world’s safe haven for bonds and assets.
Not going to happen. The few countries that have maintained a stellar credit rating through (at times painful) fiscal responsibility/austerity are not going to give up that rating and the cheap credit that comes with it in order to subsidise countries that have been spending more liberally.
Germany in particular just passed a €800 bn. special budget to catch up on missed investments of the last decades – this only works because it has a perfect rating and thus pays little interest on said credit.
We’re not going to have financially responsible countries (Benelux and the Nordics) pay for the countries that have structural deficits line France and the PIGS.
Such a nice feeling to get up in the morning knowing your tax Euros subsidair a jobless bloke in france.
The EU itself already issues said bonds.
I’m not remotely familiar with macroeconomics, so I’m curious: what “financial tools” do the ECB and other EU monetary entities possess to counter events such as the 2008 financial crisis? I would like to learn more about how a single currency shared by so many countries has been so resistant to financial shocks.
Apologies in advance if I am using the wrong terminology here. I really don’t know very much!
Good luck explaining the Germans why they should subsidise Italian or French insane and unsustainable pension spendings
I’m not sure why we are tying both of these together. You don’t need a Eurobonds to create a European stockmarket.
Never then.
Finally, yes please. This has been badly needed since forever.
Furthermore, the credit score of EU as of a whole would be even better than any of its individual countries, since the EU as a whole has a great economic diversification, as well as less likelyhood of being completely destroyed by, for example, a war.
Its the free lunch of diversification at work
The fundamental problem of Europe is, in a way, similar to US. We both need a new constitution.
A common constitution, giving common political will and power, based on common values is the foundation of a democratic federation.
All talk of a European security force or common debt is hallucination without it.
Before getting to a Eurobond, we should ask ourselves if a common fiscal policy is actually achievable. I don’t think my country will ever agree to adopt a normal fiscal policy. We’re taking too much advantage of being a subsidized, underperforming country.
Which political party here would ever dare to tell people that median pensions per capita shouldn’t be higher than the median salary, or that pensions shouldn’t keep growing while real wages are declining?
No one would vote for them if they said that.
And a Eurobond would just be used to sustain this nonsense, providing more targeted gifts to specific social classes in exchange for votes.
I don’t see this happening.
The financial responsible countries would lose the benefit of low interest rates which will have a significant effect on their own economy. At least initially, they will also have have to equalize debt within EU which would would mean that they will have to pay for debt other countries accumulated for – in some cases – decades.
The more liberal financial countries would have to make concesions on their spending habbits. Most likely countries will lose their financial sovernigty in favor of unified rules for everyone. This has been proposed in the past in order to reduce their debt to GDP ratio but they were met with high unpopularity.
The networth of an average Italian is almost twice than the networth of an average German (median value comparison). I don’t think merging finances is possible without imposing similar lifestyle and financial rules for everyone. It’s like merging financces with a friend who buys cars every 3 years wheres you take the bicyle to work.
Edit: Source for median wealth values in EU [https://en.wikipedia.org/wiki/Wealth_distribution_in_Europe](https://en.wikipedia.org/wiki/Wealth_distribution_in_Europe)
Why does it feel like we are at the beginning of either fallout and cyberpunks timeline
I’m the first supporter of more brevity in the EU, but this is one of the things in which I think we need to impose it more gradually and not create eurobonds quickly.
If you do this immediately, you get fiscally responsible countries angry about having their works made useless and you get more indebted countries angry about the perceived pretentiousness of those countries.
Now, if you create eu laws, and slowly try to unite the member’s economic policies into a common model, you mitigate that feeling.
No thanks, I’m tired of subsidizing Southern Europe as it is.
EU-Bonds should be emitted by the EU as a whole, under permission of the EU-Parliament and paid back using EU-finances (either from tariffs or future EU taxations).
What I wouldn’t like is Greece emitting Bonds for which Finland has to guarantee, without Finnish parliament having any say.
What makes OP think there isn’t a current European stock market.
The European stockmarket is basically already there, you’ve got France, Italy, Portugal, the Netherlands, Norway and Belgium are already sharing a common trading platform accounting for the bulk of EU markets.
Clearing house are interoperable for cash instruments, and kind of the same for CSD.
The sooner Europe stands on it’s own two feet and quits relying on the US for ANYTHING the better off it will be. Prepare to face to NEW Axis of Evil yourself. NATO can survive without America, and so can the EU. Be mindful though, Putin and Erdogan are NOT your friends.
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