Where is the EU going with this?

Here is some news from Europe which you may not be aware of

and a short comment from Sweden

Lets see what our members think

That’s odd - I can’t find the “Build a poll” button - so seemingly we can’t stay anonymous as I would like.

OK I found it so you can vote anonymously if you wish :sunglasses:

However the question is
a) - Can the EU survive this ?
b) - Will it have to change - and if so in what ways ?
c) - Can those 10s of thousands of hugely paid Beaurocrats survive if their jobs are taken away and they have to compete for proper jobs ?

  • The EU will Survive in it’s present form in the long term
  • The EU is doomed to oblivion
  • The EU will survive but more Nations will leave

0 voters

The story is about “coronabonds” - Germany/Austria and Holland not (yet) in agreement - was reported in UK press a week ago.

Long way to go - reasonable chance of agreement…

Oh - didn’t see the option - “The EU will survive and more nations will join” (currently 7 applicants)

It’s about Much more than that mate - It’s about Nations re-erecting their borders within the “EU” - It’s about the total failure of this beaurocratic monster to show any form of leadership or support for the parts which are severely affected - Can you imagine one of teh states in the USA being refused assistance by the Federal Government - like Italy, SPain and Greece have by their so-called “EU Government” ?

It’s about People redsicovering Patriotism, People rejectng Identity Politics, - In short it is about “THE WILL OF THE PEOPLE”

People are asking - “If they’re not there for us in our hour of desperate need - What is the point in having them at all ?”


Yup - there have been for some time -

Interesting that whilst “They” are desperate to stall The Trade negotiations with the UK - because of the beer-bug - “They” are not apparently too busy to put the “New” applicants on hold !

I wonder why ANY of those countries would not be clamouring to remove their borders with such a wealthy bloc and get free access for their people to the highly paid jobs and Welfare States of places like your own country ? - Interesting to see By the Way that your own Ireland is paid on average £500 a month more than England !

And that that difference in itself is More than the Average monthly income of those you are so willing to receive “Into the fold”

No mate “This” is about Way - Way more than “Emergency Bonds” or “Bank- Loans”
And it’s not ONLY within the EU either !

And the good news for UK folk worried about what is happening within the EU (cannot figure why, thought they’d left ) - probable outcome is now re-named ‘Covid Bonds’ - seeking to settle same at upcoming summit.

Not many years ago Ireland’s economy was very similar to the poorer countries, the general consensus is that the EU provided the environment to improve.

Anyways the good thing is that the UK is out and whether it is trade on wto or otherwise will matter little in the post-coronavirus economy - the old saying of strength in numbers is what will count.

Stay safe all, as President Trump pointed out - this is no flu and it is vicious.

When thinking about this topic my mind wandered to the UK’s response economically to this crisis.

Firms can suspend (furlough) their employees - pay them 80% of their wages and be paid back by the Govt…

Reality check - the scheme started Feb28 - now April 2nd and the on-line portal to claim this money is not yet even open - promised around the end of the month or thereabouts.

So what do small businesses do in the meantime - they are the back bone of the UK economy - no sales because they are closed but yet still pay overheads.

Simple - they can access a UK Govt backed loan at their bank says the Finance minister.

Reality check - some businesses have been quoted 30% interest rate, others have been refused based on last years p/l yet others have been told to wait for a decision. Those who have been offered a loan at around 7% must offer personal guarantees.

How can a business owner guarantee anything without as Mervyn King puts it an exit strategy.

thefcn.org reckon 18% of businesses will run out of cash within the next 4 weeks - they will not be around in the post coronavirus economy.

Excellent thinker Douglas Murray - considers the issues facing the “EU Project” and the reassertion of teh Nation Sates of Europe and indeed Worldwide.

Youtube is answer on your question

Just an update to thread title and any Euro trader that might be interested - EU finance ministers didn’t come to an agreement - close but not there yet - only the Dutch now causing the problem.

If there is agreement then Reuters figure that the EU plus the National govts would add up to the largest fiscal support ever - even larger than the US one.

So let’s see.

EU are now about ready to order some ventilators to be distributed among those who joined the scheme in mid march and Chief medical Officer resigns in disgust

Spain & Italy still being left out to dry.

Mauro Ferrari resigns as Chief Medical Officer having lost faith in the EU Project.

Followed by the comment on the Video Conference @peterma refers to above (16 more HOURS of haggling by phone without agreement - This time)

Yep, took even more hours - the ongoing discussions were left the finance ministers - they have finally (on the 3rd attempt) agreed a compromise.

It’s a package worth around 500b - the biggie has been shifted over to the leaders - this one will not be called ‘coronabond’ instead watch out for the term Recovery Fund - size of that one yet to be decided.

Have you heard the European Union is on the verge of destruction?

So asked politico in October 2015 - yes, I answered, quite a few times.

The EU monster is falling apart, and has never looked so grim
Said the Telegraph 2 years later - yeah, I know.

But surely you heard Le Maire say EU is falling apart before our eyes - yeah back a couple of years ago, I heard.

But I mean did you not hear from the Commission this very question:
Is this the worst crisis in European public opinion?

Yep they asked that back in 2013 - their own barometer was low but was lower in 1997-8.

They have a barometer??? - yeah, they have everything you could think of.

EU lacks the institutional structure to hold the line against the virus.

It comes down to money.

Having its own currency enables the United States to print however much money it wants to risk, using that money to fund its own deficit spending. Neither W Bush nor Obama nor Trump would ever be confused with fiscal conservatives, but even now at the very beginning of the process we are seeing spending bloat unprecedented in American history – even at the height of World War II.

By the second week of April, the Americans will have pumped over $2 trillion in financial relief into their system, or roughly 10% of GDP, in addition to monetary stimulus of a volume that stuns the imagination.

The current spending wave has already seen the Federal Reserve hoover up over $1 trillion in securities, while the federal government is putting up to $1200 into the hands of the vast supermajority of American adults, with a $500 kicker for each child. Nor will this be the last such infusion. Expect another one sometime in the summer.

Europe lacks that sort of power and flexibility.

Part of the network of treaties that underpin the common European currency mandates not only fairly strict deficit ceilings (although those ceilings were suspended over the weekend) but far more importantly the Maastricht Treaty on Monetary Union took monetary responsibility out of member governments’ hands. European states can’t print currency. If they want to deficit spend, they have to raise the funds themselves. That takes time. That takes investors willing to put their money into governments’ hands.

Now technically, the European Central Bank can expand the money supply, and it will, but there are two problems.

First, Europe never truly recovered from the 2008 financial crisis. Eurozone interest rates have been negative for years.

What about unconventional measures? Much ballyhoo has been made in the United States about how the Federal Reserves purchased scads of bonds to prop up markets, purchases which peaked at just shy of 25% of GDP at the height of the financial crisis. The ECB’s balance sheet as of January 1, 2020, after a decade of calm and before coronavirus erupted, was twice that in relative size . It isn’t clear the ECB has much ammo to use here, conventional or unconventional.

Second, any ECB action raises the issue of whose bonds will the ECB buy? Will it be the country with the most likely chance of repayment (Germany), or the country facing the worst health crisis today (Italy), or the country likely to see the highest death rate (Spain), or the country in the worst financial position (Greece)?

Every time the Europeans face any sort of question that bridges the monetary and the budgetary, the eurozone finance and prime ministers have to meet to hash out their disagreements in marathon negotiating sessions that take days (if not months).

In times of calm this is a questionable system which often borders on the comical. In times of crisis it is really really really really stupid.

It shows in the outcomes. During the 2008 financial crisis the Americans did more mitigation in three weeks than the Europeans did in nine years. This time around, the Americans did more in 48 hours than they did during the entire financial crisis.

The funding America’s Small Business Administration made available to provide bridge financing for America’s small businesses is a case in point. On day one $50 billion was unleashed, with another $350 billion to be available by April 1.

The EU has no such established facility. Individual European governments are scrambling to raise the necessary cash for their own small businesses. Weaker EU states are unlikely to be able to raise the requisite funds without raiding their already rickety banks. With quarantines in place, entire countries shut down.

Add in Europe’s far less flexible labor market and a workforce which remains wedded to old-style set-location facilities means European firms have more need for bridge financing than American ones, yet even Europe’s capacity to provide that financing is far lower.

Europe today is just getting going with its Rube-Goldberg-like-decisionmaking machine, and this time around coronavirus quarantines prevent the European leadership from even meeting in person to hash out a plan.

Which means “Europe” cannot be part of the mitigation process.

That leads us six places, none of which are good. First, European investors know all this and they aren’t flooding their money into European assets. Instead, it’s a massive flight to US dollar assets. Expect the USD to continue to rise throughout the crisis.

Second, an exception to that rule will only increase the light between the various European governments.

Germany, unlike most of Europe, has steadily whittled away at its debt levels to the point that pre-crisis there was a shortage of high-quality, low-risk government debt on European financial markets.

With Germany loosening the purse strings, investors will purchase German debt. It is the bulk of the rest of Europe that’s likely to be shunned. Deep, visceral splits between how the Germans and the bulk of the Union viewed finance existed before coronavirus.

Debates on the topic are already taking on the stench of desperation. On March 25 the leaders of France, Italy, Spain, Portugal, Ireland, Luxembourg, Slovenia, Belgium and Greece (aka countries who consistently find balancing their checkbooks difficult) called upon the EU to issue a joint debt instrument to deal with coronavirus. Germans are likely to have a different opinion.

Third, when the scale of the capital flight and budgeting shortfalls becomes apparent, when European governments realize the money they need to try to save their systems is leaving, they will take action.

Expect strict European capital controls at all levels. (China of course already has capital controls. Expect them to intensify.)

Fourth, the controls won’t be nearly enough. Even if the Europeans could prevent capital from leaving, raising capital to fund emergency spending the old-fashioned way isn’t as quick or effective as the American method of simply flipping the switch on the printing press.

Firms would fold in the thousands, and the damage will not be limited to the small players. To stave off the subsequent economic and cultural carnage, expect mass nationalizations throughout European economies. Unsurprisingly, the French are already discussing the mechanics of how to manage this. Peugeot, Renault and Airbus have already indicated they will fight the process (although they’d still love help with recapitalization and operating costs).

Fifth, this is likely the end of “European” manufacturing. The European manufacturing system, especially the German manufacturing system, is based on the free movement of goods, people and capital across borders.

That simply isn’t possible in an environment of national quarantine, capital flight, capital controls and nationalizations. Post-crisis things will still be made in Germany and Bulgaria and Sweden and so on, but not all that much is likely to be the result of a multi-national European supply chain.

This is doubly problematic in the short term as most European countries lack even small pieces of the medical supply chain. While the US can retool and China can get back to work, many European states simply don’t have anything within their borders they can use.

The dream of Europe was that open borders would enable Europe to have economies of scale of the Chinese or American type. But these are still separate countries, and the utter inability of the EU to ride to the rescue leaves individual states more or less on their own at the worst possible time.

Germany, for one, is a major exporter of medical equipment, and it has already barred exports of many coronavirus-related materials. Even to its EU partners. Many Europeans already resent Germans’ unwillingness to share their wealth. Imagine how refusal to share medical equipment will go over once the death toll gets seriously scary.

Sixth, this is the end of the European economic and social model, and it risks being the end of “Europe” as an entity.

  • Europe’s demographics make consumption-led growth impossible, even as coronavirus blocks export-led growth.
  • The Americans were backing away from the global security rubric that makes Europe’s export-led growth model possible before coronavirus, and the virus is only accelerating America’s turning-inward.
  • Europe lacks the institutional capacity to manage crisis response.
  • Europe lacks the financial capacity to cope with the crisis, much less apply the sort of financial fire-hose the Americans did almost reflexively.
  • Dealing with the virus’ spread has already forced the Europeans to abandon the free movement of people.
  • Dealing with their financial shortfalls will force them to abandon the free movement of capital.
  • Dealing with mass nationalizations and the loss of export markets will force them to abandon the free movement of goods.

That’s three of the four freedoms upon which modern Europe relies. The fourth freedom – movement of services – was largely something that only the UK cared about, and the Brits are gone.

There is one possible “solution” to these problems: drop the euro.

If the Maastricht Treaty were abrogated (or at least suspended) and national control over monetary policy reintroduced, individual European countries could then engage in unlimited quantitative easing, both to mitigate the current crisis and to help manage the subsequent damage and recovery.

This would (obviously) hold (many) downsides, but if the goal is to have the necessary capital required to address the current crisis, this is the only path I see that still results in salvaging Europe’s current economic and social structure.

In theory, once coronavirus was in the rear-view mirror, Europe could go through the process of re-merging their currencies (perhaps this time without basket cases like Greece).

Yes, I realize this would be monumentally messy, but we’re already in a world where economic and financial norms are in abeyance. Most of contemporary Europe’s “messes” require extensive multi-national negations. This “plan” has the advantage of countries doing things themselves.

Regardless of the path forward (or down) coronavirus is just the beginning of Europe’s problems. Demographics, economics, financials, supply chains, none of it works under coronavirus – and coronavirus is going to be with us until we either get a vaccine, herd immunity or mass serological testing, none of which is particularly likely to happen in 2020.

Even then, it is far from clear that Europe has we know it can reconstitute in the world after coronavirus. And never forget that all Europe is not created equal. Germany is not France is not Italy is not Poland is not Sweden is not Portugal is not Romania.

An end to the concept of “European” being singular represents more than simply the return to the norm of European history, it removes one of the central pillars of the world we know.

Good post Panda

No ammo for ECB right now? - not what the ECB is saying last week - they are talking in the region on 1.5tn

Anyways as always the proof is in the eating - are US companies taking up the loan offers, are they being admined via the lending banks, are they using the usual lending criteria, are US companies confident enough to take up, will they use the funds to cover losses only.

Going forward it’s down to business and consumer confidence - if both remain positive then both Europe and US will rise from this and more quickly than many suggest.

Here in the UK the govt has thrown money at the problem - but they haven’t got it right, the banks remain in control of that money and are using normal commercial judgement in an abnormal environment - result is that many sme’s are going to the wall - they will not be here when the dust settles.

There is much of value in your post @TradingPanda and much which merits discussion - The single most huge financial problem the EU has is the one you highlight here - the motto of “Ever closer union” which they espouse makes the capability of the Sovereign Nations they have emasculated into mere vassals to address their own problems an impossibility without disregarding the “Rules” which ALL have now done in erecting borders within the EU itself.

You are correct in that the adotion of the “Euro” was an incredibly BAD move and the thing is we were well aware of this after 1192 ! when Soros “Broke the Bank of England” - by selling the Pound short. In fact the Germman Bankers were highly blameworthy in this process and their actions were equally - if not More detrimental to Italy.

This Documentary shows exactly how we were pre-warned of the intentions of the German Bankers and how they viewed “Agreements” between the “Partners” !

The fact of the matter is that in the era before the European Economic Community morphed into the “European Union” we Brits were very happy to fly over to Spain, Greece, Portugal, Cyprus and Italy for cheap sunny holidays and IF (When) these countries remove themselves from the constraints of the Monetary Union and release their own currencies on the market, they can again become the playgrounds - not only of we Brits, but of teh Germans, Russians, Dutch etc etc.

The huge problem with this is that the Greman Banks have “generously” lent them massive amounts of “Money” denominated in Euros which at the moment, they are insisting one being paid back in Euros - Just the same as the IMF and USA did to teh Banana Republics.

However the Good point is that with interest rates as low as they currently are and with the Euro being effectively divided into two “currencies” - depending on who the “Debtor” is - There should be a way for Southern Europe to extricate themselves albeit with some pain.

With monetary Union, I can’t see any hope for the fine citizens of teh Countries of Southern Europe at all !

After many torturous hours spread throughout the week, eurozone finance ministers agreed Thursday night on what the bloc’s fiscal response to the coronavirus pandemic ought to be.

The short version: a 540 billion-euro ($590 billion) safety net for member states, companies and workers. The key takeaway is that the wealthy northern states were mostly able to impose their will.

There was no agreement on shared borrowing via so-called coronabonds, and access to credit lines from the bloc’s bailout fund, the European Stability Mechanism, will come with some (admittedly weak) strings attached.

After weeks of saying it was coronabonds or bust, and of renouncing the ESM, the Italian government will struggle to sell this compromise to its citizens, even if there is enough ambiguity for Rome to try.

More important, the agreement calls for the creation of a “Recovery Fund” in the EU budget that would be “temporary, targeted and commensurate with the extraordinary costs” of the crisis to “help spread them over time.”

It will be up to national leaders to decide the fund’s “sources of financing” and whether it involves “innovative financial instruments,” which is code for coronabonds.

There’s little reason to think the second battle of the coronabonds will end differently, but remarks by French, Italian, Austrian and Dutch officials demonstrate that it will nonetheless be fought.

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STop sending me to sites that want to put cookies on my computer - I have to close Firefox to delete them - lol

Europe has survived so many brushes with death in the past decade. Why should this time be different?

The recent weeks have seen a number of developments that strike at the very heart of the European project:

  1. In a clear breach of EU treaties, governments around Europe took back control over their borders.
  2. Against European law, some governments prohibited the export of respirators and surgical masks.
  3. Governments said FU to the EU rule book and took back control over their fiscal policies in order to increase budget deficits.

So now that they’ve taken back control of their borders, laws, and budgets, individual European countries now have just one common thing to unite them: the euro.

The European Union may not be dead, but the EU that we that we have grown used to certainly doesn’t exist any more.

The obvious challenge today is simple: some of Europe’s leaders—most notably Giuseppe Conte of Italy, but also Emmanuel Macron in France and Pedro Sánchez of Spain—are pushing hard for the issuance of pan-European bonds and the creation of a pan-European finance ministry.

To Germany this is not only anathema, but unconstitutional. So, at its most basic level, what we have is a high-stakes poker game between Conte and German chancellor Angela Merkel.

Conte knows Merkel’s red line—no joint-bonds—and also knows that to avoid a crisis Merkel will likely accept anything that stops short of this line

Eurogroup president Mario Centeno on the “recovery fund”: “We need to prepare the ground for a recovery plan, all ministers agreed we need to design something new, there was broad support for the setting up of a recovery fund, with the additional funding via the EU budget”

So exactly how much are we talking about?

As for the size and timing EU finance ministers will “seek guidance” from EU leaders. This will be a very deep and temporary crisis, the depth and size will depend on the duration of the lockdown. “The fund must be available as soon as we start the recovery.”

Merkel’s right hand man has been Weidmann for many years - mentioned him here back in 2015:-

From the BB March 21:

*On Wednesday shortly before midnight, the European Central Bank (ECB) took out its “bazooka” in the form of an asset purchase programme totalling €750 billion. How did the ECB Governing Council, of which you are a member as Bundesbank President, come to this decision? *
During a telephone conference. We discussed it in great depth, various points of view were put forward, plus a variety of possible solutions were proposed. But, in the end, we made a decision. Despite any differences regarding individual points, we all agree that we need to take action and that wide-reaching measures are crucial. Now it is a matter of implementing the programme in an appropriate way.

The EU is cumbersome by default, this trait is often mistook as indecision, management by committee is inherently slow but for the EU there really is no other way.

Edit: Jens Weidmann interview here for those interested:

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@TradingPanda - You’re completely correct when you write

And simply thinking of this as a financial issue - is surely incorrect - In fact I brought this up early in the thread when I wrote ;

And that is my point - What exactly is the point of having them there ?

Why are there 10,000 people within two miles of Brussels who are paid more than the Prime Minister of the UK - by “the EU” ?

What exactly Do they DO ?

Why should the Nation STates of Europe continue bowing to their commands - when clearly in times of stress - they are completely impotent ?

Sack them all and let them get Proper Jobs - laying bricks or cutting hair - whatever they can do !

Lol -mostly you anti EU guys are funny -hmmm… in a not so funny way …

Ah well, must get moved into within 2 miles (3 km) of Brussels :slight_smile:

I feel like it’s a relic from the past.
And every country can independently regulate its economic and political situation.
I think that a little more time will pass and we will forget about what EU is.