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Merkel is on record as saying a new EU Treaty is required to address the issues raised by this crisis.

As JakeS has said elsewhere in this thread, that's how you prevent the crisis from repeating itself, not how you resolve the current crisis.

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Mon Sep 12th, 2011 at 11:22:44 AM EST
[ Parent ]
Agreed, but unless you regard recurring and unpredictable crises and defaults as a solution, the only way for European elites to even come to grips with the notion that the Euro has systemic problems which require systemic solutions is to start the debate on what is required to prevent them.

If I get the time, I might write a diary on what any new Treaty should look like including elements such as:

  1. A euro wide legal framework for bank restructuring in the event of failure to abide by Basel III capitalisation requirements - specifically ruling out taxpayers as guarantors of last resort - and providing for a harmonised hierarchy of risk sharing amongst investors..

  2. Fiscal harmonisation between member states

  3. Policies and institutions specifically designed to combat structural/regional - e.g. trade - imbalances

  4. Eurobonds

  5. Bank regulation

  6. full employment and productivity/income equalisation

  7. Asset and consumer price inflation control

  8. Tobin tax to disincentivise speculators and other incentives to volatility/gaming the system

  9. Dismemberment of TBTF banks

  10. Social harmonisation (health/education/social welfare) between member states

And no, I don't expect the above to be passed or even proposed any time soon... but that is no reason why we shouldn't start the debate...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Sep 12th, 2011 at 01:04:49 PM EST
[ Parent ]
Even the Basel III gearing limits are grossly inadequate, particularly vis-a-vis currency risk.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Sep 12th, 2011 at 01:12:30 PM EST
[ Parent ]


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