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German Action On Euro Crisis Could Trigger Eu Referendum In Britain

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http://www.guardian.co.uk/business/2010/may/20/germany-euro-crisis-banks-angela-merkel-greece

Germany today stepped up its rhetoric against financial markets, throwing its weight behind a global tax on bank transactions and proposing a radical shift in the rules governing the single currency by insisting struggling eurozone countries be allowed to restructure their debt.

Following Greece's debt emergency and with the euro in the throes of its worst crisis of confidence, Berlin also tabled a nine-point plan rewriting the euro regime to include legally enshrined budget deficit ceilings in all 16 member countries.

The German demands, in a finance ministry paper obtained by the Guardian, could require the EU's Lisbon Treaty to be renegotiated, presenting David Cameron with a dilemma over whether this would trigger an EU referendum in Britain.

The crisis in the eurozone and Germany's shock decision to impose a ban on naked shorting – a strategy designed to profit from falling markets – drove London shares down to 5,000 for the first time since November and to their biggest two-day fall since March 2008. The FTSE 100 ended yesterday 1.6% lower at 5,073.

Wall Street was also rattled after a rise in jobless claims added to the euro tension. with the blue-chip Dow Jones industrial average down almost 3% by the middle of the session. The broader S&P 500 index reached official "correction" territory as it sank 10% below its recent high point, set in late April.

The euro was near a four-year low against the dollar on concern others would follow Germany's draconian action, which the EDHEC-Risk Institute – part of a business school in France – described as "counterproductive, inconsistent and liable to hinder European growth".

Cameron's coalition government added to the pressure on the banking sector by supporting Germany's call for a levy and promising to rewrite the "fundamentally flawed" system of regulation. The prime minister also pledged to investigate the "complex issue of separating retail and investment banking" and give regulators greater powers.

He is meeting Chancellor Angela Merkel of Germany tomorrow while Wolfgang Schäuble, her finance minister, is to present his proposals to overhaul the eurozone at a meeting of EU finance ministers in Brussels, the second this week.

Could be a very lazy piece of journalism but it would be interesting to see how the govt would once more deny the people of the UK the right to vote on this.

Amazing how democracy actually works, if your not going to vote how we want we won't ask you.

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IMO, the EU need scaling back, not scaling up. Having a free trade block is one thing, but the EU has become something far more encompassing.

The talk of kicking out struggling countries would likely finish said country off. I don't see how they can even argue for this, as the run on their banks would strip them of capital, before leaving them out to dry. If this is even being considered, I can't see why any country would want to join the Eurozone now.

IMO, the only way this can end well (or at least as well as it can) would be for the stronger countries to leave the Eurozone. They would be less likely to experience capital flight if it was on their terms, while the Euro could then be left to devalue as required to support the struggling countries - in fact, the currency would likely devalue as a result of this automatically. Sure, it would mean the end of the flawed Euro project as we know it, but it wouldn't suffocate the countries struggling to stay solvent.

Edited by Traktion

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IMO, the EU need scaling back, not scaling up. Having a free trade block is one thing, but the EU has become something far more encompassing.

The talk of kicking out struggling countries would likely finish said country off. I don't see how they can even argue for this, as the run on their banks would strip them of capital, before leaving them out to dry. If this is even being considered, I can't see why any country would want to join the Eurozone now.

IMO, the only way this can end well (or at least as well as it can) would be for the stronger countries to leave the Eurozone. They would be less likely to experience capital flight if it was on their terms, while the Euro could then be left to devalue as required to support the struggling countries - in fact, the currency would likely devalue as a result of this automatically. Sure, it would mean the end of the flawed Euro project as we know it, but it wouldn't suffocate the countries struggling to stay solvent.

Interesting lateral thinking, Traktion.

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Germany today stepped up its rhetoric against financial markets, throwing its weight behind a global tax on bank transactions and proposing a radical shift in the rules governing the single currency by insisting struggling eurozone countries be allowed to restructure their debt.

Following Greece's debt emergency and with the euro in the throes of its worst crisis of confidence, Berlin also tabled a nine-point plan rewriting the euro regime to include legally enshrined budget deficit ceilings in all 16 member countries.

This sounds like they are at the stage of doing completely away with the sovereign rights of individual nations in europe. They already had rules on deficits but they allowed individual nations to break the rules with impunity probably aware that there would be a crunch when they would have to introduce enforcement which is then no different to Europe as sovereign nation over all members rights.

They were likely delighted when the likes of Greece wanted and achieved membership as they could foresee those weaker nations being the weak links enabling them to initiate these latest plans with a level of force being put in place to enforce a legal requirement.

Why didn't they implement the sanctions they already had years ago when the individual nations so blatantly flouted the stated EU limits. Oh the consequences were unexpected yeah right :rolleyes:

So Germany is in favour of a global tax on bank transactions.

Does this mean.

1. Each individual nation in europe (UK, Germany, France etc etc) arranges its own version of the tax and each nation in europe spends it how it wants.

2. Germany arranges the tax on transactions for all the EUs constituent nations and then uses it to pay off its bail-out money for Greece and the rest of the PIIGS.

3. Each individual nation in the world arranges its own version of the tax and each nation in the world spends it how it wants.

4. The EU arranges the tax on transactions for all of its constiuent nations and then spends it how the EU wants e.g. bail-outs of Greece and the rest of the PIIGS etc.

5. The EU plus the rest of the world arranges the tax and so on.

Of course a lot of this new tax will likely find its way into the pockets of the politicians and the bankers and so on and also be used for various pet schemes solely of interest to politicians and bankers and so on. That's also an important issue.

Handy that it's another of those issues to emerge just after the UK election.

It could also be the thin end of the wedge to transfer the core of the banking system more to the EU and in due course perhaps that might be a good thing for the majority in the UK.

Edited by billybong

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IMO, any bank tax just won't work. The government will raid the fund for any other pet projects they wish to fund and when the next banking crisis comes, it will escalate in the exact same way. Worse still, it tells the bankers that they are entitled to bailouts, because they have paid the tax towards them. Queue more risk taking and moral hazard.

The only solution is to stop the banks leveraging up on risky activities. Limited Purpose Banking (see sig) seems to be the only realistic proposal for stopping a banking debt crisis becoming a sovereign debt crisis; it stops the banks never having insufficient capital as they won't have leant it out in the first place.

What I don't understand, is why the government and financial gurus are taking so long to come around to this. It seems obvious to most people here that financial/banking reform is a necessity, yet the politicians seem blind sighted. Is it the tax take the banks have provided over the last decade or so which they don't want to end (even though over the next decade, the money is likely to flow in the opposite direction)? Is it because they want to line up their banking jobs after they leave parliament? Is it because they fear it will cause short term problems in the economy?

IMO, it is a chance to change the system for the better. There are numerous benefits from switching to a LPB model, including voluntary negative interest rates (ie. poor investments, delivering negative returns), stable prices (as narrow money would be the only factor and would be easy to moderate via taxes), no/low inflation (depending on policy, it would be easy to reach any target), no systemic risk (only individual risk), no excessive leverage (allowing deflation to occur without breaking everything)... the list goes on.

If the government doesn't start thinking about reforms, but are content with sticky plasters, the banks will hold us to ransom again and again (by accident and/or design). If we are to have a Great Depression II, or even stagnant/negative growth over the coming decades, the banks will need hand outs time and time again. With a sovereign debt crisis already unfolding, how do they possibly expect to fund this? Maybe the next series of bailouts will be the incentive they need... I really hope so.

Edited by Traktion

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  • 277 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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