The Council of the European Union has issued COUNCIL REGULATION (EU) No 407/2010 of 11 May 2010 establishing a European financial stabilisation mechanism; published OJEU 12.5.2010 L 118/1.
Once upon a time, I explored the stages leading towards the Lisbon Treaty, writing a number of blog posts about what became Article 122 of the Treaty on the Functioning of the European Union (TFEU).
Now that the EU member states have felt the need to shore up the common currency, it is interesting to see in which terms the provision on financial assistance was discussed at the time. In this blog post we look at the legislative history of Article 122 TFEU.
We started our topical discussion about Article 122 of the Treaty on the Functioning of the European Union (TFEU) by recalling the legislative history in the blog post Background: European financial stabilisation mechanism (13 May 2010).
[Originally published in Hurriyet Daily News] I had coffee the other day with a colleague who told me why he had recently declined a job offer from a French media company. In fact, he was initially quite interested. The salary looked pretty decent, and the city where he would have to live, Lyon, seemed appealing. He even found a few nice possible schools there for his 10-year-old son. But then came the bad news from Lyon. “We would love to welcome your wife and child as well,” the employers said. “But, sorry, you can’t bring them for the initial 24 months.” This, they explained, was the result of a new “immigration law” the French Assembly had passed under the auspices of President Nicholas Sarkozy. After two years, they added, the benevolent French Republic would perhaps be kind enough allow the broken family to reunite. (Yes, not certainly, just perhaps.) “This is insane,” my friend wrote back to his would-be employers. And then he, quite wisely, declined to move to a country that seems to have little respect for the most quintessential human institution: the nuclear family.
Somewhat uncharitably, as in earlier blog posts, in EU Reflection Group delivered report: Project Europe 2030 (10 May 2010) we spoke about the ?lost decade? of the EU?s Lisbon strategy for growth and jobs, and the next day, in Mario Monti: A new strategy for the single market, we said that the European Union and especially the member states had ?squandered? the decade of the Lisbon strategy.
Martin Wolf argues with usual clarity that the EU bail-out is a temporary measure: the Eurozone imbalance remains. The imbalance is between high-savings in Germany and high-borrowing in the south. Prices – wages, houses, consumer durables, everything, really – in the Meditterranean rushed towards German-level prices; so borrowing looked cheap there. German domestic demand remained very depressed – no one really knows why Germans are not spending or investing their incomes domestically, but they’re not. If the south had not borrowed, there would have been recession in the south and lower export demand in Germany. Of course, the south should not have borrowed for the projects it did, and the banks should not have oiled the wheels of the whole thing with lashings of deception and wishful thinking. But the truth remains: the convergence of prices led to imbalance, and that has not changed. The magic of flexible exchange rates – abusable also, by the way – is that prices can be made to diverge so easily in the face of these sorts of pressures.
from Stephen Spillane
Source: Congressional Research Service (via Secrecy News/Federation of American Scientists)
Over the past decade, Greece borrowed heavily in international capital markets to fund government budget and current account deficits. The reliance on financing from international capital markets left Greece highly vulnerable to shifts in investor confidence. Investors became jittery in October 2009, when the newly elected Greek government revised the estimate of the government budget deficit for 2009 from 6.7% of gross domestic product (GDP) to 12.7% of GDP. In April 2010, Eurostat, the European Union (EU)?s statistical agency, estimated Greece?s deficit to be even higher, at 13.6% of GDP. Investors have become increasingly nervous about Greece?s ability to repay its maturing debt obligations, estimated at ?54 billion ($72.1 billion) for 2010. On April 23, 2010, the Greek government requested financial assistance from other European countries and the International Monetary Fund (IMF) to help cover its maturing debt obligations. This report analyses the Greek debt crisis and implications for the United States. The debt crisis has both domestic and international causes. Domestically, analysts point to high government spending, weak revenue collection, and structural rigidities in Greece?s economy. Internationally, observers argue that Greece?s access to capital at low interest rates after adopting the euro and weak enforcement of EU rules concerning debt and deficit ceilings facilitated Greece?s ability to accumulate high levels of external debt.
This week’s creation of a Conservative led coalition with the Liberal Democrats has brought the period associated with Margaret Thatcher after her election in 1979 to an end. The UK will continue to play its part in global capitalism but a new kind of domestic politics is on offer. One way of describing it, uncomfortable as it may be for me to report, is that the transition from New Labour to a Tory led coalition promises a distinctly more progressive government in the UK. If indeed the Coalition agreement is carried out then the government will be to the left of its predecessor by being:
Default, and other dogmas
May 13th 2010
The experience of ex-communist countries in the 1990s undermines many of the claims now made about Greece
FOR anyone from the ex-communist world with a medium-term memory, the frantic efforts under way to save Greece (and the other wobbly southern members of the euro zone) are rather puzzling.
My last post had a quick look at what the Con/Lib Agreement said on Political Reform. Now look at what should be a what the Agreement says on the EU. As a Euroblogger I probably should have done this first!
The UK will not join the Euro. No surprise there.