It is very difficult to write something new about the situation in Europe with the debt crisis and the Euro-zone problem. However, according to the Financial Times Otmar Issing, a highly respected German economist, who participated in the set up of the Euro, have said that it is not good if a so called transfer union is formed, ie, when rich countries gives to the poor in the EU. He also did not like that an almost consensus had formed around the notion that more strict rules would not help countries keep their budgets.
It seems to me that this would be new information if heeded by the German public. Because it would be one step closer to the D-mark reinstatement. There is one way out that probably is so unpopular that it is unreasonable but it would be possible to peg the salary levels in government to the GDP/capita for each nation. Private companies would follow suit. They could then compete nation for nation to improve their situation and would be more competitive due to lower salaries. I don't see another solution, but then again I am not an economist. Issing ruled out a political union brought about by the necessity for saving the Euro and the idea of such a solution would be to use transfers to equalize the economy.
The fact that lowering salaries, raising pension age and other austerity changes are so unpopular that they seem to induce instabilities is actually quite serious. Because there simply is no other way if a transfer union is not installed. It would be interesting to know if Swedes would be interested in a transfer union? One idea could be to give "influence points" to countries that give transfers. A small country like Sweden could therefore get more to say which would make sense because they have a functioning economy. This might make transfers more popular. It is very quiet in Swedish media on the Euro/debt crisis, by the way. It is actually quite a fuss on the Continent. Is this because there is no solution?
Och nu ECFR Annual Council i Paris.
14 timmar sedan