Open letter to the EU

The Telegraph in the U.K. has published this open letter from 16 university professors:


Without radical deregulation, EU markets will never thrive


"SIR – As economists from 16 EU states, we don’t all hold the same view on whether the euro was a good idea, nor any particular view on David Cameron’s veto of a possible EU treaty. However, we are staunch believers in the free movement of goods, services, people and capital as enshrined in the Treaty of Rome.

Though only one person from each country has signed this letter, our views are not far out of line with those of many fellow economists. The EU should not focus on Mr Cameron’s actions. It should, instead, look at the underlying arguments about the future of the EU and the euro.

Unless there is radical deregulation of the labour and product markets and lower taxation, the euro can never work and the EU can never be a thriving economic area again.

These are the challenges, but the EU and its member governments are moving in the wrong direction. We see no sign that those discussing how to deal with the euro crisis understand the actions that need to be taken.

Whether or not the euro survives, this attitude will lead to gradual decline and increased social conflict within the EU. It may ultimately lead to the disintegration of both the single currency and the EU."


Until the politicians start understanding the root of the problem and commence on essential structural reforms we will see no progress.

Perhaps this crisis is necessary to open the eyes of the incredulous.

Policies cooked up by charlatans

Financial terrorists

Hat tip: Apodrecetuga

Adding debt to a debt problem is going to increase stability?  That is insane.

And these are the people trying to save Europe?

Water does not prevent dehydration

EU officials have concluded, following a three-year investigation, there was no evidence to prove the previously undisputed fact. Producers of bottled water are now forbidden by law from making the claim and will face a two-year jail sentence if they defy the edict, which comes into force in the UK next month. Last night, critics claimed the EU was at odds with both science and common sense. Conservative MEP Roger Helmer said:

“The euro is burning, the EU is falling apart and yet here they are: highly-paid, highly-pensioned officials worrying about the obvious qualities of water and trying to deny us the right to say what is patently true."

“If ever there were an episode which demonstrates the folly of the great European project then this is it.”

German professors Dr Andreas Hahn and Dr Moritz Hagenmeyer, who advise food manufacturers on how to advertise their products, asked the European Commission if the claim could be made on labels.

A MEP Paul Nuttall said: “I had to read this four or five times before I believed it. It is a perfect example of what Brussels does best. Spend three years, with 20 separate pieces of correspondence before summoning 21 professors to Parma where they decide with great solemnity that drinking water cannot be sold as a way to combat dehydration."

This comes right into the category of the bent banana (no myth) and the x year study to define what is a cow.

Comforting to know these are the people trying to save Europe.  They are one third of the Troika.  Comforting is it not?  I worry for Portugal.

I am strongly in favor of the European Union as an idea, but sometimes I have my doubts.  Perhaps we would be better off without these clowns...

All that you did yesterday was a rearrangement of the deck chairs on the Titanic

We are now all in Europe part of an experiment.  I doubt the consequences have been considered fully.

"Today we have a deal on the Euro that will benefit its 17 members – but I stress only temporarily. In the long run, this is neither sustainable nor defensible.

We should also allow the non-Eurozone members – such as my country the Czech Republic – to decide again whether they wish to enter. We signed up to a monetary union, not a transfer union or a bond union in our accession treaty. This is the major reason why the Czech Prime minister wishes to call the referendum on this matter. I fully support him.

We have come up with costly and temporary solutions. Sorry, Mr. President, there is no reason for optimism. Not at all. All that you did yesterday was a rearrangement of the deck chairs on the Titanic.“

Read more at the "O Insurgente" (Hat Tip)

Greek debt cut to half

An agreement has been reached at the EU.  Hat Tip: BBC

At this moment I do not entirely understand it.  But it seems:

• European banks holding Greek debt have agreed to take a loss of 50% on the debt
• The stockholders take the loss...
• It is not a Greek default
• It will permit Greece a still huge debt load of 120% of its GDP in 2020. Under current conditions, it would have grown to an astonishing 180%.
• IMF and the Euro zone will give (I think they mean loan) Greece an additional 100 billion euros
• The EU bailout fond is boosted from 440 billion euros to a cool 1,000,000,000,000 euros (one trillion)
• The banks will be obliged to accept new recapitalization demands of 106 billion euros
• This will require more bank packages, I believe.  Guess who is paying...

The financial markets are reacting positively.  I consider they think it makes little difference for the spendthrift Greeks, but are just happy to see the EU agree on something.  Greece will continue to spend and will continue to need more aid.   Not the least reasons being the world wide crisis and the partial destruction of the Greek economy.

The one trillion is a big number.  But not that big a number if say Portugal, Spain and Italy start asking for (additional) help.

What would happen if we private citizens started to complain about our debt?  Would we also get a 50% discount?

Nevertheless, it is an attempt to save the Euro zone.   I wonder what the government in Portugal will now say.  They have used the "it would be terrible for Portugal to default" - does that mean hell fire on Earth?, as one argument for the austerity measures.  However, a 50% cut in debt looks rather enticing - does it not?

Update:
It seems the banks do not agree and are not part of the agreement.  The EU would like it to be a voluntary agreement as to not make Greece seem to default.
The EU banks can be forced, but what about banks outside the EU?  Or is all the debt inside the EU?  I doubt it.

Update 2:
The 50% loss is equivalent to 20 billion euros.  The banks are needing to find 126 all in all...

Update 3:
Academics do not understand much of the above either.  Quite frankly because it is unclear and not negotiated yet.  Another question:  How is the 440 billion euros bail out fond to become 1 trillion euros?  By magic?

Update 4:
The rating agencies are now jumping into the fray.  Fitch now states that the bond haircut is a default.  Of course it is, what else would you call it?  The emperor IS naked.  But sometimes it does take a child to see the obvious.