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View Full Version : Cameron UK Veto thing, explain to me the consequences



IdleRich
11-12-2011, 07:33 PM
So, as I understand it Cameron has vetoed greater fiscal union between the countries that use the euro (despite the fact that we don't) because the agreement as proposed would somehow have affected the competitiveness of The City of London. How was it gonna do that? What are the euro countries gonna do now? Can they make a deal outside the EU? How much union was planned, centrally set taxes across all countries were surely not on the cards? And, most importantly, has the British Bulldog finally showed his cojones, found that Dunkirk Spirit and stuck it to Johnny Foreigner, or is it actually a bit more complicated than that?

IdleRich
11-12-2011, 07:34 PM
Also, what are the consequences for the coalition?

Sectionfive
11-12-2011, 09:02 PM
It would have affected the City as we're looking at an EU rather then EZ treaty so Cameron wanted guarantees it wouldn't affect the single market, a tobin tax, bank capital levels, regulation and all that. He decided to kick off about this at 2am after 7 hours of talks. Apparently half the room were wondering what he was talking about and the rest why he was bringing it up now. From what I gather the UK is now out side the treaty which was backed by all 26.

Re tax and integration I'm not really sure. I don't think they have sorted anything so it's just another plaster to get over xmas and we'll be back here again in January. There seems to be a bit of effort to blame Cameron for that result which isn't quite true but doesn't excuse terrible diplomacy for the UK. If Dunkirk Spirit is more pandering to the banks and playing to the worst breed of little Englander then Cameron has it in spades.

Sectionfive
11-12-2011, 09:06 PM
consequences: More nationalism for everybody it seems

IdleRich
11-12-2011, 09:40 PM
So they wanted to impose a Tobin Tax on the uk? Can they now do this outside of the EU? Surely that can't be done?

Sectionfive
11-12-2011, 10:17 PM
Well Cameron wanted assurances they wouldn't push for it down the line. In the EU. This could also just be a ploy to isolate Britain further of course, knowing Cameron could never agree. And now it's Britain who are the difficult ones being unreasonable and not rowing in to save the euro. Handy if you you have an election next year

bruno
11-12-2011, 10:46 PM
it could be a french ploy, or they could also be fed up with the convenience of the british arrangement and the temerity to ask for further exceptions while the effort is underway to save the euro. without knowing anything about the details, from what i understand what was agreed was tighter fiscal integration and promises not to touch the banks, all to assuage the markets, that was the point of the meeting in the first place. to prevent contagion of the whole euro area to what began in greece. if the euro collapses, cameron's decision will be vindicated for a very short time before the effects are felt on the uk economy, it won't matter if every eu business transfers their money and headquarters to london. what is interesting to me is that if the euro survives, how will this integration be received nationally in every eu member state? not very well, i suspect, so more trouble there and by extension for britain.

IdleRich
12-12-2011, 10:01 AM
Yeah, how much fiscal integration is actually being proposed? Does it apply more to countries who have been bailed out? All countries have agreed it but is that the commissioners or the leaders? Either way it's not the people of those countries.
In theory the commissioners are supposed to act for the best interests of the EU rather than their respective countries, is that what's happening here?
So confusing....

droid
12-12-2011, 10:55 AM
Yeah, how much fiscal integration is actually being proposed? Does it apply more to countries who have been bailed out? All countries have agreed it but is that the commissioners or the leaders? Either way it's not the people of those countries.
In theory the commissioners are supposed to act for the best interests of the EU rather than their respective countries, is that what's happening here?
So confusing....

AFAIK, hardcore fiscal interventions (deficit of 3%, approved budgets etc...) are aimed at eurozone countries. Wider financial regulation measures, inc Tobin tax (the good stuff) are aimed at the entire EU. Tax harmonisation hasn't yet being seriously discussed.

IdleRich
12-12-2011, 11:32 AM
Yeah, that seems to be right. But what are the planned fiscal interventions and are they a step towards tax harmonisation?
Also, if the countries in favour negotiate a treaty for the first bit outside the EU (which surely they could do as it only affects them) can they impose the second bit on Britain? If not then hasn't Cameron effectively managed to get the red lines that he wanted inserted in the original treaty?

Sectionfive
12-12-2011, 11:39 AM
All countries have agreed it but is that the commissioners or the leaders? Either way it's not the people of those countries.

Inter-governmental treaty whatever that means (is there many other kinds?)


If I was to bet on it, I think CCTB is on the way next year in time for Le Figaro to big Sarkozy up. Our politicians are denying it so it must be true. We got ahem, guarantees around the time of the last referendum but they very specifically only apply to the Lisbon treaty.

droid
12-12-2011, 11:50 AM
Why treaty change?

Because Berlin wants it. As one European diplomat put it: "The Germans fundamentally feel they were wronged by agreeing to replace the deutsche mark with the euro because member nations failed to respect the rules of the game demanding budgetary discipline in return." Given the failure of the initial and loosely-implemented Stability and Growth Pact governing the single currency, which France and Germany were the first to flout in 2004, Merkel is now calling for a "fiscal union" carving rules in stone that would be legally binding.

What changes are under consideration?

Germany had wanted the European Court of Justice to have the authority to sanction repeated budget offenders, but France was cool to that idea. So the suggestion is for the court to verify states meet the obligation of introducing a so-called "golden rule" into their legislation, requiring a balanced budget.

This way, eurozone debt levels could be brought back within a fixed threshold. Sanctions would be automatic and immediate and Brussels could be given guardianship of countries in dire straits. Special powers too could be conferred on a European commissioner to step in and intervene directly in national budgets when deemed necessary.

Are all the changes about tightening fiscal discipline?

No. EU president Herman Van Rompuy wants to also improve economic policy convergence in the 17-nation eurozone on issues such as tax, which Ireland is expected to resist to safeguard its cheaper corporate tax. With national interests and political stakes at play, others may demand a quid pro quo, notably Britain which has already threatened to scupper a deal failing EU pledges to protect the country's profitable financial sector.

http://articles.economictimes.indiatimes.com/2011-12-08/news/30490468_1_eu-treaty-eurozone-nations-treaty-change

The balanced budget thing is, of course, insane. Also, Germany and France have both broken deficit spending rules in the the past and then decided not to sanction themselves - a decision deemed illegal by the European court of justice, so you'd have to wonder how they can hope to make sanctions stick in the future.

Sectionfive
12-12-2011, 11:57 AM
Indeed Germany were the first to break the deficit rules under Maastricht. Sanctions are for the little people.
More evidence really there is nothing to see here and we're looking at another d-day for the euro in 6 weeks

vimothy
12-12-2011, 12:14 PM
Every country in Europe except for Greece would have fallen foul of the deficit cap in the decade running up to the crisis.

The Euro plan seems pretty bad to me--synchronising pro-cyclical fiscal policy across the whole continent and doing nothing about the trade imbalances, which are the real source of the stress.

baboon2004
12-12-2011, 12:29 PM
Is the 'Six Pack' the same as these propositions?

IdleRich
12-12-2011, 12:42 PM
Yeah, it's funny how the most powerful people don't seem to want the rules to apply to them - same for American with the International Criminal Court.
It does seem that there are two parts to the changes that are being introduced and, although it pains me to admit it, Cameron does kinda have a point in saying that he (we?) ought to be able to agree to the first part which doesn't really affect us and is (in theory) designed to save the Euro without agreeing with the second part which does affect us. He can make a convincing case for saying that he was being offered an unfair choice between being the wrecker of the Euro and accepting a tax which he believes is bad for Britain when these two things don't necessarily have to be tied together.


"Every country in Europe except for Greece would have fallen foul of the deficit cap in the decade running up to the crisis."
Isn't that because they were lying about their situation though?

What can the EU realistically do about trade inbalances?

droid
12-12-2011, 12:47 PM
Yeah, it's funny how the most powerful people don't seem to want the rules to apply to them - same for American with the International Criminal Court.
It does seem that there are two parts to the changes that are being introduced and, although it pains me to admit it, Cameron does kinda have a point in saying that he (we?) ought to be able to agree to the first part which doesn't really affect us and is (in theory) designed to save the Euro without agreeing with the second part which does affect us. He can make a convincing case for saying that he was being offered an unfair choice between being the wrecker of the Euro and accepting a tax which he believes is bad for Britain when these two things don't necessarily have to be tied together.


Isn't that because they were lying about their situation though?

What can the EU realistically do about trade inbalances?

Anyone with an ounce of sanity should support the Tobin tax. Its not 'bad for Britain' its 'bad for the tiny minority of financial fuckwits who have time and again have screwed the rest of us over'.

In the long run it'll be better for everyone as it will make the markets less volatile and prone to manipulation.

vimothy
12-12-2011, 01:16 PM
The world nowadays looks very much like the theoretical world that economists have traditionally used to examine the costs and benefits of monetary unions. The eurozone members’ loss of ability to devalue their exchange rates is a major cost. Governments’ efforts to promote wage cuts, or to engineer them by driving their countries into recession, cannot substitute for exchange-rate devaluation. Placing the entire burden of adjustment on deficit countries is a recipe for disaster.

In such a world, fiscal union is an essential counterpart to monetary union. If the gumbo industry goes into decline, driving the US state of Louisiana into a recession, residents will pay fewer federal taxes and receive more fiscal transfers. These financial flows are a natural counter-cyclical mechanism that helps local and regional economies to weather bad times. In a hypothetical European fiscal union, there would certainly be transfers from Germany to the periphery in 2011, but a properly designed setup would have ensured flows to Germany in the 1990’s, as it struggled to cope with the costs of reunification with East Germany.

With this in mind, the most obvious point about the recent summit is that the “fiscal stability union” that it proposed is nothing of the sort. Rather than creating an inter-regional insurance mechanism involving counter-cyclical transfers, the version on offer would constitutionalize pro-cyclical adjustment in recession-hit countries, with no countervailing measures to boost demand elsewhere in the eurozone. Describing this as a “fiscal union,” as some have done, constitutes a near-Orwellian abuse of language.

http://www.project-syndicate.org/commentary/orourke1/English

IdleRich
12-12-2011, 01:49 PM
Tobin Tax seems like a no-brainer but you would think it has to be done across the board. Or at a level that is low enough that no-on will actually bother to up-sticks on its account. That's probably the way to do it I guess, start at a low level... and then increase it.

Sectionfive
12-12-2011, 02:36 PM
Don't be giving Dave too much credit now. If the city asked him to dress as a bulldog and crawl round on all fours barking at Lagard they wouldn't expect to have to ask twice.

droid
12-12-2011, 03:07 PM
Don't be giving Dave too much credit now. If the city asked him to dress as a bulldog and crawl round on all fours barking at Lagard they wouldn't expect to have to ask twice.

There was no barking. He just peed on her shoes and then hid behind a curtain whimpering.

vimothy
12-12-2011, 04:36 PM
I'm not sure that the Tobin Tax really is a no-brainer, but in any case, the priority should be preventing the collapse of the Euro. I don't see that what was proposed at the summit does anything to further that goal, and so it seems to me that Cameron can't fairly be blamed if indeed it does collapse.

Sectionfive
12-12-2011, 07:50 PM
Fear not Rich. Joey Barton is breaking everything down as we speak.



@Ed_Miliband not as bad as Gordon Brown selling the gold at january sale prices! It makes sense to not be in Euro-mess and u know it Edward.

FYI am not a leftie or a rightie, am neither libertarian or statist, am a centrist..........

IdleRich
13-12-2011, 10:13 AM
What's the downside of a Tobin Tax then if it's applied around the world?

Sectionfive
13-12-2011, 05:16 PM
Other then it being perceived as a tax on the rich it means even more money and profit ends up whizzing around the world before surfacing in the Caymans I assume. So probably even less tax paid. Even if it came in tomorrow you there is already twenty ways of getting around it. Tbh I think it's just a populist thing and doesn't go far enough/won't be properly enforced.

If almost every singling policy so far has been firmly on the side of finance you have to doubt our leaders sudden change of heart.


I think Vim might mean it's not good in so far it would make one country's finance sector "less competitive" then one that doesn't have it. ie I don't see it coming to Wall St anytime soon

IdleRich
13-12-2011, 06:08 PM
Yeah but if it's applied everywhere around the world then there won't be a finance centre that doesn't have it. I understand that a unilateral, bilateral or larger introduction would have problems but other than that I can't see a downside.