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Mario Draghi Op-Ed: "Lay Down Your Rights... In A New Institutional Order"
Authored by Mario Draghi, originally posted at Project Syndicate,
There is a common misconception that the euro area is a monetary union without a political union. But this reflects a deep misunderstanding of what monetary union means. Monetary union is possible only because of the substantial integration already achieved among European Union countries – and sharing a single currency deepens that integration.
If European monetary union has proved more resilient than many thought, it is only because those who doubted it misjudged this political dimension. They underestimated the ties among its members, how much they had collectively invested, and their willingness to come together to solve common problems when it mattered most.
Yet it is also clear that our monetary union is still incomplete. This was the diagnosis offered two years ago by the so-called “Four Presidents” (the European council president in close collaboration with the presidents of the European Commission, the European Central Bank, and the Eurogroup). And, though important progress has been made in some areas, unfinished business remains in others.
But what does it mean to “complete” a monetary union? Most important, it means having conditions in place that make countries more stable and prosperous than they would be if they were not members. They have to be better off inside than they would be outside.
In other political unions, cohesion is maintained through a strong common identity, but often also through permanent fiscal transfers between richer and poorer regions that even out incomes ex post. In the euro area, such one-way transfers between countries are not foreseen (transfers do exist as part of the EU’s cohesion policy, but are limited in size and are primarily designed to support the “catching-up” process in lower income countries or regions). This means that we need a different approach to ensure that each country is permanently better off inside the euro area.
This implies two main things.
First, we have to create the conditions for all countries to thrive independently. All members need to be able to exploit comparative advantages within the Single Market, attract capital, and generate jobs. And they need to have enough flexibility to respond quickly to short-term shocks. This comes down to structural reforms that spur competition, reduce unnecessary red tape, and make labor markets more adaptable.
Until now, whether or not to carry out such reforms has largely been a national prerogative. But in a union such as ours they are a clear common interest. Euro area countries depend on one another for growth. And, more fundamentally, if a lack of structural reforms leads to permanent divergence within the monetary union, this raises the specter of exit – from which all members ultimately suffer.
In the euro area, stability and prosperity anywhere depend on countries thriving everywhere. So there is a strong case for sharing more sovereignty in this area – for building a genuine economic union. This means more than beefing up existing procedures. It means governing together: shifting from coordination to common decision-making, and from rules to institutions.
The second implication of the absence of fiscal transfers is that countries need to invest more in other mechanisms to share the cost of shocks. Even with more flexible economies, internal adjustment will always be slower than it would be if countries had their own exchange rate. Risk-sharing is thus essential to prevent recessions from leaving permanent scars and reinforcing economic divergence.
A key part of the solution is to improve private risk-sharing by deepening financial integration. Indeed, the less public risk-sharing we want, the more private risk-sharing we need. A banking union for the euro area should be catalytic in encouraging deeper integration of the banking sector. But risk-sharing is also about deepening capital markets, especially for equity, which is why we also need to advance quickly with a capital markets union.
Still, we have to acknowledge the vital role of fiscal policies in a monetary union. A single monetary policy focused on price stability in the euro area cannot react to shocks that affect only one country or region. So, to avoid prolonged local slumps, it is critical that national fiscal policies can perform their stabilization role.
To allow national fiscal stabilizers to work, governments must be able to borrow at an affordable cost in times of economic stress. A strong fiscal framework is indispensable to achieve this, and protects countries from contagion. But the crisis experience suggests that, in times of extreme market tensions, even a sound initial fiscal position may not offer absolute protection from spillovers.
This is a further reason why we need economic union: markets would be less likely to react negatively to temporarily higher deficits if they were more confident in future growth prospects. By committing governments to structural reforms, economic union provides the credibility that countries can indeed grow out of debt.
Ultimately, economic convergence among countries cannot be only an entry criterion for monetary union, or a condition that is met some of the time. It has to be a condition that is fulfilled all of the time. And for this reason, to complete monetary union we will ultimately have to deepen our political union further: to lay down its rights and obligations in a renewed institutional order.
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I was hoping the propaganda would let up in the new year...I was wrong:
http://www.philiacband.com/propaganda.html
Fuck that man.
"The more you tighten your grip, Tarkin, the more star systems will slip through your fingers."
" Lay down your rights...."
Translation: Bend over and spread them.
More power is required by a group of morons to produce infinite wealth for everyone.
I love these official conspiracy theories! :D
"...markets would be less likely to react negatively to temporarily higher deficits if..."
Who the fuck is "markets"?
Serfs don't need no stinkin rights. It's racist.
MisterX, yer website looks slick but the music? Meh. Besides, does this look like Bandcamp?
The EU was created to eliminate the sovereignty of European nations along with the rights of individual Europeans, in order to put banksters in charge of the Treasuries and the US in charge of foreign policy.
The result will soon be World War III, unless the Germans (and French?) wake up and throw the bastards out and regain control of their nations.
The French have to lead the charge.
They might have noticed the missing Polish govt that was brazenly dissappeared while claimed to be lost on a plane. A plane that was filmed by a local, who showed that there were 4 people on that plane, and ect ect
The French (and Oliver Stone) are leading the way:
http://article.wn.com/view/2014/12/18/Hollande_Floats_Russian_Sanctions_Relief_in_EU_Split/
The small countries leave first screaming "take your bonds and shove it" and I think if things keeping going the way they are Germany will take the northern EU and split off in order to survive.
This is the best case scenaro.
Hey Mario, sorry buddy but "die kleine Deutsche Hexe" says NEIN... again ! See here.
"...I was wrong:"
You were born wrong.
nigel farage must be epiplectic over this analysis. I'd pay to see him debate Mario, live only.
Do you mean apoplectic or eplileptic?
DavidC
Both?
If you like this bull crap, you can keep this bull crap.
Fuck You Mario.
Wait!!! Best story of the day! Harry Reid breaks his own face!!!!
http://www.weeklystandard.com/blogs/harry-reid-breaks-number-ribs-and-bo...
He would have suffered those injuries had he lost consciousness or otherwise lost his footing on a treadmill. The chest and face can smack into the rear part of the footbed when that happens.
No need for rights. Work will make you free.
"In other political unions, cohesion is maintained through a strong common identity, but often also through permanent fiscal transfers between richer and poorer regions that even out incomes ex post."
If Mariois trying to say that fiat currency helps to transfer the wealth of the poorer countries into the hands of the wealthy while loading the impoverished sovereign up with debt than one can only come to the conclusion that the Euro is a raging success.
I guess I'd have to agree with you. Only because I re-read what he wrote 3 times now and I still don't understand it. It's a fiscal transfer thing, but it's not a fiscal transfer thing, so it should be the ability to borrow money from other EU members in times of "distress," assuming they all feel comfortable there are good prospects for future growth....
WHAT??? What a total pile of horsesht double-speak. He should just come out and say what he really thinks. He's smarter than the rest of us, so just do what he says. And the crazy part is that he's GOING TO WIN. He'll get what he wants in the end. Don't ask me how, but he will. Guaranteed.
I like to think that he will get a nailgun in the end..... and in the head too.
Germany vetoed (maybe officially, though I'm not sure) any fiscal transfer without more political integration. The rationale there is correct : sharing the cost cannot be done without sharing the decision that caused that cost. Since this thighter political integration (common decision sharing) has not progressed, Draghi moves on to present an alternative : it suffices to ensure financial markets that investing in Greece is the same as investing in Germany. Given enough security, financial markets would provide the same business environment in Greece and in Germany, which would more or less achieve the same goal as a tighter political integration.
Yeah except the Greeks are not Germans and they will never reduce their largesse and so will never pay off said loans. In the end, if they are to be view the same way, Germany will be seen to be like Greece not the other way around.
He is talking about the USA, obliquely. He wants moar centralized command and control, such as has developed in the USA since the first progressives era.
We may hate his conclusion, but his points are logical and consistent so far as they go. You cannot have effective monetary union without more political integration. At least the obfuscation over this point has ended.
Europeans should accept the stark alternatives he presents: break up the Eurozone or create a more integrated union. There is nothing wrong with presenting these alternatives in sharp contrast.
At the beginning of the Euro project, I thought it might be worthwhile in that it might increase economic growth and foster peace. After 20-odd years, we have no growth and potential war with Russia, not to mention administrative bloat and arrogance in Brussels.
Perhaps it is time to call it a failure and move on. Draghi merely reflects the consensus of the elite in Europe. They are too heavily invested in the Eurozone project to surrender or admit failure.
The average guy in the street may yet have the final say. EU institutions are weak in comparison to the US. The US rams all manner of tyrrany up the asses of its citizens because of the power of the central government. The EU will have a much harder time doing this.
On the other hand, Europeans are used to ubiquitous government. In France or the UK, show me a party that's to the right of the U.S. Democrat party on free markets, laissez faire, individual liberty and so on. Their nationalist parties are more anti immigrant than anti nanny state. A Brussels based super nanny state would hardly be different from what the frogs are boiling in now.
Captain Willard,
Survey all recorded history, and answer these questions: When gov'ts grow very large and assume vast powers (As you seem to posit that the EU should do): (1) Does economic growth increase, stay the same, or decrease? (2) Do the prospects for war increase, stay the same, or decrease. (3) Do individual liberties flourish, stay the same, or diminish?
TB,
Righto. Obama is at least a Democratic Socialist, if not even farther left, but the USA is not yet the EU.
Perhaps I was too oblique in my first post. I'm not arguing for more EU power. I'm in favor of quite the opposite.
I'm simply stating that the EU/Eurozone is at an unstable equilibrium. It must either expand its powers or break up. I also suggested that this was the point of Draghi's recent op-ed piece and indeed his interview in Handelsblatt this morning.
And my hope was that Draghi's increasing candor about his goals will wake up the average man in the street to the Elite's agenda and the need for a break up of the EU.
Fair enough. I mis-read your post, having been misdirected when I read:
EU institutions are weak in comparison to the US. The US rams all manner of tyrrany up the asses of its citizens because of the power of the central government.
We can argue which is more tyrannical, the US or EU, but that wasn't your (worthwhile) main point, which was that Draghi may need to finally and overtly tell the truth.
Both in the US and EU, the elite have gotten away with it until now. Unfortunately, they may get away with it a while longer.
Give it some time and the average guy in the street will be named Mohammed and he will gut men like Mario.
one squid to rule them all
Super Mario playing King Donkey
The unelected leaders of the EU will continue to do all they can to make sure it remains the biggest undemocratic political and economic madhouse on the planet.
The sooner it all comes crashing down the better
I wouldn't be to sure of that. They need the whole system to collapse and then they move in saying
"See if we ONLY had more POWER to control things unilaterally this wouldn't have been a problem."
And the nitwits will eat that shit up.
https://www.youtube.com/watch?v=1yeA_kHHLow
Equity markets aren't buying Mario's BS, giving up all gains in a sharp 30 minute collapse: Oil should be following:
http://www.investing.com/commodities/crude-oil-advanced-chart
looking forward to GREXIT
and these bankster scum sweating
"misunderstand" "misjudge"
and of course, we ALL "underestimate" the amount of political capital involved.
If no one, anywhere, understands what your are saying or what your stated goals or solutions are, then the problem lies with you, Mr. Draghi.
i'm sure there is a perfectly logical reason why the 10yr yield has dropped 10 bps in a few hours ...
"First, we have to create the conditions for all countries to thrive independently. "
Keyword: INDEPENDENTLY. Easy, abolish the the EU, the EZ and the ECB! Strip off an entire layer of bureacracy.
pretty much
euro failed experiment from the get go
as an example ... greek worker works till 50s (and then gets govt dole) ... german worker works till 60s
i'm sure german worker has no qualms supporting a retiree 10 years YOUNGER
That doesn't tell you anything. And it obfuscates the issue.
Different economies function differently. What the German gets for his hard work is a 'richer' lifestyle, and a pumping industrial economy to earn his living in.
The Greek may get an easier lifestyle, but has less of an opportunity to 'get rich' from the slower-paced tourist economy he lives in. It's a trade-off, or should be.
Trying to put both those economies on an equal footing is pointless. As jealous as the German might BE about the Greek's early retirement, I doubt most would agree to go LIVE in Greece and do business THERE. And that Greek probably wouldn't fare too well in Berlin.
Leave each country to figure things out for themselves, according to their own needs/abilities/wants, etc.
I honestly cannot figure out what he is trying to say.
He is basically saying they need to loosen some of the legal hurdles to debt monetization and wealth redistribution and at the same time create uniform laws across EU members to ease the minds of the wealthy countries that will be funding it.
His words are too vague to conclude anything. He could be angling for a unified fiscal policy.
His closing statement seems clear enough. Fiscal, monetary, policitcal... just different means to an end. Tyranny and servitude, ways of life.
then the statement is perfectly written
I ran the following portion of his speech through Google to translate from European to American.
This is the result...
The irony is that the ECB is itself a contagion spreading its disease by masquerading as a cure for contagion.
this is not news. these people are unelected megalomaniacs
"Plus, I'd like to be the new Emperor of Europe."
To allow national fiscal stabilizers to work, governments must be able to borrow at an affordable cost in times of economic stress.
I call that bullshit with 5 y German yields just go negative
Aren't enough lamposts for these ARSEWHOLES.
What a bunch of drivel.
The citizens of Europe need to hang that Goldman Sachs bastard.
I like how broke fucks always talk about sharing
This was always the Euro playbook. Slowly boiling frogs.
New improved Institutional nanny teat milk.
The most honest conversation I had last year was with a gal from Italy who wandered into my shop right before closing. We got to talking about world affaris (which she was suprised at my knowledge of) and eventually of course we moved on to economics. She sure didn't pull punches there: squarely laid the blame on the "politicians" who were "sucking all the country dry." We both agreed that things are incredibly shitty in Europe and it was only a matter of time until things popped.
She then asked for a good place to get and Gin & Tonic. I gave her the name of a decent place down the street...still kicking myself in the ass I didn't swing by to see if I couldn't bump into her again...Doh.
Any bar will serve gin and tonic. She was asking you to go with. Keep kicking.
"I will be King, and you shall bow to me and my financial kingdom, or face the wrath of my Goldman army".
If we just had more Power and "Unity" we can Suspend Mathematics.....
EU's redistribution among member states is a fraction of the US's redistribution among states. So a "federal governement, with all its attributes there, could effectively redistribute a larger part of the wealth produced.
I agree. I think that's what Draghi was saying.
I was hoping I wouldn't throw up after reading this.
I was wrong
that's the chocolate, not the reading...
summary: if a stronger political union is not possible, Goldman Sachs and associates are ready to take its role for the common good of eurozone members and their citizens.
Should be a wake up call for nationalists who don't want more political integration...
Also, funny that UK does all it can to prevent this political integration, as if it were profiting from more financial services... I mean, as if UK's policy was City's policy...
They've already taken the European's guns, and made most of them dependent on .gov, so it's time to roll out the New World Order.
Just another nice sounding text, full of ideals and generalities -- acting as bait for the simple or naive.
Alas, the Devil is in the detail, which is anything but inocous.
His is an attempt to create EUSSA, acting as a vassal to the USSA (the Empire). As a vassal, it is being used as a tool and a weapon against the Empire's real or contrived adversaries in Eastern Europe and North Africa.
Fuck you, Mario!!
Put your money where your fucking squid inkhole is and start the QE already. Let's keep this party going...!!
meet the NWO/ZWO which does not exist according to NWO/ZWO media
He won't speak plainly. You can't create stability with jedi mind tricks.
Back in April, the European Central Bank President, Mario Draghi, famously said the ECB would do “whatever it takes” to tackle the forces of deflation in the European Union. So far, those efforts don’t seem to be working.
http://www.globaldeflationnews.com/whatever-it-takes-isnt-going-to-be-en...
Socialism is so ingrained in that gigantic EU bureaucratic nightmare.I just don't see how huge government agencies do anything for ordinary working people except tax the living hell out of them in order to support overpaid government employees and government management that both have their pockets padded pretty deep with top wages,benefits and pensions.I'm not a fan of any of that shit.The more they can get rid of government the better.It's a curse on taxpayers by politicians that swim in the shit laden pigpen with these socialist bums.It's the same crap that brought down the Soviet Union and it's firmly entrenched now in the U.S. government too and it'll bust them sooner or later.
If you can't dazzle them with brilliance;
baffle them with bullshit.
Fuck off, cunt.
Deepening financial integration means that when the euro ship goes down all of it’s passengers not in a lifeboat will drown.
LOL - a masterpiece of vagueness. Well done, Draghi
"Talk to the organ grinder, not the monkey"
Germany being the organ grinder and Mario Draghi the monkey.
Stop listening to the gibbering monkey.