Spain on Saturday proposed the set up a new fiscal authority in the euro zone which would control and harmonize national budgets and manage the European debts.Obama Seeks End to "Crisis Cloud"
Prime Minister Mariano Rajoy said the authority was the answer to the European debt crisis and would go a long way in alleviating Spain's woes as it would send a clear signal to investors that the single currency is an irreversible project.
"The European Union needs to reinforce its architecture," Rajoy said at an event in Sitges, in the north-eastern province of Catalonia. "This entails moving towards more integration, transferring more sovereignty, especially in the fiscal field.
"And this means a compromise to create a new European fiscal authority which would guide the fiscal policy in the euro zone, harmonize the fiscal policy of member states and enable a centralized control of (public) finances," he added.
He also said the authority would be in charge of managing European debts and should be constituted by countries of the euro zone meeting strict conditions.
Bloomberg reports Merkel Rejects Debt Sharing as Obama Urges End to Crisis Cloud
German Chancellor Angela Merkel hardened her opposition to joint debt sharing in the euro region as President Barack Obama singled out Europe’s leaders for not doing enough to stop the financial crisis.Cloud? What Cloud?
With Europe’s debt crisis cited last week for canceled IPOs, weaker-than-expected Chinese manufacturing figures and a rise in the U.S. jobless rate, Merkel rejected joint debt issuance in the 17-nation euro area as a solution, saying “under no circumstances” would she agree to Germany-backed euro bonds.
Now, some “come along and ask for euro bonds, saying all we need are equal interest rates and everything will turn out all right,” Merkel said in a speech to members of her Christian Democratic Union in Berlin today. Instead, what’s needed is an economic overhaul to tackle the lack of competitiveness in Europe, she said.
Obama, speaking at a Chicago fundraiser yesterday as he bids for re-election in November, said that a report showing the slowest month of U.S. employment growth in a year was in large part “attributable to Europe and the cloud that’s coming over from the Atlantic.” The “whole world economy has been weakened by it,” he said.
Clouds are imaginary. The markets have cast a clear sunshine vote that the euro is a failure.
Since the euro itself is the problem, the only clouds anyone can see stem from nannyzone proponents insisting at any and all costs to hold this untenable structure together.
Recall that when the economies of Spain and Ireland were artificially booming fueled by two of the biggest property bubbles in the entire world, the IMF, eurocrats in Brussels, and misguided economic fools everywhere were cheering the growth in those countries.
Nannycrats did not see this coming last time and they will not see the mess coming the next time either. Heck, they cannot even see the mess the LTRO has made now. Nor can they see just how counterproductive and contagion-causing their own policies have been.
Somehow these nannycrats are supposed to prevent messes?! Please be serious.
The only thing nannycrats will do, were the idea ever to gain traction, would be to sink all of Europe into a permanent mess.
For my original post on the Nannyzone written June 2, 2011, precisely one year ago today, please see Trichet Calls for Creation of European "Nanny-State" and Fiscal "Nanny-Zone"
Even if such a proposal were possible, it would require a whole new treaty, and a constitutional vote in Germany, Ireland, and other countries.
Fortunately, Rajoy's proposal is dead-on-arrival.
Thus, it is time to focus on reality, instead of imaginary clouds. The reality is the eurozone is going to bust up and nannycrats better get used to the idea or the markets will impose that break-up in their own messy way.
Addendum on the Nannycrats and the Nannyzone
Reader Stan says ..
Rajoy says he wants this "Nannyzone", but would he actually obey the dictates of the Nannycrats if they ordered Spain to live within it's means? I doubt it. He wants the Nannycrats to tell Germans they must subsidize the PIIGS, but he wouldn't care for Nannycrats telling PIIGS to balance their budgets.Exactly!
Mike "Mish" Shedlock
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