•
I think we all rather knew this first part.
The outrageous decision to make the Irish vote again shows the EU is thoroughly anti democratic.
It’s the second part which is a little more complex.
It also appears that there are changes to the Treaty, over the number of Commissioners. This means it should be put again to the people and Parliaments of the EU everywhere.
Complex even if equally true.
For the assurances that the Irish are seeking need, of course, to be legally watertight. A few well meaning expressions of intent won’t cover it. But if they are to be legally watertight then they need to be part of the legal document. Meaning that the treaty approved (if it is of course) by the Irish will be different in a legal sense from the one approved by everyone else.
So, therefore, everybody should have to ratify the treaty once again.
Now of course neither I nor anyone else is sufficiently naive to believe that this is what will actually happen. Which means that not only are we a tad short on that democracy thing within the EU, we’re also alarmingly short on the rule of law.
•
This is going to be a tad controversial: there are indeed benefits of joining the euro. For there are benefits about doing just about anything. There are also costs to joining the euro, just as there are costs to doing just about anything.
One thing economists like to point out is that there are in fact no solutions. There are only tradeoffs. And what you want to do is work out the value of all of those tradeoffs so that you can make the correct decsion, do this or don’t do this?
One of the claimed benefits of joining the euro has been that it will boost trade. Yes, it almost certainly would as the costs (and uncertainties) of using different currencies fall. But what we actually want to know is by how much, so that we can set it off against the undoubted costs of losing our currency and interest rate freedoms.
One of the most important pieces of research used by euro proponents was a paper from Andrew Rose showing that countries which joined currency unions tended to see their trade increase by up to 200pc. However, a paper published by Harvard’s Jeffrey Frankel has shown that, in fact, trade within the eurozone increased by just 10-20pc during the first four years of the currency. Moreover, the volume of trade did not rise any further thereafter.
In the paper, published by the National Bureau for Economic Research, Prof Frankel says: “The most surprising finding of this study was the absence of any evidence that the effects of the euro on bilateral trade have continued to rise during the second half of the eight-year history of the euro.”
Worth noting that Jeff Frankels is one of those economists we should be listening to. And the benefits are a great deal smaller, one tenth only, of those previously assumed. Further, they come as a one off boost (a “step change” I like to call it) rather than an ever accelerating benefit. This is important because the exchange rate and interest rate flexibility will be something that, retaining the pound, continues to give us extra benefits each year into the future.
So, another nail in the coffin of the idea that the euro is good for us….or anyone else come to that.
•
This all sounds very good:
Immigrants will have wait up to 10 years for the right to claim UK benefits and council housing in the toughest crackdown seen for decades, it emerged last night.
All legal migrants will have to serve a five year ‘probationary citzienship’ before being considered for a passport, immigration minister Phil Woolas said.
Those who work hard, are law-abiding and do voluntary work will be eligible for benefits one or two years afterwards.
But others will have to wait another five years before they can claim any benefits at all, in order to deter migrants who see Britain as a soft touch for benefit claimants.
Mr Woolas said: ‘Entitlement to benefits should be for citizens of our country, not other people. If you are a citizen you have earned the right to benefits. People must show they are here to work.’
And then you look at the details. This will not apply to asylum seekers as they are dealt with under UN and EU rules. This won’t apply to EU citizens because it is illegal for us to make such distinctions against them. The only group it does apply to is non-EU immigrants (who are not asylum seekers) and there really aren’t all that many of them.
It’s not that I mind or don’t mind the restrictions, it’s the way that it’s being announced.
Last October Home Secretary Jacqui Smith was forced to make the embarrassing admission that the number of foreign workers entering Britain since 1997 was 1.1 million - a staggering 300,000 more than official figures recorded.
It simply doesn’t affect that number of people.
•
At least, not in the European Union it seems.
On Thursday the Irish Prime Minister Brian Cowen will confirm that a new vote will be held in 2009.
Diplomats have named October as the most likely date for the vote, while Government sources said April was also being considered
Mr Cowen said he believed that the economic crisis could help persuade some of those who voted against the Treaty to change their minds.
The Government is expected to argue that Ireland would have been in a worse position if it had not signed up to the euro, and that the Treaty will speed up decision-making and help tackle the downturn.
That part of being “worse off” out of the euro is of course insane. With their own currency Eire could have set interest rates to suit their own economy rather than that of Germany. They would thus have been higher and the housing boom and subsequent bust less painful.
•
No, we really do not want to have these ID cards nor the associated National Database.
•
Peter Obourne tells it like it is over the euro. No, of course Britain shouldn’t join it, it’s a laughable idea.
The truth is that the euro has failed as a currency. Its supporters are talking nonsense when they say it will soon emerge as a major world currency capable of rivalling the dollar. In fact, the single currency is likely to fall apart during the recession.
Back in 1999, the British public was told by Tony Blair and others that we would suffer economically if we stayed out of the euro. As we now know, these warnings were mendacious. Instead, Britain’s growth rate has increased by 26 per cent in real terms since 1999. Meanwhile, the eurozone countries have seen a figure of just 21 per cent.
There is a structural reason for this. While the euro has certainly created some benefits for member countries, such as the abolition of currency transactions, these have been outweighed by one fundamental flaw: nations in the eurozone are forced to have the same interest rate regardless of their individual economic circumstances.
Over the past decade, these rates have tended to be too low. This is because they were set in order to help the German economy recover from the recession into which it fell as a result of the massive costs of incorporating East Germany after the fall of the Berlin Wall.
While these low rates benefited Germany, they fuelled a disastrous inflationary boom in Spain, Ireland and a number of other countries.
Conversely, the German economy then started to improve - leading to the European Central Bank raising interest rates.
Once again, this policy suited Germany at a time when it needed to hold back inflation. But it has proved disastrous to economies such as those in Ireland, France, Italy and Greece because it suffocated their growth and created a period of prolonged recession from which some will struggle to emerge.
Britain alone, among major European economies, remains outside the euro. This has proved a fantastic piece of good fortune.
Indeed, our economic fate scarcely bears thinking about had we joined the single currency, as all those so- called ‘experts’ wanted, ten years ago.
With the same, low interest rates as the rest of Europe in the early years, Gordon Brown’s credit boom would have been even more reckless. Subsequently, as rates were raised steeply, Britain would have plunged into an even deeper recession because our industry would have found borrowing costs too high.
As it is, sterling has benefited greatly by being outside the eurozone. Having fallen in value by 30 per cent against the single currency during the past 12 months, exporters have seen a growth in business while the cost of imports have soared.
Without the pound being able to find its own natural level outside the euro, unemployment would have been considerably higher.
Those are very much the same arguments that I make myself. Indeed, I would go further: there has to be flexibility in an economy. The world isn’t stable, technology isn’t stable, markets and relative prices aren’t stable. So the economy is a continual balancing act. And to do that balancing we need to have flexibility in the economy. There’s a number of different ways we can get that too.
The first and most obvious is that with a floating currency we’re able to change the external value of our exports and the internal value of our imports. This is exactly what he decline of sterling in the recent months has done for us. Our exports are now cheaper for the rest of the world to buy, imports are more expensive. This will increase the demand doubly for goods and services produced in Britain and thus boost the economy and employment.
A second source of flexibility is in interest rates. We’ve the power and ability to set them to suit the needs of our economy.
Neither of those sources of flexibility exist inside the euro. However, there are two more sources of possible flexibility. The first is the number of unemployed. If we can’t change interest rates or the exchange rate then we can still change the number in employment. But does anyone really want recessions to be marked by even higher unemployment than we are already going to get?
The second is in prices. The general price level could fall (or real wages as has been happening in Germany) but that’s something we call deflation. And that’s something we really really don’t want as it causes the entire economy to collapse in on itself as happened in the 1930s.
There’s a truism from economics, that there are no solutions, only tradeoffs.
Stay out of the euro and control our own interest rates and exchange rate to provide the flexibility the economy requires. Or join and lose those two tools and leave ourselves only with unemployment or deflation as the tools available.
Given that the social effects, the results in terms of human suffering, are much greater from those latter two than the first pair this leads us to the inevitable answer.
Stay out of the euro.
•
The European Union is asking for your views on what it should do, how Europe could be made a better place.
The website is here.
I think it might be a good idea if we contributed an idea or two, don’t you? Perhaps a tad more constructive than my own desired entry of “Bugger Off”?
In fact, why don’t we try and rally the clans, get the word out, and see quite how many constructive ideas we might be able to contribute?
As long as they’re being honest and publishing all entries we might be able to get some interesting points across.
•
No, not far right idiots goose stepping around, rather that in hard times people look to the nation rather than the ethereal creations of an international elite.
The abandonment by its few remaining supporters of any residual, sentimental loyalty to the idea of the European Union is becoming more likely by the day. The peoples of Europe, under very great stress, are beginning to realise that their pain is being made worse by supranational rules made in Brussels by unelected officials and then rammed through supine national parliaments by political elites. These rules are now working against the interests of the people of Europe.
No-one has been more supportive of the EU project than the Germans, from their windmills to their currency. However, when their country’s core industries are shutting down, they will turn to an entity they recognise and resonate with: their nation. Germany.
The same will happen in France, as it always has though it is impolite - not communautaire - to say so out loud. France first. All else is convenience, nostalgic national bombast or smokescreen.
•
A report on a talk give by Tim Congdon:
Professor Tim Congdon was clearly outraged at the behaviour of the Bank of England over Northern Rock. He argued that the Bank of England is meant to be and has long been the lender of last resort. That is how the system has worked. For many years it has saved banks but it has done so in a way that does not damage a free society. What it has done is lend aggressively and expensively to banks that have had need of cash but whose assets have exceeded their liabilities.
He said that in the case of Northern Rock, Lloyds TSB offered to buy Northern Rock but wanted the Bank of England to promise to back it up with cash if need be. Congdon said that normally the Bank would have said yes. He claimed the previous Bank governor, Eddie George, would have said yes. But the current governor, Mervyn King, said no. He is outraged by this and argues that this made our current crisis worse than it need have been. He says the Northern Rock had net assets (assets larger than its liabilities) and that even after the fall in house values, this remains the case. He said, if I recall, that 97 per cent of its mortgages are being paid off in the normal way.
More recently, again the Bank of England has not kept to its usual role of lending aggressively and expensively. Instead the government has only lent on conditions and, I would add, one major condition has been the taking large stakes in several major banks. The freedom, independence and perhaps international competitiveness of banks has been undermined and the crisis has been made worse than it need have been.
Sounds about right to me (althopugh do remember that I’m not a banking economist, only an interested amateur in the subject).
•
These stories enrage me.
A primary school infuriated parents after cancelling the traditional Christmas nativity play to make way for the Muslim festival of Eid.
Parents at the Nottingham school were told that the planned performance had to be pulled because some of the pupils wanted to celebrate Eid at home with their families.
No, it’s not Islam or Islamism that enrages. Anybody and everybody can worship whichever version of the sky pilot they desire as far as I’m concerned. And it’s certainly not the reaction of those Muslim parents that enrages.
Sajad Hussain, 35, of who has two children at the school said: ‘My children will be off for the two days next week to see their family.
‘It’s not that complicated; they could have one event on one day and another on another day, they should have both celebrations at the school.
‘If you do not have both it becomes a racist thing and that’s why you have to be careful if an issue is made out of it it could become nasty.’
An eminently sensible mixture of tolerance, pragmatism and a touch of scheduling. Very British in fact.
No, it’s twits like this:
In a letter, sent by the staff at Greenwood Junior School, mothers and fathers were told: ‘It is with much regret that we have had to cancel this year’s Christmas performances.
‘This is due to the Eid celebrations that take place next week and its effect on our performers.’
How did we end up with the education system run by people like this?