EuroUnion Games and Their (Ever) Changing Rules (John Mauldin)

Changing the Rules in the Middle of the Game By John Mauldin | November 25, 2011 Changing the Rules When Even Germany Fails European Inverted Yield Curves Time to Review the Bang!Moment The Risk of Contagion in the US Time to Start Watching China New York, China, and Some Links Angela Merkel is leading the call for a rule change, a rewiring of the basic treaty that  binds the EU. But is it both too much and too late? The market action suggests that  time is indeed running out, and so we’ll look at the likely consequences. Then I glance  over the other way and take notice of news out of China that may be of import. Plus a  few links for your weekend listening “pleasure.” There is lots to cover, so let’s get  started. Changing the Rules I have been writing for a very long time about the changes needed to the EU treaty if  Europe is to survive. Specifically, last week I noted that Angela Merkel has made it  clear that the independence of the ECB must not be compromised. This week Sarkozy  and the new prime minister of Italy, Mario Monti, agreed to stop their public calls for  such changes (at least until their own crises get even worse, would be my guess). And  Merkel has called for a new, stronger union with strict control of budgets as the price  for further German aid for those countries in crisis. In seeming response: “The European Commission on November 23 proposed a newpackage including  budget previews at EU level, the establishment of independent fiscal councils and  growth forecasts, closer surveillance of bailout recipients and a consultation paper  on Eurobonds. There is also a growing consensus among EU policy makers on  the need for the adoption of fiscal rules in national legislation. However, it is far  from clear whether EU countries would accept the implicit loss of sovereignty  this would involve and agree to treaty changes enshrining legally enforceable  fiscal oversight at EU level. The German Chancellor, Angela Merkel, is willing  to support a change in Germany’s own constitution if the EU Treaty change to  that effect is agreed first.” ( www.roubini.com) READ FULL POST HERE