Saturday, November 26, 2011

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

By John Mauldin | November 25, 2011

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
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.” (

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