Momentum grew on Saturday behind a proposed common European bond to help bolster fragile member states during the global economic crisis as the International Monetary Fund threw its weight behind the idea.
At this point in time it isn’t entirely clear who issued this particular “call”, but still, we’re up and running, and this one is gaining traction by the day. It would be nice to be able to say that all this started on a blog (see here) but in fairness Wolfgang Munchau was first off the block with the public call (followed perhaps by the Italian finance minister).
“We have a big player which is the European Union and there is no reason why it shouldn’t have its own way of financing and to issue bonds is a good idea,” IMF Managing-Director Dominique Strauss-Kahn told a news conference in Rome. “I really support this initiative,” he said. “It really depends on the European Commission and the EU authorities but I see no reason why the EU cannot do this.”
and of course Italy’s Giulio Tremonti is still pushing, but then as someone once said, he would wouldn’t he, since Italy’s debt to GDP is 105% and rising.
Asked if he thought there was growing political support among European governments for such a bond, Italian Economy Minister Giulio Tremonti said: “Honestly, yes.” “We are lacking a common European vision and the idea that Europe issues European bonds to finance Europe itself – it would be crazy and suicidal not to do it,” Tremonti told Italy’s state television RAI.
First this scientfic strangeness – who thought of what five seconds first – has got to stop.
(You will be facebooked just for pushing the idea)
Second: Is it clear to everybody that is is not going to be much help? At the very best it will help countries like Austria and Italy; concerning eastern european countries what is needed for this to work is membership in the euro club, otherwise currencey devaluations – against the euro – will kill them eurobonds or not.
How is this going to happen?
Could you be pressing for that idea?
Would they form an optimum currency aerea with – say – france? That is, would that (membership) be a good idea?
Once more – eurobonds are nice for non german eurozone members — in case there is a flight to safety, they could be … very non nice to select eastern European countries. (Hungary, the Baltic states etc. …)
Eurobonds will be used as a great way for non-EU players to dictate to Europe how the world will unfold.
Is the EU restricting trade in a key area? No problem, find the weak country who wants to float a Eurobond and go fishing with them. Better yet, find one that does not want to live within it’s means.
If you cannot get a deal on EU market access in exchange for a Eurobond purchase, pull out and leak a few stories to the media. The story line will be country “X” was looking to help but could not rationalize that help while market access to their marque companies was being “unfairly” denied.
Let’s talk about EU leadership. Let the squabbling within the EU begin…