Curiosity killed the Euro

About ten days ago, the Commission announced plans to regulate the rating agencies 1,2,3. Defenders of Moody’s, Fitch and other S&P responded by saying “don’t blame the messenger“. Their argument: the rating agencies are just evaluating the financial health of states and is not responsible for any crisis. In other words, don’t blame the thermometer if you have a fever.

That is true: indeed, the original cause of financial crisis is the management by states of their finance.

However, it is not fair to say that Rating agencies don’t have any responsibilities. Why ? Because of quantum physics of course !

Indeed, when one is probing for the temperature of something (outside, cake, …) with a thermometer – as rating agencies pretend they do with public finances – the thermometer does not change the temperature of what you’re measuring the temperature of (or very very very very little). This is what’s called a non destructive measurement.

But, for quantum systems, observation perturbs the system and force it to adopt a specific configuration – that is why looking into the box might kill the cat. It is very clear that it is this kind of observation that are made by rating agencies: the result they publish are fixing the financial world into one state of mind.

When the weather channel announce that it is 10˚C outside, nobody consider that information as the unmovable truth, but when a rating agencies says one country will go bust, the financial world react to this announce in a way that prevent any escape from this predicament.

To conclude this reflection, I’ll say that there is one way for the rating agencies to be effective thermometer: just to not publish their estimations will make their observations non destructive and not constraining on the finance of states.


Les 7 questions à poser à l’eurozone

Ce n’est pas nécessaire de faire une longue introduction sur le sujet: l’eurozone est en crise, vous le savez bien.

La gouvernance de la zone euro a cependant besoin d’un nouveau souffle démocratique. C’est pourquoi je propose – ça vaut ce que ça vaut – un référendum à l’échelle de l’Eurozone, qui obérirait à là régle de double majorité (approuvé par au moins 65% des citoyens et au moins 55% des états membres) Ce référendum ne poserait pas une, mais sept questions :

  1. Approuvez-vous la formation d’une Union monétaire avec l’Euro pour monnaie ?
  2. Dans le cadre de l’eurozone, approuvez-vous la coordination des budgets nationaux pour assurer la stabilité de l’euro ?
  3. Dans le cadre de l’eurozone, approuvez-vous la création d’un fond de stabilité pour aider les états en difficultés à se financer ?
  4. Dans le cadre de l’eurozone, approuvez-vous la nomination d’un ministre de la zone euro qui aura une capacité de décisions et d’initiatives  pour assurer la stabilité de l’euro ?
  5. Dans le cadre de l’eurozone, approuvez-vous que la Banque Centrale Européenne agisse sur les marchés financiers pour assurer la stabilité de l’euro ?
  6. Dans le cadre de l’eurozone, approuvez-vous l’utilisation d’euro-obligations pour partager la charge de la dette publique entre les états membres dont la monnaie est l’euro ?
  7. Dans le cadre de l’eurozone, approuvez-vous plus d’intégration entre les états membres dont la monnaie est l’euro, qui conduirait à un transfert de compétence des gouvernements nationaux vers l’Eurozone ?

Ces questions sont suffisamment générale pour laisser de la flexiilité dans leur implémentation ; mais au moins elles permettraient de connaître clairement la position des citoyens et quel niveau d’intégration ils sont prêt à accepter.

The 7 questions to ask the Eurozone

I will not make a long introduction about how the eurozone is in crisis… you probably know too much about it. Anyway, the eurozone governance needs a fresh air of democratic input. That is why I propose a Eurozone wide referendum that would required to pass the double majority rule (approved by at least 55% of member states representing at least 65% of the total population). This referendum would not have only one question but seven :

  1. Do you approve the formation of a currency Union with the euro as its currency ?
  2. In the frame of the Eurozone, do you approve the coordination of national budget to ensure the stability of the euro ?
  3. In the frame of the Eurozone, do you approve the creation of a stability fund to help countries in difficulty finance themselves ?
  4. In the frame of the Eurozone, do you approve the nomination of a Eurozone minister that would have decision and initiative power to ensure the stability of the euro ?
  5. In the frame of the Eurozone, do you approve the European Central Bank to take action on the financial markets to ensure the stability of the euro ?
  6. In the frame of the Eurozone, do you approve the use of eurobonds to share the burden of public debt between the member states using the euro as their currency ?
  7. In the frame of the Eurozone, do you approve more integration between the member states using the euro as their currency, that would lead to transfert of competence from the national government to the Eurozone ?

The answer to such questions would not fix too much the details, leaving room for flexibility in their implementation; but at least, it would give a very clear idea of how much integration and change the european citizen are ready to take.

[Budget 2012] Et le gagnant est…

Le dernier chapitre des négociations sur le Budget Européen (la conciliation) a été rapide… Et le gagnant est: le Conseil, avec une augmentation de seulement 2% du budget de l’UE pour 2012. Le budget 2012 sera donc de 129 milliards d’euros.

Les états membres arguaient en faveur d’une augmentation très limitée du budget de l’Union ; faisant face à des coupes difficiles dans leurs propres comptes, ils ne voulaient pas laisser l’UE  dépenser trop et insistaient pour que le budget suivent juste l’inflation et pas un centime de plus.

Le parlement Européen qui souhaitait une augmentation de 5%, s’est trouvé en situation difficile dans la mesure ou le budget 2011 a eu besoin de 200 millions d’euros supplémentaire pour finir son année,

Voir les réferences: 1,2,3,4 et 5

[2012 Budget] And the winner is…

The last chapter of the EU budget negotiation (the conciliation) was quick… And the winner for this year is… The Council, with only a 2% increase of the EU budget for 2012.

The next budget will amount for 129 billion euros.

Member states argued strongly in favor of this very limited increase of the Union budget, facing hard cuts of their own budget, they did not want the give a pass on the EU for too much spending and insisted that the budget would only follow inflation and not an extra penny.

The European Parliament who wanted an higher increase (of 5%) entered the negotiations with a lower hand as the 2011 budget needed an extra 200 million euros to finish the year.

See references: 1,2,3,4 and 5

Don’t worry, everything is going according to plan

The euro crisis and everything related: do not worry, it is all going according to plan. At least, that what I read on a eurosceptic blog post reacting to one of my post. The comments by the owner of the blog says :

the Euro was set up deliberately to have a series of crisis, in order to give an excuse to facilitate political union

So, do not be afraid: since the Maastricht treaty in 1992, our democratically elected leaders have playing with our economies in order to get «more Europe»… Hopefully, this strategic crisis has a secret solution that will be used once the citizens fold to «full EU integration». The only problem in that game is that people might notice the secret goal of the euro-dictators and may not accept the «giant leap towards» integration… The precisely prepare scheme is «all coming undone».

Note that despite this diabolic plan, the «the Euro is flawed, everything about it is flawed»; but apparently, it’s all on purpose.

Are EU-enthusiasts in denial of democracy ?

In the last month, a few opportunity has been given for the euro-bubble to express themselves on issues related to democracy.

  • First, the short-lived announce of a referendum in Greece, on the issue of austerity. The general reaction was that then-PM Papandreou was playing with fire. I called the referendum the wrong right thing to do, and argued that the referendum was bringing chaos to Europe, threatening it to explode.
  • The remplacement of G. Papandreou by Mr Papademos, without any referendum or vote from the Greek citizens was accepted as PM immediately and held responsible by other EU leaders # and the markets.
  • A couple of weeks after, it is the turn of Italian PM S. Berlusconi to be deposed while Italy faces rising interest rates on the financial markets. Even as Italian cheer the departure of the cavaliere, they don’t get to vote to replace him by M. Monti. Many were those, including myself, who then explained that the markets were not responsible, democracy was safe. # #
In these conditions, one can ask, and I did ask to myself, this question: would the pro-EU go so far as to put the survival of the institutions they support above the democratic expression of the citizens ? 
I do not believe so.
At least, I hope that it is not the case for myself. I truly believe in democracy, in the expression of citizen and in the right of people to have their voice heard.
I am deeply disturbed of the pressure and the urgency that markets put on governments, obviously, the time scale of financial world is much shorter than the one of Politics. This is why I think a unique, centralized body of economic governance for the whole eurozone, with a mandate to govern the monetary union and the ability to take initiatives and act quickly is the best solution.