When the facts change, I change my mind. What do you do? -- John Maynard Keynes

Monday, December 12, 2011

The Germans and French just did something Very Stupid

The City must now look to its own defence – Telegraph Blogs: "Surely everyone can now see . . . . the EU intends to maim our (UK) banking, insurance and investment industries. David Cameron's sticking point at the talks on Friday was so modest, so minimalist, that no one had foreseen the possibility of a breakdown. . . He wasn't asking for special treatment . . . (in the sense that, say, the French insist on special treatment for their film industry). All he was asking was that future decisions on financial services shouldn't be imposed without the consent of all 27 members. . . he simply wanted a confirmation that the status quo couldn't be altered in ways deleterious to Britain. In rejecting his request, the federalist leaders may have sent the prime minister, and the United Kingdom, in a direction that neither he nor they intended. . . there can surely no longer be any doubt about their motives. If the Frankfurt Group Euro-federalists were not planning measures which the Square Mile would resist, it would have cost them nothing to agree to David Cameron's amendment. . . . What can we do about it? Since the EU plainly intends to be unhelpful, if not downright vindictive, we shall need to find unilateral ways to protect our interests. . . . The financial services sector is one of the few in which Britain leads the world. Its impact is felt well beyond London. . . . The industry also employs 100,000 people in Birmingham and 150,000 people in Scotland. It generates nearly 12 per cent of the government's total tax take, and 3 per cent of our export revenue. It is as important to us as heavy industry is to Germany or agriculture to France. They, of course, would not countenance accepting EU rules that damaged those sectors. . . "

The Germans and French just did something stupid--Very Stupid. London is a world financial center. Over-regulation by the EU could very well lead to permanent damage to the UK's banking, insurance and investment industries. Merkel and Sarkozy, in their myopic, selfish, and vindictive attitudes, don't realize that once London's status is lost, the financial business will NOT migrate to Paris or Berlin (or Frankfurt etc.)--it will leave the EU forever--most probably for more market-friendly Asia.

The Eurozone has a lot of problems, the heart of which is a defectively-designed currency with no "lender of last resort." Germany (with support from France) is trying to suck everyone into the Euro's own problems so it doesn't have to accept responsibility and allow the ECB to monetize the debts of Italy, Ireland, et al. By alienating Cameron (and the UK), Germany and France have needlessly lost an ally. The Eurocrisis is not over. The Eurosummit solved nothing long-term.  The problems of the Eurozone will never be solved until the Germans and French quit acting like Germans and Frenchmen, and start acting (and thinking) like Europeans.


The Big Picture

Financial Crisis - The Telegraph

JohnTheCrowd.com | The Sailing Website

Craig Newmark - craigconnects