Thursday 18 August 2011
Tobin tax proposal to split Europe further
On this topic, I posted yesterday on the disastrous Merkel-Sarkozy 'plans' which have managed once again to set the market off on another set of falls. Along with poor UK numbers on inflation, employment (actually this not so bad, too many immigrants are making the numbers look worse - more on this later today) and Public Sector Borrowing.
The real challenge for the EU though is how is the Franco-German axis going to work? The UK is simply not going to sign up to a Tobin tax that will raise over 80% of its money from activities in the City of London to distribute to Southern Europefor the sake of French and German bond prices. No doubt then the new European State can attack perfidious Albion, but it still does not help the fiscal consolidation. Cameron is going to veto this EU clause and this is going to have the effect of pushing the UK to be even more euro-sceptic as the ire of demagogues in the new Axis falls upon the UK.
The Southern European states are going to tire of the German heckling too - there is real austerity in the PIGS and being told it is not enough and you have to do more by a Germany not undergoing any austerity is not going to wash forever. Only a change of Government in one and a decision to leave the Euro and get out of the fiscal mess and then the EU would have a real problem.
At times of crisis, what is needed is magnanimity by the victors (as after WWII) not bitterness (WWI). It is a shame that we are in this position, because I would have thought that Europe above all would understand these lessons.