Lars P. Syll — Why a monetary union cannot work without also being a political union

Nicholas Kaldor foresaw what the would happen if the Eurocrats attempted to force a political union using an monetary economic one on top of the then existing common market.

Lars P. Syll’s Blog
Why a monetary union cannot work without also being a political union
Lars P. Syll | Professor, Malmo University

See also

The mess at the heart of the EU

Don Quijones — Germany, France Call for Fiscal and Political Union. Public Ignorance Vital for Success of EU Power Grab

Constructing the United States of Europe obvious to the fact that the contract of the United States of American resulted in the bloodiest civil war in history, the effects of which are still being played out.

What could possibly go wrong this time around with all that experience behind them? Hmm. I can think of lot of things. They can't make the EZ work, the UK is toying with Brexit, and they think that rushing forward to a union will solve the existing problems, let alone the emerging challenges?

“The euro was built on a Franco-German understanding but also on a typically European compromise,” they write. “This gives France and Germany a particular responsibility to straighten what is crooked” — an eminently fitting phrase.

Are these people naive, crazy, or just venal and power hungary?

Wolf Street
Germany, France Call for Fiscal and Political Union. Public Ignorance Vital for Success of EU Power Grab
Don Quijones

Lars P. Syll — Nicholas Kaldor on putting the cart before the horse fallacy

Also called the "wagging the dog's tail" fallacy.

Keeper quote that turning out to be true in spades.

Lars P. Syll’s Blog

Nicholas Kaldor on putting the cart before the horse fallacy

Lars P. Syll | Professor, Malmo University

Jan Kregel — Europe At The Crossroads – Financial Fragility And The Survival Of The Single Currency

To outside observers, Germany's insistence that the new Greek government continue to impose austerity policies in the presence of rising unemployment and mounting debt levels appears to defy economic logic. However, an acquaintance with the historical evolution of the path to the creation of the common currency in the European Union (EU) sheds some light on the logic of the German government's strategy in dealing with the eurozone sovereign debt crisis and its negative response to Greece's request for an alternative economic policy.

Given the continuing divergence between progress in the monetary field and political integration in the euro area, the German interest in imposing austerity may be seen as representing an attempt to achieve, de facto, accelerated progress toward political union; progress that has long been regarded by Germany as a precondition for the success of monetary unification in the form of the common currency. 

Yet no matter how necessary these austerity policies may appear in the context of the slow and incomplete political integration in Europe, these policies are ultimately unsustainable.

The survival and stability of the euro, in the absence of further progress in political unification, paradoxically require either sustained economic stagnation or the maintenance of what Hyman Minsky would have recognized as a Ponzi scheme. Neither of these alternatives is economically or politically sustainable.

Levy Economics Institute of Bard College
Europe At The Crossroads – Financial Fragility And The Survival Of The Single Currency
Jan Kregel | Senior Scholar

Note: Paragraphing changed for ease of reading online.

Ambrose Evans-Pritchard — EU has squandered last chance to make euro workable, warns Ex-Bundesbank chief

Forward or forget it.

The former head of the German Bundesbank has warned that the European Central Bank (ECB) will not succeed in raising inflation for years to come and is almost powerless to revive the fortunes of the eurozone on its own. 

Axel Weber, now chairman of UBS and widely-regarded as Europe's most influential private banker, said Europe's leaders had squandered the chance to rebuild the eurozone's foundations when the going was good and markets were calm. 

In an ominous sign, he appeared to lose confidence in the euro altogether, cautioning that monetary union will be tested repeatedly and may not survive unless EMU leaders agree to bite the bullet on full fiscal and political union.…

Mr Weber warned that central banks are pursuing policies in a narrow self-interest without much regard for the global knock-on effects, though he stopped short of calling it a currency war. "The international system at the moment is seriously unanchored," he said. 

The effect is finally ricocheting back into the US in the form of a surging dollar and rising risks in the US high-yield debt market. Mr Weber said the Federal Reserve may not be able to tighten policy or raise rates as soon as the markets seem to expect. "I don't think the Fed can continue on the path announced," he said.

The Telegraph
EU has squandered last chance to make euro workable, warns Ex-Bundesbank chief
Ambrose Evans-Pritchard

Javier Solana — A Europe for the World

As the EU aspires to become an international power, the choice is simple: either we Europeans act in unity to confront the tremendous challenges presented by the tumultuous changes now underway in the world order, or we doom ourselves to act as spectators in a world in which we have little or no say. Our prosperity and the viability of our socioeconomic model are at stake. That should convince us that Europe’s states are too small to act globally on their own, and that European integration is the only viable path.

Project Syndicate
A Europe for the World
Javier Solana | former Foreign Minister of Spain, Secretary-General of NATO, and EU High Representative for Foreign and Security Policy, and current President of the ESADE Center for Global Economy and Geopolitics and Distinguished Senior Fellow at the Brookings Institution

Indication that elites of the periphery are willing to destroy the economies of their countries, privatize their national resources, forfeit national sovereignty as well as currency sovereignty, and sell their fellow countrymen into debt servitude to achieve a united Europe? Sounds like a recipe for disaster.

Ramanan — Nicholas Kaldor On The Common Market

Ramanan provides a very short explanation by Kaldor of why a European monetary and fiscal union will break down if not preceded by a federal political union similar to the US.

The Case For Concerted Action
Nicholas Kaldor On The Common Market
by Ramanan

ZH — Referendum: Is Germany Preparing For The Nuclear Option?

Is the rubber about to hit the road in Germany? Looking increasingly like it. This post lays out the likely options.

Zero Hedge
Referendum: Is Germany Preparing For The Nuclear Option?
Tyler Durden