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Third Conference on European Law & Policy

in ContextBirmingham, June 2012

WHERE ARE EU COMING FROM?

THE US & THE WORLD

Sub-Prime Selling

THE UK & THE WORLD

Northern Rock

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• Commission on houses sold more than their worth

• Lending to people who can’t afford to pay back – for Commission

• Buying and selling of shares on short-term gain basis

• Lack of consumer confidence in markets and banks

BOOM

BUST!

HIGH PRICE ASKED & LOW PRICE WANTED = ‘UNFAIR PRICE’

CUSOMERS DEFAULT = IT’S THE BANKERS FAULT

WHAT DID EU DO WRONG?Crass Keynesianism (Quantitative easing)

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Increase money supply with printed money

Recapitalised the banks

Secured pensions and savings

Secured short-term national credit ratings

Goods inflation needs to grow

Low demand caused disequilibrium

Jobs/wages needs to be tightened

Low supply cased disequilibrium

Crass Monetarism (Fiscal Union) All ‘singing from the same hymn sheet’

Inability of Member States manage local economies

CRASH!DEBT FUELLED GROWTH + DEBT FUELLED RECOVERY

= INFLATION, UNEMPLOYMENT, STAGFLATION x 2

WHAT MUST EU DO NOW?

CENTRALISED BANKING AND FISCAL POLICY

Manage the Market

ECB• Sets single interest rate• Sets varying ‘Tobin rate’

Court of Auditors• Single Stock Exchange• Monitor fiscal

management

DECENTRALISED FISCAL MANAGEMENT

Converge the Economies

EU Governments• Use single interest rate

as benchmark in order to use fiscal powers to• Converge wages• Converge

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SAVED!REGULATION + CONVEGENCE

= MANAGED GROWTH + HARMONOUS INTEGRATION

HOW DO EU GET IT DONE?

EUROZONE

Enhanced Co-operation

• Increase competence of• ECB/ESCB/Eurosystem• Court of Auditors• Regional treasuries

• Decrease competence of• National lending bodies

OUTSIDE EUROZONE

Voluntary Approach• Central Banks Regulate:• Stock markets• Interest rates

• Regional approach to:• Income taxes / credits• Business taxes / credits• Purchases taxes

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SIMPLE!ONE FRAMEWORK FOR THE EUROZONE

DIFFERENT ONE’S FOR ALL THE OTHERS

WHAT ABOUT THE REST OF EU?

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ONE SIZE!

DOES NOT FIT ALLIT ONLY LEADS TO FREE-FALL

United Kingdom

Converge or die?

Adopt EU interest rate for easier convergence?

Use exchange rate for harmonising wages/goods prices?

GreeceThe ‘Gold Standard’?

Gold for euros to increase money supply?The ‘Sweden Model’?

Tied to euro, but own currency to increase confidence?

Germany

Give up control or give up the ghost?

WHAT QUESTIONS DO YOU HAVE?

• The Economics •Monetarianism•Keynesianism

• European Union Law•Enhanced Co-operation

• Anything else?

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