Common borrowing was first used by the EU to help countries pay for the recovery from the coronavirus pandemic. But then, as now, countries such as the Netherlands, Germany and the Nordics resented having to pay for poorer southern countries that they see as lacking fiscal discipline.
The hypocrisy of the Netherlands talking about fiscal resposability while having siphoned off the taxes from most of the continent is something else
“lacking fiscal discipline”.
More like “deflate the Euro and are pushed into debt” so that the rich countries export economies can work.
The rich countries export economies can always devalue by buying foreign assets, like Switzerland.
Before the introduction of the euro, there was a public letter by economists that warned about the danger of the conflict of interest between countries with strong and weak currencies. Everybody but the population knew.
It is wealth transfer from the rich countries and it also makes it difficult for poor countries to compete so the rich can buy assets. Yet poor countries could always reduce their wages instead of devaluing their currency, but that’s unpopular for emotional reasons even though financially it is the same. In the end it’s wealth transfer from the poor of rich countries to the rich of rich countries with everybody in the poor countries as the funnel.
We are playing this game for 20 years and more. It hugely undermines the credibility of the EU, for all countries. There shouldn’t be hidden agendas. If the EU thrives by exploiting its poor in all countries then something is wrong. It also shows how bad Russia must be that Ukrainians still want to join.
Buying foreign assets is devastating for the poor countries though as their capital and the capital returns are now in the hands of the already rich countries. And with assets like simple homes already out of reach, pushing down wages only makes things worse.
No matter how you play it. If you want a single market with a single currency, you must put the effort to balance trade and strengthen the weaker economies. Otherwise it will become lopsided time and time again.
Foreign assets must be outside the Euro zone to devalue the Euro. It still devastates countries but not EU countries.
For the devaluation to work right now, we must already do that. My guess is that it’s poor countries buying stuff from China. In that light, fiscal discipline could mean less stuff from China as a preparation for decoupling. But that cannot work because if people have less money they cannot buy expensive stuff from the EU.
as their capital and the capital returns are now in the hands of the already rich countries
Do people ever hold those assets? Don’t they just wander from one set of billionaires to another?
The big picture is that fewer global resources are spread among more people. People are inevitably becoming poorer unless they count their immaterial goods, their movie, music and gaming libraries.
We have to redesign cities for that. Better sooner than later as long as we have some resources.