Another of those insistences that one should never let a crisis go to waste. Here the coronavirus is being used to push the next stage of the integration of the eurozone. For without this socialisation of debt across the eurozone economies then it might break apart. To which the correct response is “Good”. For the eurozone should not exist and events that lead to its break up are to be welcomed. Of course, not the deaths and suffering that coronavirus is visiting upon us all, but “an event which breaks up the eurozone” is, in and of itself, to be so welcomed.
Which is how we should be viewing this:
The shock of coronavirus could split Europe – unless nations share the burden
Excellent, don’t share the burden and cause the split.
This substantial disparity in the policy response is exacerbated by differences in initial conditions. In 2019, Italian output was still 4% lower than in 2007 while German GDP was 16% higher. Owing to the ongoing GDP collapse, the Italian public debt ratio will soon approach 150% of GDP – even without a new support package. Yet despite their comparatively tepid response, Italian policymakers already have to nervously watch the interest rate differential between Italian and German government bonds. The spread widened substantially in recent weeks.
Quite so, which is why we don’t want the eurozone to exist and why we would welcome it splitting. An economic system that forces Italians into permanent poverty is one not worth having.
Europe needs a joint fiscal response to the Covid-19 crisis. All countries in the currency union must be able to do whatever is necessary to respond to the public health catastrophe. Two different options are on the table.
The best solution would the joint issue of one-off bonds with long maturities.
Which is exactly what the federasts have been wanting to happen since whenever. A joint fiscal policy that is. Do not believe the guff about it being a one off. The moment it as been done once, in extremis, then everything will become an extremis which justifies it. That’s just the way the EU works.
That is this is just what the federasts have been praying for, an emergency which leads to a common European Treasury run from Brussels. They’re licking their lips at the prospect of this – and what are a few tens of thousands of deaths against the dream of a truly United Europe?
What is needed is an unambiguous signal of mutual trust and burden-sharing within the European family. Nine heads of government, from Belgium, France, Greece, Ireland, Italy, Luxembourg, Portugal, Slovenia and Spain, have today called for the issue of “a common debt instrument” – a bond, in other words – to raise funds to fight the pandemic. This is the right path. This is a time for European solidarity. If the continent does not stand together now, the European project might never recover.
The European project should not recover, should not exist, therefore we should not have a common fiscal policy and so too, therefore, not a common eurobond to deal with the coronavirus.
It’s all terribly simple when viewed correctly.