The angle about the Eurobonds is fascinating. I've never thought about them in the context that you've laid out here. Can you recommend any sources to read up more on this topic? And do you think that the EU members that are have not yet adopted the Euro (Romania for example) have a better chance at getting out before things completely go to shit or at least insulating themselves from the worst consequences, or are they as fucked as the rest? It doesn't seem like the EU is going to allow a repeat of Brexit under any circumstances and will pull out all the stops to prevent members from leaving.
6
☆ Yσɠƚԋσʂ ☆ - 4mon
I actually picked up on the eurobonds thing listening to the duran guys. They harp on this a lot, and surprisingly I haven't seen it discussed much by other people. But the problems are obvious when you start to think about the mechanics of it. In theory nations that haven't adapted the Euro yet would have more space to maneuver, but in practice I don't think they're in a position to take advantage of that. For example, Romania doesn't really have any industry to speak of, so it's not like they have exports they can boost by devaluing their currency. These smaller members also tend to be the ones that get EU funds distributed to them, creating a dependence. So, they're unlikely to try to leave until the gravy train stops.
The real crisis would be if AfD in Germany or RN in France got in power and tried to leave the union. I completely agree that the EU will pull out all the stops to prevent that from happening, but at the same time their power is going to collapse if there is a financial crisis in Eurozone. This is related to the point I note that EU technically is just an administrative organization. It doesn't have its own funds, and if countries start withholding funds because they need to save their own economies, the whole thing will start to unravel.
8
GreatSquare - 4mon
Good article.
I think even IF Britain doesn't want to do MMT, they are in a good position to make a lot of money by crashing the share and real estate market before they issue bonds. Capital will rush to sell their assets and convert it to bonds at low interest rates. This can fund their next move (stupid as it may be). If they had some brains they would use that bond money to buy the real estate, either lowering rents or using the land for infrastructure e.g. public transport/education/healthcare.
The EU on the other hand is fucked.
3
cfgaussian - 4mon
I think Britain is even more fucked. They are in the same position as the EU only with a smaller economy and already in a more advanced state of decline. The dynamics are the same it's just going faster for Britain because they have less of a buffer to let them kick the can down the road. As a European looking at them right now and seeing how catastrophic the situation is over there, it feels like looking about five years or so into our own future.
5
☆ Yσɠƚԋσʂ ☆ - 4mon
I agree, I expect they might actually end up with the IMF bailout, and the first thing IMF does is enforce austerity to "balance the budget."
4
GreatSquare - 4mon
I think Britain is even more fucked. They are in the same position as the EU only with a smaller economy and already in a more advanced state of decline.
Britain is in the odd position of being pretty useless to exploit for international capitalists. Therefore their own bourgeoisie government can still keep their neoliberal control going. The government can keep the economy going by playing the bond market against other assets like shares and real estate. e.g. UK real estate is through the roof so it's got a long way to fall. Billionaires can't take real estate out of the country so they will sell in a falling market and convert to bonds.
The UK Chancellor is under pressure now to issue more bonds at the worst time to do it. The trick is timing, having the patience to wait to issue bonds and then spending on the right things. This is the test of UK leadership skills which are frankly complete shit. The market and the media are in a constant state of doomerism and always calling for action which leads to an overreaction. All signs point to the government fucking it up again.
The EU is under threat of countries leaving. There's less and less advantages being in the EU.
3
cfgaussian - 4mon
Ok but that's a fiscal argument that i feel just ignores the elephant in the room which is the rapidly declining living conditions. What use is the government playing the bond market game when people can't afford heat their homes? Real estate prices being sky high is also not a sign that things are going well, quite the opposite, because it leads to unaffordable rents.
2
GreatSquare - 4mon
i feel just ignores the elephant in the room which is the rapidly declining living conditions.
This is true.
But I think the EU and UK governments are just worried about funding themselves which is what the article was about.
Real estate high prices mean that when owners sell it (which they do in a falling market), they still get a lot of pounds. Those investors then use those pounds to buy bonds that the UK government issue and the government gets a lot of pounds. In the meantime, the UK can borrow from the Bank of England.
yogthos in europe
The Terminal Crisis of European Neoliberalism
https://dialecticaldispatches.substack.com/p/the-terminal-crisis-of-european-neoliberalismThe angle about the Eurobonds is fascinating. I've never thought about them in the context that you've laid out here. Can you recommend any sources to read up more on this topic? And do you think that the EU members that are have not yet adopted the Euro (Romania for example) have a better chance at getting out before things completely go to shit or at least insulating themselves from the worst consequences, or are they as fucked as the rest? It doesn't seem like the EU is going to allow a repeat of Brexit under any circumstances and will pull out all the stops to prevent members from leaving.
I actually picked up on the eurobonds thing listening to the duran guys. They harp on this a lot, and surprisingly I haven't seen it discussed much by other people. But the problems are obvious when you start to think about the mechanics of it. In theory nations that haven't adapted the Euro yet would have more space to maneuver, but in practice I don't think they're in a position to take advantage of that. For example, Romania doesn't really have any industry to speak of, so it's not like they have exports they can boost by devaluing their currency. These smaller members also tend to be the ones that get EU funds distributed to them, creating a dependence. So, they're unlikely to try to leave until the gravy train stops.
The real crisis would be if AfD in Germany or RN in France got in power and tried to leave the union. I completely agree that the EU will pull out all the stops to prevent that from happening, but at the same time their power is going to collapse if there is a financial crisis in Eurozone. This is related to the point I note that EU technically is just an administrative organization. It doesn't have its own funds, and if countries start withholding funds because they need to save their own economies, the whole thing will start to unravel.
Good article.
I think even IF Britain doesn't want to do MMT, they are in a good position to make a lot of money by crashing the share and real estate market before they issue bonds. Capital will rush to sell their assets and convert it to bonds at low interest rates. This can fund their next move (stupid as it may be). If they had some brains they would use that bond money to buy the real estate, either lowering rents or using the land for infrastructure e.g. public transport/education/healthcare.
The EU on the other hand is fucked.
I think Britain is even more fucked. They are in the same position as the EU only with a smaller economy and already in a more advanced state of decline. The dynamics are the same it's just going faster for Britain because they have less of a buffer to let them kick the can down the road. As a European looking at them right now and seeing how catastrophic the situation is over there, it feels like looking about five years or so into our own future.
I agree, I expect they might actually end up with the IMF bailout, and the first thing IMF does is enforce austerity to "balance the budget."
Britain is in the odd position of being pretty useless to exploit for international capitalists. Therefore their own bourgeoisie government can still keep their neoliberal control going. The government can keep the economy going by playing the bond market against other assets like shares and real estate. e.g. UK real estate is through the roof so it's got a long way to fall. Billionaires can't take real estate out of the country so they will sell in a falling market and convert to bonds.
The UK Chancellor is under pressure now to issue more bonds at the worst time to do it. The trick is timing, having the patience to wait to issue bonds and then spending on the right things. This is the test of UK leadership skills which are frankly complete shit. The market and the media are in a constant state of doomerism and always calling for action which leads to an overreaction. All signs point to the government fucking it up again.
The EU is under threat of countries leaving. There's less and less advantages being in the EU.
Ok but that's a fiscal argument that i feel just ignores the elephant in the room which is the rapidly declining living conditions. What use is the government playing the bond market game when people can't afford heat their homes? Real estate prices being sky high is also not a sign that things are going well, quite the opposite, because it leads to unaffordable rents.
This is true.
But I think the EU and UK governments are just worried about funding themselves which is what the article was about.
Real estate high prices mean that when owners sell it (which they do in a falling market), they still get a lot of pounds. Those investors then use those pounds to buy bonds that the UK government issue and the government gets a lot of pounds. In the meantime, the UK can borrow from the Bank of England.