72 replies on “Towards a Genuine Economic and Monetary Union”
I would suggest that the following extracts are likely to be the focus of actual decision.
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“The possibilities foreseen under Article 127(6) TFEU regarding the conferral upon the European Central Bank of powers of supervision over banks in the euro area would be fully explored”.
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“Under these rules, the issuance of government debt beyond the level agreed in common would have to be justified and receive prior approval. Subsequently, the euro area level would be in a position to require changes to budgetary envelopes if they are in violation of fiscal rules, keeping in mind the need to ensure social fairness. In a medium term perspective, the issuance of common debt could be explored as an element of such a fiscal union and subject to progress on fiscal integration. Steps towards the introduction of joint and several sovereign liabilities could be considered as long as a robust framework for budgetary discipline and competitiveness is in place to avoid moral hazard and foster responsibility and compliance. The process towards the issuance of common debt should be criteria-based and phased, whereby progress in the pooling of decisions on budgets would be accompanied with commensurate steps towards the pooling of risks. Several options for partial common debt issuance have been proposed, such as the pooling of some short-term funding instruments on a limited and conditional basis, or the gradual roll-over into a redemption fund. Different forms of fiscal solidarity could also be envisaged.”
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“Close involvement of the European parliament and national parliaments will be central, in the respect of the community method. Protocol 1 TFEU on the role of national parliaments in the EU offers an appropriate framework for inter-parliamentary cooperation”.
In general terms, it is an impressive document but the general reading that will be applied to it is that it just another exercise in kicking the can down the road. A number of players, notably the now identifiable trio of France, Italy and Spain, have yet to grasp that they are playing with very weak hand, indeed no hand at all. None of the three is yet sufficienytly advanced in coming to terms with this reality. Sarkozy understood that France shoul stay out of this company in the first place cf. article by Philip Stephens of the FT.
I prefer listening to more attractive characters.
This Daily Mail like girl was closer to the mark a few years ago although perhaps a bit naive herself.
The symbol of the council speaks volumes.
Its a expression of pure evil ,we are unfortunetly surrounded by its servants.
This further centralisation of power will destroy what little good remains in this place.
Money / energy will flow in & out of jurisdictions with even more devastating force.
No redundencey / independence will remain – people as conduits rather then sentient human beings left stranded , unskilled and vulnerable after each successive credit bubble which will utilise this concentrated energy to the max.
Its always been the final result of such evil efforts.
Devastation.
We need to break from this Soviet or they will kill us all.
Two years post the first Greek bailout and this document, ‘not a blueprint’, seems to owe more to metaphysics than to practical commerce. Is there no sense of a fire sweeping through the house?
If anyone can explain how the countries currently being ‘cured’ by the troika will be helped by this document to repay their loans within the specified periods, it would make great reading.
Meanwhile Spain and Italy are having the financial equivalent of a nervous breakdown. There is a possibility that if an agreement isn’t reached at the next summit (Thursday and Friday) then Monti will resign and that act and its implications will probably tip borrowing costs off a cliff..
@ The Alchemist
Exactly! And where would that leave Italy?
@DOCM
Over the past two months, Monti’s increased dissatisfaction with Merkel and his general irritation with the prevarication that have come to define EU summits featuring the euro has been widely reported upon in the Italian media.
Berlusconi is testing the waters to see if he could be elected president have Napolitano goes, and in the past few days has been flying a popular return to the Lira kite. If Monti resigns, perhaps another technocrat could be prevailed upon to step in but it is doubtful that such a candidate would get a vote of confidence within parliament. So it would be general election time in August – a horrible holiday month.
06/26/2012 26.06.2012
The World from Berlin
Germany Debates a Euro Bailout Referendum
German Finance Minister Wolfgang Schäuble kicked a political hornets’ nest when he suggested to SPIEGEL that a referendum on efforts to save the euro will have to be held sooner or later. German commentators jumped into the debate on Tuesday.
George Soros on the Euro Crisis
‘A Tragic, Historical Mistake by the Germans’
With the EU summit set to start on Thursday, pressure is on European leaders to find a way out of the euro crisis. Investor George Soros is pessimistic that a solution will be found and says time is extremely short. In an interview with SPIEGEL ONLINE, he warns that Germany could develop into a hated, imperial power.
Eurozone
Germany — make the bad choice, not the disastrous one
26 June 2012 Süddeutsche Zeitung Munich
…..Without at least a limited collective European liability, the euro can no longer be defended credibly. This includes a European banking policy with teeth. Why are so many European banks undercapitalised – in contrast to the American competition? Because there is no European body that could force them to build up adequate reserves.
When to comes to the euro, the Germans are stuck between a bad choice and a disastrous choice. They should choose the bad one, and very quickly.
EU does NOT have 10 years! TIME is the key variable that has led to failure after failure as the ‘financial crisis’ deepens damaging democracy and the lifeworlds of ordinary EU citizens ….
Texts highlight Time: Action is what is demanded now.
My first impression was that that the report was cogged from the latest IMF ‘Concluding Euro’ report. Maybe not quite verbatim but cogged nonetheless.
My second impression based on the ‘Next Steps’ paragraph is that the game is well and truly up.
“NEXT STEPS–PROPOSAL FOR A WORKING METHOD.
Further work is necessary to develop a specific and time-bound road map for theachievement of the genuine Economic and Monetary Union. A report could be submitted to the December European Council by the President of the European Council in close collaboration with the President of the Commission, the President of the Eurogroup and the President of the European Central Bank. There will be regular and informal consultations with the Member States and the EU institutions. An interim report could be presented in October 2012.”
You are not serious! “Further work is necessary…”
In other words ‘we cannot get anybody to agree on anything that will stop the downward spiral’.
And this just a few days after Monti declared that something to ‘save the euro’ was needed within a week.
IMHO the game is up.
@DOCM
re: “A number of players, notably the now identifiable trio of France, Italy and Spain, have yet to grasp that they are playing with very weak hand, indeed no hand at all.”
I think you are misreading events as they are developing. There comes a point in every situation where it becomes nonsensical to continue the present course of action as it will lead to destruction. Sometimes any alternative is better. Spain and Italy are at that point. France not yet. Monti’s recent comments and the fact that Italy are borrowing at 7% should be reflected on.
Germany should ask itself what would be happening in Germany at such rates of interest or with Spain or Italy’s unemployment rates.
‘Saving the euro’ is I suspect not top of the Spanish or Italian agendas right now. How to extricate themselves from it might be top of that agenda.
@joseph ryan
+1
After all the time and tribulations of the past few years for the ‘President’ to produce a document on banking policy that is ‘not a blueprint’ really says a lot about the huge credibility gap into which is thrust the euro’s future.
For Merkel to say that she was ruling out eurobonds “as long as she lived” to a meeting of an FDP group, if she said it, was unwise, to say the least.
It is a misfortune of history that a politician from the former East Germany has had the reins of power in the united Germany at this critical juncture. Merkel simply has no feeling for what Europe is all about.
The situation will, it seems, have to get much worse before it gets better! Meanwhile, the two frozen china figures that constitute represent the Irish government are still, just about, on the mantlepiece.
Interesting that Draghi is part of this. Surely he realizes how ridiculous the text is. The other characters are mediocre politicians chosen for their weaknesses (meaning they won’t threaten national leaders), but Draghi would see the need for true substance. How can they call it “Towards a Genuine EMU”? Do they all agree that what we have currently is not “genuine”? This document exhibits more reasons the EMU is destined to fail: the best people to consider these issues have been crippled by the weight of bureaucracy or excluded, while the institutions that have emerged to deal with these problems aren’t competent enough to earn respect.
@docm
That was confusing, thought with “frozen china figures” you had managed to conflate this with Chinese electricity consumption.
You might approve of this tone from a Nomura currency note:
“Forget about economics, it’s about politics
The end-June summit may seem like „just another summit‟. However, the stakes are much higher than before. It is becoming consensus that the current austerity-based strategy is not yielding results and that there is a need for a more fundamental change in the structure of the eurozone.
As we have pointed out, capital flight from the eurozone appears to be materializing for the first time in this crisis, and talk about a eurozone break-up is becoming an increasingly central part of the debate. Just a few months ago, a break-up was generally regarded as highly unrealistic. But the notion of break-up, in the form of a Greek exit, or a more dramatic reconfiguration, has now entered the mainstream debate, and policy makers have had to admit that a certain degree of contingency planning is necessary.
More public recognition of the short-comings of the current institutional setup also means that failure to reach an effective agreement has the potential to trigger significant further deterioration in market dynamics.
What constitutes a successful outcome at this point? There are two key criteria:
First, the scope of agreement needs to be sufficiently broad to put the eurozone, as a currency union, on a more sustainable path. The market is likely to be looking in particular for the scope and timing of the elements concerning banking union and debt mutualization.
Second, the ratification of the agreement needs to be politically feasible across the eurozone. From this perspective, it will be important whether the agreement requires treaty change (necessitating referenda), or whether parliamentary approvals are sufficient.
The problem is that the broader the scope of the agreement, the higher the risk of ratification hiccups. European policy makers are facing a fine balancing act indeed. For this reason, we are likely to be entering a period characterized by gradual progress towards further integration most of the time, interrupted periodically by violent set-backs as a function of specific political events.
The democratic deficit as obstacle to further integration…etc,etc…
@ Joseph Ryan
Put yourself in Van Rompuy’s position! He is not trying to mind mice at the crossroads but a herd of elephants, one of which has gone rogue.
Our posts crossed. I could not think of a better description of the quality of the present exchanges on the CPA, not to mention the unthinking acceptance by the commentariat that “of course, a second bailout is necessary” without any reflection as to why this should be so.
Some thought might also be suitably given to where, if anywhere, it might come from.
Merkel: “I don’t see total debt liability as long as I live,” she was quoted as saying, a day after branding the idea of euro bonds “economically wrong and counterproductive”.
@ All
Martin Wolf is good but with this contribution he has surpassed even his own high standards. The message; it is time to stop looking to summits for salvation. The answer lies closer to home; sinn féin!
I think its one thing to realise the post 1973 Labour party has conspired to bring us into a Soviet but we now know if we did not know already that the very sad followers of FG & FF can be bought for 30 pieces of silver.
Its a strange political world we live in – where up is down and left is right.
Its a consequence of both the fiscal payouts & regional / cultural mind games the euro boys have played especially post 87 and also of course the much more important monetary turmoil / leverage neutron bomb economics carried out deep withen the biggest banking houses of the west.
Of course most people just don’t know how deep this rabbit hole truely goes.
They walk around like zombies unaware that the nation state now leaving the station was born out of tremendous bloodshed & treachery financed by the Dutch banking houses of that era……
The elite now bored with its artiface have conspired to deconstruct its bomb and build a Larger one.
The fact that Barroso was /is a Bloody Maoist seems of no concern to so called conservative people.
I guess its because the very word conservative has been so warped by this matrix.
The Paddy fields will become the killing fields when this reaches its final logical conclusion as these guys are true social engineers and not people who believe there is any clear division between private affairs and the good of the commons.
“…as long as I live”
Surely some mistake. It was, “I want to give.”
Merkel: “I don’t see total debt liability as long as I live,” she was quoted as saying, a day after branding the idea of euro bonds “economically wrong and counterproductive”.
Hands up if you sold the FC constitutional amendment as either a “pathway”, “gateway” or the more modest “stepping stone” to Eurobonds.
“Redemption Fund” – My Redeemer liveth!
Grumpy,
You should know that you never believe anything until it has been denied.
For what it’s worth, I think the Euro lurches on until August 2014- the 100 th anniversary of the first German attempt to destroy the Continent.
@Tull,
Your willingness to evoke the past to bash Germany is probably your least endearing trait revealed here. Europe has a choice: a German Europe which can hold its own in the various conflicts, economic and otherwise, with the emerging economies in a global context; or a long self-consuming decline.
Martin Wolf outlines the choices well as DOCM as noted above.
There are short-term and long-term issues and a path towards better banking regulation would be a start but not much.
Merkel’s domestic leeway has reduced because France, the second-biggest economy in the EMU, has given the impression that it’s is not going to give priority to reform – – basically to help itself by addressing issues that impact job creation.
I have said several times that a weak centre in Brussels cannot order up growth for individual economies. It can help only.
A rise in aggregate demand would float some boats but with worries about a US ‘fiscal cliff’ in early 2013, it’s foolish to expect the global economy to get into high gear soon. Besides, France has been running a trade deficit in boom and bust times.
In the UK today, the head of the CBI, the main business lobbying organisation, will say that a return to growth will not solve the youth unemployment problem and he will call for an alliance between business and government to address it.
Such problems can be alleviated but there is little appetite for change among those on the gravy train already.
The US is one of only three OECD countries whose workers age 55-64 have the same or better education than workers age 25-34. In most of the 33 other countries in the organization, younger workers are much better educated than those nearing retirement.
The Irish government makes a choice to maintain high public sector costs at the expense of youth unemployment. Euronews reports that while the Greek private sector has been decimated, the government has hired some 70,000 new civil servants in the last two years.
Merkel is asked to show political courage but it’s not very evident elsewhere.
Extremism is a risk but also in Germany.
On trade, Paul Hunt is right.
In Europe, outside of Germany, there are few European global business leaders and Nokia, the one bright start in consumer electronics, is floundering.
By 2030, China alone will account for 30% of the world’s new college-educated workers. In comparison, the United States will account for only 5%, and collectively, advanced countries including the US, Japan and much of Europe will account for only 14% of new highly educated workers.
There is no free lunch!
folks,
what did Merkel say? “total liability”
This would be, as in private and business life, an extremely bad idea.
Even for a company, you have total control over, the very most people built “limited liability partnerships / companies” llp / llc for. To keep some money, if things go bad, like Schlecker in Germany now.
Total control is a conditio sine qua non for total liability, like eastern Germany. I dont think you would like that : – )
Of course Soros, Paulson, Goldman Sachs would like that “unlimited” for Germany, just as some bank likes that, if the rich aunt gives a surety for the latest business idea of her flamboyant nephew.
But that would create just a tremendous moral hazard, of who is more deserving.
Even now the Greeks feel their need for 2 year unemployment payments, while the benefactor Germany has only one.
Finally: every nation bails out her own banks (or not, which in hindsight would have been the better choice for Ireland, maybe)
UK RBS, Belgium / France Dexia, Germany HRE, Ireland, Dutch ING.
Why should Spain now get a privelege ?
A question in general:
Are people in Ireland happy with how affairs are run in Europe now ?
That most things are decided in configurations of 2, 4 , 4+ of large countries, and the rest can then give it a nod?
In Germany, if I would not like Merkel, I have to try to get a majority in Bundestag, and one day later she is out of the job. If I dont like a law, I have to lobby a majority in Bundestag, threatening MPs to campaign against them in the next general election. There is a clear path.
If I want to get rid of the Clown Barroso, or block the latest sillly regulation from Brussels, what can I do? You are just hitting a rubber wall of intransparent, undemocratic structures.
Soo the question is, do we want to go forward to form a more perfect union, with clear. simple, direct “one man one vote”.
As M Hennigan and Merkel said many times.
If we all do our own thing, are an assembly of little Switzerlands, this feels good in this little moment. But there is strength in numbers, if united.
Just look at what happened when the Swiss stopped the Ghaddafi son constantly beating up his servants in Switzerland. Ghaddaffi senior took hostages and demanded compensations and apologies, and the swiss FM had to take a deep bow. Would you like that happening to you ?
Look at what i happening in the Spratly Islands. China is spreadening its wings and demands other countries with obviously much stronger claims to kow-tow. The US and China will be big players in the future, and Europe has a choice of being a player or not, being able to defend our rights only if we are united and strong.
PH,
Funny, J Fishker and Axel Weber have made the same point recently. The current policy will lead inevitably to the break up of the euro. Both added that the political price Germany will pay will be high for obvious historical reasons. The former thinks this outcome is regrettable. The latter, not so sure. This is a “Guns of August” moment. We will end up with a disaster that none of the protagonists want
@Genauer
“if the rich aunt gives a surety for the latest business idea of her flamboyant nephew.”
In Ireland’s case it was not so rich aunt giving surety for its most flamboyant nephews. She had several nephews, you see. We have a high birth rate.
The rich aunt was cheered on in the beginning but when she began to have second thoughts, the people the nephews owed money to threatened her to the point of ‘sending her back to middle ages’.
Yes, Ireland has had a sharp lesson on the meaning of total liability, or liability for the total mess if you wish to describe it that way.
What a pity the fine logic of Germany was not used to benefit some of her neighbours when they were faced with those ‘total liability’ demands.
@ genauer
What you say, of course, reflects the harsh reality with which indigent countries have enormous political difficulties in coming to terms. However, on the democratic legitimacy argument, what you suggest does not apply in federal systems; not even in Germany.
The principle of one man one vote is, of course, unimpeachable in a democracy. But a federation is made up of several democracies and the interests of both the citizens and the states have to be balanced. This is usually achieved by a bi-camegral structure, in the case of Germany, Bundesrat and Bundestag; in the US, the Senate and the House of Representatives etc.
The EU is sui generis, the democratic aim of one man one vote being achieved nationally through democratically elected, or mandated, representatives on the Council and through the European Parliament, where seats are allocated on the basis of so-called degressive proportionality which gives every state a reasonable number of seats without giving an excessive number to the largest (a bit like the system of election to the Bundesrat).
All this would not matter very much if the idea of one man one vote that you propound was just a popular notion. Unfortunately, this is not the case as the Constitutional Court, in a very idiosyncratic decision on the Lisbon Treaty, gave it, mistakenly and ignoring the precedent that Germany herself provides, considerable weight as the only source of political legitimacy for a directly elected European Parliament.
As in Ireland, the glacial speed eventually brings the destination in view and 40 years of argument on an EU patent is maybe moving to a partial conclusion.
European Union leaders are expected to agree on who gets the patent court at the a two-day summit on Thursday, with rival bidders France, Britain and Germany awaiting a compromise proposal by Van Rompuy ahead of the summit.
Reports say that the plan will see Paris offered the seat of the court, with ‘other functions’ offered to London and Munich.
In April 2011, the European Commission said, under the current system, the process involves considerable translation and administrative costs, reaching approximately €32,000 when patent protection is sought in the EU27, of which €23,000 arises from translation fees alone. In comparison, a US patent costs €1,850 on average. a European patent validated in 13 countries costs up to €20,000, of which nearly €14,000 relates to translations.
Under the latest proposals, the cost for a European patent with unitary effect in 25 member countries (Italy and Spain have opted out) would be €680, after a transitional period during which costs would still be less than €2500.
Italy, which could do with some incentives to help startups as the World Bank says it ranks with Mongolia on ease of doing business, has a case before the Court of Justice on the exclusion of Italian.
“S’ils n’ont pas de pain, qu’ils mangent de la brioche!”
@ Joseph
please dont overstretch the “rich auntie” metaphor.
What I wanted to say, that to the present day this “total liability” happens in Germany as well, multi million euro Schlecker folks riding with everything they have into insolvency.
I remember well, when the crazy Brian Cowen made his famous unilateral surprise move on 29th September 2008, with unlimited backing banks to 200 % GDP. It would have been up to the Irish Parliament to kick him out of office, because this was formally signed a month later.
But one that was signed, defaulting on this debt became a national Irish default, there is no way back from such things.
@DOCM
I have absolutely no problem with bicameralism, which typically also contains elements that 2/3 majorities of the broad house can overrule the smaller.
And of course fundamental rights are supreme to the majority du jour, not to forget.
But this European Commision is a mis construction.
From my perspective, the only advantage Germany has in a tighter political integration beyond a single market, is that even Germany alone is not strong enough for the coming tidal changes. Then how does that look for the other countries in Europe?
@Grumpy
“For this reason, we are likely to be entering a period characterized by gradual progress towards further integration most of the time, interrupted periodically by violent set-backs as a function of specific political events.”
That sounds very like the prognosis for global stock markets for as long as the West is deleveraging. Sideways movement over time punctuated by periodic fits of range bound euphoria which subsequently lead to large doses of despair which then give way to range bound euphoria …
Very hard for hedge funds.
Michael,
do you have a link for this 1850 Dollar? Our rule of thumb was 5 – 10 k$.
And I have my name on 26 patents : – )
While the 20 k and more for a patent in Europe where a clear sign of disfunctionality, most the time we just went for a US patent, and maybe later for EU / WP clone. We considered the time delays also important.
Now doing something for 680 sounds even more crazy. You can not get any reasonable vetting at this price. This would be just some rudimentary administration, with endless, extremely expensive lawsuits following later.
And Italy and Spain still doing their own thing just shows that they are delusional. The world is not circling any longer around Europe, and its internal affairs.
I don’t like these solutions; mostly coz they don’t seem to address the existing problem.
Reminds me of this Jackass clip and we ain’t getting to the moon:
Press Release
Patricia the Irish_Sovereign_in_Exile has sent best wishes to HRH, Michael D., Peter and Martin at the Co-operation Ireland Reception, The Lyric, Belfast. END
I would be concerned by the following – early involvement of the ECB and early inteference with national budgets but slow moved towards appropriate democratic control and mandates.
I cannot see a solution based on further EU integration other than full federalism with a federal budget and state budgets.
Heading down a democratically illegitimate route at a time of hardship and economic crisis with the intention (but no certainty) of rectifying the situation at a later date is very very dangerous.
The democratic deficit takes on a whole different political significance when we put national budgets under direct control of the EU.
@ MH, genauer
The >20K cost of a European patent consists mainly of national fees and translation costs, as mentioned. In practice, small firms can avoid much of this cost by nationalizing the claims in just a few countries, i.e. the ones where they do most of their business. So for small firms at least, the effect is to limit coverage rather to restrict innovation.
In any case, to the cost of application you must add the cost of professional advice and the cost of annual renewals for 20-odd years. These multiple the application cost by a factor of 3-4 in both the EU and US. (I wouldn’t want anyone reading this to think that you can really get and maintain a patent for <2K$!).
BTW, the quality of review and prior art search seems considerably higher in the EPO than in the US patent office, at least that is my impression. Of course that all adds to the cost and delay!
@All
Spain’s version of regulators falling upwards/”fair play to you, willie”
“I cannot see a solution based on further EU integration other than full federalism with a federal budget and state budgets.”
I don’t see a federal union as a runner. Germany has the recent experience of reunification which cost them a decade. A number of people think a large part of the problem was the exchange rate offered to east germany at unification. ie. it made inefficient east german industry/economy completely uncompetitive. Given the EZ is already a common currency, it would look like German reunification on a much bigger scale. I just don’t think German people would go for it.
@ skeptic01
The quality of patent filings has fallen dramatically over the past two decades. The rush to protect even minor improvements in products or services is overburdening patent offices. This slows the time to market for true innovations and reduces the potential for breakthrough inventions, according to the OECD report.
Besides the cited savings with a European patent, the cost of litigation would also fall.
A UK patent attorney wrote in the FT this week:
Many of the big British battalions are unhappy with some aspects of the deal but they have the means to obtain the benefits without suffering too much from the disadvantages. Small to medium-sized enterprises do not have such resources and yet they are the companies that contribute more to the creation of new enterprises and on which the future of the UK and Europe will eventually depend. The deal would provide great advantages to British SMEs. The cost of patent cover in most of the EU would be enormously reduced, maybe by as much as 70 per cent due to the almost complete elimination of translations and the cost of litigation in their own country would likewise be enormously reduced, due to the litigation being conducted on continental lines.
I have the feeling that if you ask an economist how we got into the mess we are in, he or she, while not denying that it is indeed a mess, will reply by giving advice as to how to get out of it but will not have anything very enlightening to say about how we got into it.
thanks for the link. As I was afraid, they are a little bit comparing apples to marmelade with the costs, but we are so used to that, these days 🙂
MH, sceptic
otherwise I pretty much agree with you, that is also good to say from time to time.
@MH
“The quality of patent filings has fallen dramatically over the past two decades. ”
This is difficult to define and report on convincingly especially across all fields of technology, and slow prosecution times are far from the only factor which might reduce the potential for breakthrough invention.
The fact is that as technologies mature it is normal to see increased numbers of patents and an increasing proportion of less influential patents. (influence level of patents can be measured using a variety of quant-qual ways)
One of the biggest fields of invention at present relates to software, i.e. ‘computer-implemented inventions’. For various reasons it is more difficult to obtain patent protection for these from the European patent office than from the US authority. But combined with the evolution from a mechanical/electrical world to today’s world where ‘breakthrough’ inventive activity is focused on macro and nano science and on cloud-based software applications, this has resulted in intense patent-protected inventive activity in the US in cloud computing, the ‘smartphone wars’, massive investment in patent monetisation, and a torrent of investment and economic activity related to this. There is less incentive to make such investment in the EU given the greater difficulties in securing robust IP protection in EU jurisdictions (although nothing whatever to prevent EU and Irish software companies from building patent portfolios in the US as monetisable assets and to discourage litigation).
A more severe problem than the high cost of European patenting perhaps is lack of engagement by EU companies with the patent system in high growth business areas.
The contrast between jurisdictions in just one area of invention, cloud computing, is striking. Cloud computing is a vast and diverse field, including areas as diverse as electronic banking, social media, cable and satellite content delivery, online auctions, surveillance and so on. Our own independent research reveals that US applicants dominated patenting in this field from 1990 to today. The top of the pecking order is US, Korea, China, Japan, Germany, Canada, UK with roughly 59%, 7%, 5%, 4%, 3%, 2% respectively of the total pool of inventions. Irish applicants contributed 0.4%.
Unfortunately most of that activity represents tax-driven filings from Ireland by a small number of global services firms. Nett of that, it transpires that in general the indigenous Irish software industry does not engage in meaningful patenting. Consequently such companies risk being filleted if/when they develop significant operations in litigious markets such as the US, and are disadvantaged in building enduring value in their businesses.
It’s a well worked piece on how we may implement more financial integration if that’s what we wish to do.
I don’t see how much financial integration is to help though since economies need money to function well and at that moment money can only come from bank loans.
More integration won’t encourage more bank loans. Even if it did every bank loan creates new money but also new debt so we can’t alleviate the problems of the debt crisis per se.
@ skeptic, MH, genauer
It is unarguable that many smaller businesses and individuals in the EU have decided not to bother patenting and exploiting ideas because they have literally been priced out. Europe has given its innovators a ridiculous barrier to entry compared to the US for example.
Taking out a patent in just one EU state leaves an innovator’s idea published so that anybody can copy it and a firm that exploits the idea in the rest of Europe will have economies of scale, imports to the patent protected market will inevitably emerge and the small patent holder will not have the resources to litigate against these cheaper imports.
A decade or so ago US patents seemed to be granted more sloppily, but some of the recent stuff making it past the UK office has been difficult to regard as “novel”.
so apparently Ms Merkel is channeling Ms Thatcher “eurobonds – that is out… Eurobills..that is out…. Debt redemption funds…that is out”
@Sophont
I thought in order to ‘channel’ someone they had to be dead? Or do you know something we don’t know?
Wasn’t de Gaulle also famous for saying ‘non’.
God I’m bored. Trying to make out a little software problem in some Scottish town could have happened in some other country miles away. I hate working with IT people, they are so intense. Don’t know what they’re getting so worked up about….. 😉
2 more days to go………
@ grumpy
The software patent sector is a mess with lots of litigation and trolls in search of killings.
Up to 250,000 patents may apply to a single smartphone and how can any company know in advance all the potential patents that maybe infringed?
In the context of economic growth and challenges ahead, an interesting fact is that more than three quarters of the patents granted in respect of work at America’s top 10 patent-generating universities (University of California system, Stanford University, Massachusetts Institute of Technology, University of Wisconsin, the University of Texas system, California Institute of Technology, the University of Illinois system, University of Michigan, Cornell University and Georgia Institute of Technology) in 2011 had a foreign-born inventor.
06/27/2012 27.06.2012
The Coming EU Summit Clash
Merkel Vows ‘No Euro Bonds as Long as I Live’
German Chancellor Angela Merkel has come out stronger than ever against euro-zone debt sharing, telling a group of parliamentarians that there would be no euro bonds “as long as I live.” Her tough stance guarantees conflict with Italian Prime Minister Mario Monti at this week’s pivotal EU summit in Brussels.
Merkel also made clear on Tuesday that she is unhappy with a crisis strategy paper (downloadable here as a PDF file) developed by a quartet of EU leaders and completed this week. The plan, developed by European Council President Herman van Rompuy, European Central Bank head Mario Draghi, European Commission President Jose Manuel Barroso and Euro Group chair Jean-Claude Juncker, calls for the creation of a banking union complete with euro-zone wide deposit guarantees and the creation of a joint crisis fund.
No one politician may stall the march of a continent.
@ MH et al
The real interest of the patent issue in the context of this thread is what it reveals about the nature of the EU i.e. that it is first and foremost a collection of nation states that are expected to compete with one another. This explains the strength of the competition rules which have remained largely unchanged since the Treaty of Rome. There is no common EU industrial policy other than some flagship demonstration projects dicated by pressure from outside the EU, notably Airbus.
The ideal outcome to the European Patent dispute would have been agreement on a single language – English – and location of the HQ in Paris. It seems that we may get the latter but not the former.
Both Italy, and especially Spain, given that country’s interests in Latin America, have a legitimate grievance about the choice of language regime which was limited to German (which used to be the standard), English and French.
The topical interest lies in the fact that the decision on the HQ has been included in the package that is being put together. If London has any leverage on retaining the EBA, I cannot see where it is.
06/27/2012 27.06.2012
The World From Berlin – Press Review
‘States Must Sacrifice Sovereignty to Save Euro’
Do European leaders trust each other enough to take the steps necessary to secure the long-term existence of the euro? German commentators warn that fundamental questions must be answered at Thursday’s EU summit.
Regarding the ‘leaning out’ of burdensome and expensive EU patenting procedures, how long it has taken to secure progress and ‘legitimate grievances’.
I think one simply has to ‘follow the money’ here. During decades of obfuscation by parts of the legal industry in EU states threatened by loss of rents for many low value-adding legal requirements, China has embraced Western patenting practices and is committed to increasing compliance with IP law, while India continues to develop a global IP services industry.
I think that while the European Commission has brought EU policies, funds and projects as well as an entire Directorate-General to foster collaborative RDI and use of IP, it faces an impossible task when trying to bring about constructive engagement between largely agrarian peripheral states and core states with breadth and depth of technological capability.
@ Tony Owens
You lost me there! The problem lies in the nature of the legal agreement – as reflected in the treaties – between the Member States. By and large, I think that it is a good agreement. Countries should compete with one another but in arriving at the level playing field required for this to be an even contest, vested interests – as you point out – often queer the pitch (to mix my metaphors a bit).
Genius is not confined to core countries cf. the startling statistics quoted by MH above on the origin of patents filed in the US.
@ Tony Owens
You lost me there! The problem lies in the nature of the legal agreement – as reflected in the treaties – between the Member States. By and large, I think that it is a good agreement. Countries should compete with one another but in arriving at the level playing field required for this to be an even contest, vested interests – as you point out – often queer the pitch (to mix my metaphors a bit).
Genius is not confined to core countries cf. the startling statistics quoted by MH above on the origin of patents filed in the US.
@ All
A blunt and accurate statement in the FAZ by a commentator that simply stating no is not a policy. And if that stance is maintained, the consequences must also be spelt out by the political leader holding it.
Lucinda waffling on about 10 billion & EIB…. on Morning Ireland Radio_1 … petty parochial platitudinous … and she is back to the 10 billion … Sweden? ….
EuroBonds … ‘moving in a positive direction in my view’ ..
I’VE HAD MORE THAN ENOUGH. WITH DUE personal RESPECT to Ms Creighton, THIS TD IS COMPLETELY OUT OF HER DEPTH AT EUROPEAN LEVEL …. RESPONSIBILITY RESTS WITH THE TAOISEACH WHO APPOINTED HER TO A POSITION FOR WHICH SHE IS CLEARLY NOT QUALIFIED ….
MAY WE HAVE A NEU MINISTER FOR EUROPE WHO IS UP TO THE TASK? NOW.
@ All
This article by Jeremy Warner in the Telegraph sums up what might be described as the classic Conservative view of the euro; Thatcher was right!
It also takes as gospel the view that a single currency cannot function without federal integration of the participating states. Merkel seems intent on proving this to be true.
The leader of the opposition in the Bundestag, Steinmeier, and her former foreign minister, has stated bluntly that she has now become part of the problem rather than the solution and that her changes of tack and hesitation have made the crisis worse.
Her “over my dead body” remark has become a major subject for discussion not only in Germany but across the globe.
@David O’Donnell
What’s really frightening is that there might not even be anyone better suited to the job in the ranks. Imagine if she’s the best they’ve got! Where does that leave us?
@ All
This article by Dr. Gunnar Beck in the NYT, refuting the idea that Germany has been the major beneficiary of the euro, also deserves a home on this thread.
What is extraordinary about the articlet is that it fails to ask the obvious question viz. why have German overall growth rates been so low? Would the distorting impact of concentraing on exports as the near sole engine of growth have anything to do with it?
@DOCM
… a little matter of German Unity (a fabulous achievement albeit its inclusion in the deal on EMU has had some dire consequences for others) … I hear you are mentioned in dispatches in the STASI files … now where did I put me wikileaks account … ?
@PR Guy
it is beyond a joke .. Hayes’ praise of the Irish financial system is no better … parochials are totally out of their depth …
Berlusconni is making life difficult for Monti …. who is lashing out at Angela
Italian officials said they were extremely concerned how markets might react Monday if the Brussels talks fail to break new ground. The summit was heading towards “complete uncertainty”, Mr Monti said.
Mr Monti is said by aides to be furious with Mr Berlusconi’s recent anti-European tack which is seen as undermining Italy ahead of the summit. Mr Berlusconi reportedly repeated on Tuesday that it would not be a bad thing if Germany exited from the Euro.
Chancellor Angela Merkel is taking a hard line on the euro crisis this week, insisting that shared debt be avoided at all costs. Her shrill tone, however, is born out of fear. Just as Europe finds itself on the verge of historic reforms, Berlin is losing control of the debate. Idealism, and the euro, might be the victims
The Thursday political cartoon in the Financial Times Deutschland couldn’t be easier to decipher. It depicts the Grim Reaper standing over an aged, bed-ridden Angela Merkel saying: “It is time.” Merkel responds: “For euro bonds, I know.”
The drawing refers to the chancellor’s comments made Tuesday afternoon during a meeting with parliamentarians belonging to her junior coalition partner, the Free Democrats. Euro bonds, she said according to meeting participants, would not be introduced in the euro zone “as long as I live.” The statement was widely interpreted as Merkel finally losing patience with demands from southern European countries that euro-zone debt be communitized. Instead of bending to the political breeze, Merkel had finally turned into “Iron Angie.”
But is that really what she meant? There are several indications that the answer could be no. First and foremost, the Chancellery has been at pains since Tuesday evening to elaborate on the context within which the “as long as I live” sentence was uttered. In reality, several papers, citing Chancellery sources, are reporting on Thursday that she was outlining the complexity of the reforms necessary before such shared debt could be introduced. As such, euro bonds aren’t likely “in her lifetime.” In other words, the Chancellery is insisting, Merkel remains the voice of calm and reason rather than one of hysteria and division.
06/28/2012 28.06.2012
The World from Berlin
Merkel’s Hard Line ‘Could Kill the Euro’
German Chancellor Angela Merkel’s comment that euro bonds would not be introduced in her lifetime has made headlines in Germany and provoked intense discussion. Commentators say that while the harsh tone is atypical of the cautious leader, her hard line could have disastrous consequences.
72 replies on “Towards a Genuine Economic and Monetary Union”
I would suggest that the following extracts are likely to be the focus of actual decision.
—
“The possibilities foreseen under Article 127(6) TFEU regarding the conferral upon the European Central Bank of powers of supervision over banks in the euro area would be fully explored”.
—
“Under these rules, the issuance of government debt beyond the level agreed in common would have to be justified and receive prior approval. Subsequently, the euro area level would be in a position to require changes to budgetary envelopes if they are in violation of fiscal rules, keeping in mind the need to ensure social fairness. In a medium term perspective, the issuance of common debt could be explored as an element of such a fiscal union and subject to progress on fiscal integration. Steps towards the introduction of joint and several sovereign liabilities could be considered as long as a robust framework for budgetary discipline and competitiveness is in place to avoid moral hazard and foster responsibility and compliance. The process towards the issuance of common debt should be criteria-based and phased, whereby progress in the pooling of decisions on budgets would be accompanied with commensurate steps towards the pooling of risks. Several options for partial common debt issuance have been proposed, such as the pooling of some short-term funding instruments on a limited and conditional basis, or the gradual roll-over into a redemption fund. Different forms of fiscal solidarity could also be envisaged.”
—
“Close involvement of the European parliament and national parliaments will be central, in the respect of the community method. Protocol 1 TFEU on the role of national parliaments in the EU offers an appropriate framework for inter-parliamentary cooperation”.
In general terms, it is an impressive document but the general reading that will be applied to it is that it just another exercise in kicking the can down the road. A number of players, notably the now identifiable trio of France, Italy and Spain, have yet to grasp that they are playing with very weak hand, indeed no hand at all. None of the three is yet sufficienytly advanced in coming to terms with this reality. Sarkozy understood that France shoul stay out of this company in the first place cf. article by Philip Stephens of the FT.
http://www.ft.com/intl/cms/s/0/81b7a26e-b4af-11e1-aa06-00144feabdc0.html
No thanks.
I prefer listening to more attractive characters.
This Daily Mail like girl was closer to the mark a few years ago although perhaps a bit naive herself.
http://www.youtube.com/watch?v=Wt6BkaDVNws
The symbol of the council speaks volumes.
Its a expression of pure evil ,we are unfortunetly surrounded by its servants.
This further centralisation of power will destroy what little good remains in this place.
Money / energy will flow in & out of jurisdictions with even more devastating force.
No redundencey / independence will remain – people as conduits rather then sentient human beings left stranded , unskilled and vulnerable after each successive credit bubble which will utilise this concentrated energy to the max.
Its always been the final result of such evil efforts.
Devastation.
We need to break from this Soviet or they will kill us all.
Two years post the first Greek bailout and this document, ‘not a blueprint’, seems to owe more to metaphysics than to practical commerce. Is there no sense of a fire sweeping through the house?
If anyone can explain how the countries currently being ‘cured’ by the troika will be helped by this document to repay their loans within the specified periods, it would make great reading.
Meanwhile Spain and Italy are having the financial equivalent of a nervous breakdown. There is a possibility that if an agreement isn’t reached at the next summit (Thursday and Friday) then Monti will resign and that act and its implications will probably tip borrowing costs off a cliff..
@ The Alchemist
Exactly! And where would that leave Italy?
@DOCM
Over the past two months, Monti’s increased dissatisfaction with Merkel and his general irritation with the prevarication that have come to define EU summits featuring the euro has been widely reported upon in the Italian media.
Berlusconi is testing the waters to see if he could be elected president have Napolitano goes, and in the past few days has been flying a popular return to the Lira kite. If Monti resigns, perhaps another technocrat could be prevailed upon to step in but it is doubtful that such a candidate would get a vote of confidence within parliament. So it would be general election time in August – a horrible holiday month.
06/26/2012 26.06.2012
The World from Berlin
Germany Debates a Euro Bailout Referendum
German Finance Minister Wolfgang Schäuble kicked a political hornets’ nest when he suggested to SPIEGEL that a referendum on efforts to save the euro will have to be held sooner or later. German commentators jumped into the debate on Tuesday.
http://www.spiegel.de/international/germany/germany-debates-referendum-over-euro-zone-integration-a-841014.html
06/26/2012 26.06.2012
George Soros on the Euro Crisis
‘A Tragic, Historical Mistake by the Germans’
With the EU summit set to start on Thursday, pressure is on European leaders to find a way out of the euro crisis. Investor George Soros is pessimistic that a solution will be found and says time is extremely short. In an interview with SPIEGEL ONLINE, he warns that Germany could develop into a hated, imperial power.
http://www.spiegel.de/international/europe/george-soros-says-germany-must-change-course-on-euro-crisis-a-841061.html
Eurozone
Germany — make the bad choice, not the disastrous one
26 June 2012 Süddeutsche Zeitung Munich
…..Without at least a limited collective European liability, the euro can no longer be defended credibly. This includes a European banking policy with teeth. Why are so many European banks undercapitalised – in contrast to the American competition? Because there is no European body that could force them to build up adequate reserves.
When to comes to the euro, the Germans are stuck between a bad choice and a disastrous choice. They should choose the bad one, and very quickly.
http://www.presseurop.eu/en/content/article/2245621-germany-make-bad-choice-not-disastrous-one
CARTOON OF THE DAY
Greece
Convalescents
26 June 2012I Kathimerini Athens
http://www.presseurop.eu/en/content/cartoon/2247151-convalescents
@on the report: towards a genuine ….
Key is TIME.
EU does NOT have 10 years! TIME is the key variable that has led to failure after failure as the ‘financial crisis’ deepens damaging democracy and the lifeworlds of ordinary EU citizens ….
Texts highlight Time: Action is what is demanded now.
My first impression was that that the report was cogged from the latest IMF ‘Concluding Euro’ report. Maybe not quite verbatim but cogged nonetheless.
My second impression based on the ‘Next Steps’ paragraph is that the game is well and truly up.
“NEXT STEPS–PROPOSAL FOR A WORKING METHOD.
Further work is necessary to develop a specific and time-bound road map for theachievement of the genuine Economic and Monetary Union. A report could be submitted to the December European Council by the President of the European Council in close collaboration with the President of the Commission, the President of the Eurogroup and the President of the European Central Bank. There will be regular and informal consultations with the Member States and the EU institutions. An interim report could be presented in October 2012.”
You are not serious! “Further work is necessary…”
In other words ‘we cannot get anybody to agree on anything that will stop the downward spiral’.
And this just a few days after Monti declared that something to ‘save the euro’ was needed within a week.
IMHO the game is up.
@DOCM
re: “A number of players, notably the now identifiable trio of France, Italy and Spain, have yet to grasp that they are playing with very weak hand, indeed no hand at all.”
I think you are misreading events as they are developing. There comes a point in every situation where it becomes nonsensical to continue the present course of action as it will lead to destruction. Sometimes any alternative is better. Spain and Italy are at that point. France not yet. Monti’s recent comments and the fact that Italy are borrowing at 7% should be reflected on.
Germany should ask itself what would be happening in Germany at such rates of interest or with Spain or Italy’s unemployment rates.
‘Saving the euro’ is I suspect not top of the Spanish or Italian agendas right now. How to extricate themselves from it might be top of that agenda.
@joseph ryan
+1
After all the time and tribulations of the past few years for the ‘President’ to produce a document on banking policy that is ‘not a blueprint’ really says a lot about the huge credibility gap into which is thrust the euro’s future.
@ All
FYI
http://www.spiegel.de/politik/ausland/kanzlerin-merkel-schliesst-euro-bonds-aus-a-841115.html
For Merkel to say that she was ruling out eurobonds “as long as she lived” to a meeting of an FDP group, if she said it, was unwise, to say the least.
It is a misfortune of history that a politician from the former East Germany has had the reins of power in the united Germany at this critical juncture. Merkel simply has no feeling for what Europe is all about.
The situation will, it seems, have to get much worse before it gets better! Meanwhile, the two frozen china figures that constitute represent the Irish government are still, just about, on the mantlepiece.
Interesting that Draghi is part of this. Surely he realizes how ridiculous the text is. The other characters are mediocre politicians chosen for their weaknesses (meaning they won’t threaten national leaders), but Draghi would see the need for true substance. How can they call it “Towards a Genuine EMU”? Do they all agree that what we have currently is not “genuine”? This document exhibits more reasons the EMU is destined to fail: the best people to consider these issues have been crippled by the weight of bureaucracy or excluded, while the institutions that have emerged to deal with these problems aren’t competent enough to earn respect.
@docm
That was confusing, thought with “frozen china figures” you had managed to conflate this with Chinese electricity consumption.
You might approve of this tone from a Nomura currency note:
“Forget about economics, it’s about politics
The end-June summit may seem like „just another summit‟. However, the stakes are much higher than before. It is becoming consensus that the current austerity-based strategy is not yielding results and that there is a need for a more fundamental change in the structure of the eurozone.
As we have pointed out, capital flight from the eurozone appears to be materializing for the first time in this crisis, and talk about a eurozone break-up is becoming an increasingly central part of the debate. Just a few months ago, a break-up was generally regarded as highly unrealistic. But the notion of break-up, in the form of a Greek exit, or a more dramatic reconfiguration, has now entered the mainstream debate, and policy makers have had to admit that a certain degree of contingency planning is necessary.
More public recognition of the short-comings of the current institutional setup also means that failure to reach an effective agreement has the potential to trigger significant further deterioration in market dynamics.
What constitutes a successful outcome at this point? There are two key criteria:
First, the scope of agreement needs to be sufficiently broad to put the eurozone, as a currency union, on a more sustainable path. The market is likely to be looking in particular for the scope and timing of the elements concerning banking union and debt mutualization.
Second, the ratification of the agreement needs to be politically feasible across the eurozone. From this perspective, it will be important whether the agreement requires treaty change (necessitating referenda), or whether parliamentary approvals are sufficient.
The problem is that the broader the scope of the agreement, the higher the risk of ratification hiccups. European policy makers are facing a fine balancing act indeed. For this reason, we are likely to be entering a period characterized by gradual progress towards further integration most of the time, interrupted periodically by violent set-backs as a function of specific political events.
The democratic deficit as obstacle to further integration…etc,etc…
@ Joseph Ryan
Put yourself in Van Rompuy’s position! He is not trying to mind mice at the crossroads but a herd of elephants, one of which has gone rogue.
@ All
FYI
http://www.businessinsider.com/the-spanish-bailout-and-the-myth-of-seniority-2012-6
@ grumpy
Our posts crossed. I could not think of a better description of the quality of the present exchanges on the CPA, not to mention the unthinking acceptance by the commentariat that “of course, a second bailout is necessary” without any reflection as to why this should be so.
Some thought might also be suitably given to where, if anywhere, it might come from.
btw “Towards a genuine EMU”
This is a genuine one:
http://www.bizarrebytes.com/wp-content/uploads/2011/08/emu-bird.jpg
@ All
FYI
http://www.telegraph.co.uk/finance/financialcrisis/9356829/EU-banking-union-plans-a-threat-to-London.html
What part of Nein and nein do we not understand?
Merkel: “I don’t see total debt liability as long as I live,” she was quoted as saying, a day after branding the idea of euro bonds “economically wrong and counterproductive”.
@ All
Martin Wolf is good but with this contribution he has surpassed even his own high standards. The message; it is time to stop looking to summits for salvation. The answer lies closer to home; sinn féin!
http://www.ft.com/intl/cms/s/0/98dc710e-beb9-11e1-8ccd-00144feabdc0.html#axzz1ykT846wn
I think its one thing to realise the post 1973 Labour party has conspired to bring us into a Soviet but we now know if we did not know already that the very sad followers of FG & FF can be bought for 30 pieces of silver.
Its a strange political world we live in – where up is down and left is right.
Its a consequence of both the fiscal payouts & regional / cultural mind games the euro boys have played especially post 87 and also of course the much more important monetary turmoil / leverage neutron bomb economics carried out deep withen the biggest banking houses of the west.
Of course most people just don’t know how deep this rabbit hole truely goes.
They walk around like zombies unaware that the nation state now leaving the station was born out of tremendous bloodshed & treachery financed by the Dutch banking houses of that era……
The elite now bored with its artiface have conspired to deconstruct its bomb and build a Larger one.
The fact that Barroso was /is a Bloody Maoist seems of no concern to so called conservative people.
I guess its because the very word conservative has been so warped by this matrix.
The Paddy fields will become the killing fields when this reaches its final logical conclusion as these guys are true social engineers and not people who believe there is any clear division between private affairs and the good of the commons.
“…as long as I live”
Surely some mistake. It was, “I want to give.”
Merkel: “I don’t see total debt liability as long as I live,” she was quoted as saying, a day after branding the idea of euro bonds “economically wrong and counterproductive”.
Hands up if you sold the FC constitutional amendment as either a “pathway”, “gateway” or the more modest “stepping stone” to Eurobonds.
“Redemption Fund” – My Redeemer liveth!
Grumpy,
You should know that you never believe anything until it has been denied.
For what it’s worth, I think the Euro lurches on until August 2014- the 100 th anniversary of the first German attempt to destroy the Continent.
@Tull,
Your willingness to evoke the past to bash Germany is probably your least endearing trait revealed here. Europe has a choice: a German Europe which can hold its own in the various conflicts, economic and otherwise, with the emerging economies in a global context; or a long self-consuming decline.
Martin Wolf outlines the choices well as DOCM as noted above.
There are short-term and long-term issues and a path towards better banking regulation would be a start but not much.
Merkel’s domestic leeway has reduced because France, the second-biggest economy in the EMU, has given the impression that it’s is not going to give priority to reform – – basically to help itself by addressing issues that impact job creation.
I have said several times that a weak centre in Brussels cannot order up growth for individual economies. It can help only.
A rise in aggregate demand would float some boats but with worries about a US ‘fiscal cliff’ in early 2013, it’s foolish to expect the global economy to get into high gear soon. Besides, France has been running a trade deficit in boom and bust times.
In the UK today, the head of the CBI, the main business lobbying organisation, will say that a return to growth will not solve the youth unemployment problem and he will call for an alliance between business and government to address it.
Such problems can be alleviated but there is little appetite for change among those on the gravy train already.
The US is one of only three OECD countries whose workers age 55-64 have the same or better education than workers age 25-34. In most of the 33 other countries in the organization, younger workers are much better educated than those nearing retirement.
The Irish government makes a choice to maintain high public sector costs at the expense of youth unemployment. Euronews reports that while the Greek private sector has been decimated, the government has hired some 70,000 new civil servants in the last two years.
Merkel is asked to show political courage but it’s not very evident elsewhere.
Extremism is a risk but also in Germany.
On trade, Paul Hunt is right.
In Europe, outside of Germany, there are few European global business leaders and Nokia, the one bright start in consumer electronics, is floundering.
By 2030, China alone will account for 30% of the world’s new college-educated workers. In comparison, the United States will account for only 5%, and collectively, advanced countries including the US, Japan and much of Europe will account for only 14% of new highly educated workers.
There is no free lunch!
folks,
what did Merkel say? “total liability”
This would be, as in private and business life, an extremely bad idea.
Even for a company, you have total control over, the very most people built “limited liability partnerships / companies” llp / llc for. To keep some money, if things go bad, like Schlecker in Germany now.
Total control is a conditio sine qua non for total liability, like eastern Germany. I dont think you would like that : – )
Of course Soros, Paulson, Goldman Sachs would like that “unlimited” for Germany, just as some bank likes that, if the rich aunt gives a surety for the latest business idea of her flamboyant nephew.
But that would create just a tremendous moral hazard, of who is more deserving.
Even now the Greeks feel their need for 2 year unemployment payments, while the benefactor Germany has only one.
Finally: every nation bails out her own banks (or not, which in hindsight would have been the better choice for Ireland, maybe)
UK RBS, Belgium / France Dexia, Germany HRE, Ireland, Dutch ING.
Why should Spain now get a privelege ?
A question in general:
Are people in Ireland happy with how affairs are run in Europe now ?
That most things are decided in configurations of 2, 4 , 4+ of large countries, and the rest can then give it a nod?
In Germany, if I would not like Merkel, I have to try to get a majority in Bundestag, and one day later she is out of the job. If I dont like a law, I have to lobby a majority in Bundestag, threatening MPs to campaign against them in the next general election. There is a clear path.
If I want to get rid of the Clown Barroso, or block the latest sillly regulation from Brussels, what can I do? You are just hitting a rubber wall of intransparent, undemocratic structures.
Soo the question is, do we want to go forward to form a more perfect union, with clear. simple, direct “one man one vote”.
As M Hennigan and Merkel said many times.
If we all do our own thing, are an assembly of little Switzerlands, this feels good in this little moment. But there is strength in numbers, if united.
Just look at what happened when the Swiss stopped the Ghaddafi son constantly beating up his servants in Switzerland. Ghaddaffi senior took hostages and demanded compensations and apologies, and the swiss FM had to take a deep bow. Would you like that happening to you ?
Look at what i happening in the Spratly Islands. China is spreadening its wings and demands other countries with obviously much stronger claims to kow-tow. The US and China will be big players in the future, and Europe has a choice of being a player or not, being able to defend our rights only if we are united and strong.
PH,
Funny, J Fishker and Axel Weber have made the same point recently. The current policy will lead inevitably to the break up of the euro. Both added that the political price Germany will pay will be high for obvious historical reasons. The former thinks this outcome is regrettable. The latter, not so sure. This is a “Guns of August” moment. We will end up with a disaster that none of the protagonists want
@Genauer
“if the rich aunt gives a surety for the latest business idea of her flamboyant nephew.”
In Ireland’s case it was not so rich aunt giving surety for its most flamboyant nephews. She had several nephews, you see. We have a high birth rate.
The rich aunt was cheered on in the beginning but when she began to have second thoughts, the people the nephews owed money to threatened her to the point of ‘sending her back to middle ages’.
Yes, Ireland has had a sharp lesson on the meaning of total liability, or liability for the total mess if you wish to describe it that way.
What a pity the fine logic of Germany was not used to benefit some of her neighbours when they were faced with those ‘total liability’ demands.
@ genauer
What you say, of course, reflects the harsh reality with which indigent countries have enormous political difficulties in coming to terms. However, on the democratic legitimacy argument, what you suggest does not apply in federal systems; not even in Germany.
The principle of one man one vote is, of course, unimpeachable in a democracy. But a federation is made up of several democracies and the interests of both the citizens and the states have to be balanced. This is usually achieved by a bi-camegral structure, in the case of Germany, Bundesrat and Bundestag; in the US, the Senate and the House of Representatives etc.
The EU is sui generis, the democratic aim of one man one vote being achieved nationally through democratically elected, or mandated, representatives on the Council and through the European Parliament, where seats are allocated on the basis of so-called degressive proportionality which gives every state a reasonable number of seats without giving an excessive number to the largest (a bit like the system of election to the Bundesrat).
All this would not matter very much if the idea of one man one vote that you propound was just a popular notion. Unfortunately, this is not the case as the Constitutional Court, in a very idiosyncratic decision on the Lisbon Treaty, gave it, mistakenly and ignoring the precedent that Germany herself provides, considerable weight as the only source of political legitimacy for a directly elected European Parliament.
As in Ireland, the glacial speed eventually brings the destination in view and 40 years of argument on an EU patent is maybe moving to a partial conclusion.
European Union leaders are expected to agree on who gets the patent court at the a two-day summit on Thursday, with rival bidders France, Britain and Germany awaiting a compromise proposal by Van Rompuy ahead of the summit.
Reports say that the plan will see Paris offered the seat of the court, with ‘other functions’ offered to London and Munich.
In April 2011, the European Commission said, under the current system, the process involves considerable translation and administrative costs, reaching approximately €32,000 when patent protection is sought in the EU27, of which €23,000 arises from translation fees alone. In comparison, a US patent costs €1,850 on average. a European patent validated in 13 countries costs up to €20,000, of which nearly €14,000 relates to translations.
Under the latest proposals, the cost for a European patent with unitary effect in 25 member countries (Italy and Spain have opted out) would be €680, after a transitional period during which costs would still be less than €2500.
Italy, which could do with some incentives to help startups as the World Bank says it ranks with Mongolia on ease of doing business, has a case before the Court of Justice on the exclusion of Italian.
“S’ils n’ont pas de pain, qu’ils mangent de la brioche!”
@ Joseph
please dont overstretch the “rich auntie” metaphor.
What I wanted to say, that to the present day this “total liability” happens in Germany as well, multi million euro Schlecker folks riding with everything they have into insolvency.
I remember well, when the crazy Brian Cowen made his famous unilateral surprise move on 29th September 2008, with unlimited backing banks to 200 % GDP. It would have been up to the Irish Parliament to kick him out of office, because this was formally signed a month later.
But one that was signed, defaulting on this debt became a national Irish default, there is no way back from such things.
@DOCM
I have absolutely no problem with bicameralism, which typically also contains elements that 2/3 majorities of the broad house can overrule the smaller.
And of course fundamental rights are supreme to the majority du jour, not to forget.
But this European Commision is a mis construction.
From my perspective, the only advantage Germany has in a tighter political integration beyond a single market, is that even Germany alone is not strong enough for the coming tidal changes. Then how does that look for the other countries in Europe?
@Grumpy
“For this reason, we are likely to be entering a period characterized by gradual progress towards further integration most of the time, interrupted periodically by violent set-backs as a function of specific political events.”
That sounds very like the prognosis for global stock markets for as long as the West is deleveraging. Sideways movement over time punctuated by periodic fits of range bound euphoria which subsequently lead to large doses of despair which then give way to range bound euphoria …
Very hard for hedge funds.
Michael,
do you have a link for this 1850 Dollar? Our rule of thumb was 5 – 10 k$.
And I have my name on 26 patents : – )
While the 20 k and more for a patent in Europe where a clear sign of disfunctionality, most the time we just went for a US patent, and maybe later for EU / WP clone. We considered the time delays also important.
Now doing something for 680 sounds even more crazy. You can not get any reasonable vetting at this price. This would be just some rudimentary administration, with endless, extremely expensive lawsuits following later.
And Italy and Spain still doing their own thing just shows that they are delusional. The world is not circling any longer around Europe, and its internal affairs.
@ genauer
http://bit.ly/hLKvF4
I don’t like these solutions; mostly coz they don’t seem to address the existing problem.
Reminds me of this Jackass clip and we ain’t getting to the moon:
Press Release
Patricia the Irish_Sovereign_in_Exile has sent best wishes to HRH, Michael D., Peter and Martin at the Co-operation Ireland Reception, The Lyric, Belfast. END
I would be concerned by the following – early involvement of the ECB and early inteference with national budgets but slow moved towards appropriate democratic control and mandates.
I cannot see a solution based on further EU integration other than full federalism with a federal budget and state budgets.
Heading down a democratically illegitimate route at a time of hardship and economic crisis with the intention (but no certainty) of rectifying the situation at a later date is very very dangerous.
The democratic deficit takes on a whole different political significance when we put national budgets under direct control of the EU.
@ MH, genauer
The >20K cost of a European patent consists mainly of national fees and translation costs, as mentioned. In practice, small firms can avoid much of this cost by nationalizing the claims in just a few countries, i.e. the ones where they do most of their business. So for small firms at least, the effect is to limit coverage rather to restrict innovation.
In any case, to the cost of application you must add the cost of professional advice and the cost of annual renewals for 20-odd years. These multiple the application cost by a factor of 3-4 in both the EU and US. (I wouldn’t want anyone reading this to think that you can really get and maintain a patent for <2K$!).
BTW, the quality of review and prior art search seems considerably higher in the EPO than in the US patent office, at least that is my impression. Of course that all adds to the cost and delay!
@All
Spain’s version of regulators falling upwards/”fair play to you, willie”
http://www.nytimes.com/2012/06/27/business/global/spanish-officials-hailed-banks-as-the-crisis-built.html
@Zhou,
“I cannot see a solution based on further EU integration other than full federalism with a federal budget and state budgets.”
I don’t see a federal union as a runner. Germany has the recent experience of reunification which cost them a decade. A number of people think a large part of the problem was the exchange rate offered to east germany at unification. ie. it made inefficient east german industry/economy completely uncompetitive. Given the EZ is already a common currency, it would look like German reunification on a much bigger scale. I just don’t think German people would go for it.
@ skeptic01
The quality of patent filings has fallen dramatically over the past two decades. The rush to protect even minor improvements in products or services is overburdening patent offices. This slows the time to market for true innovations and reduces the potential for breakthrough inventions, according to the OECD report.
Besides the cited savings with a European patent, the cost of litigation would also fall.
A UK patent attorney wrote in the FT this week:
http://monthlyreview.org/2012/06/01/why-stagnation-2
I have the feeling that if you ask an economist how we got into the mess we are in, he or she, while not denying that it is indeed a mess, will reply by giving advice as to how to get out of it but will not have anything very enlightening to say about how we got into it.
More about the Spanish banks:
http://www.golemxiv.co.uk/2012/06/the-eurofiscal-corruption-contest-the-spanish-entry/
MH,
thanks for the link. As I was afraid, they are a little bit comparing apples to marmelade with the costs, but we are so used to that, these days 🙂
MH, sceptic
otherwise I pretty much agree with you, that is also good to say from time to time.
@MH
“The quality of patent filings has fallen dramatically over the past two decades. ”
This is difficult to define and report on convincingly especially across all fields of technology, and slow prosecution times are far from the only factor which might reduce the potential for breakthrough invention.
The fact is that as technologies mature it is normal to see increased numbers of patents and an increasing proportion of less influential patents. (influence level of patents can be measured using a variety of quant-qual ways)
One of the biggest fields of invention at present relates to software, i.e. ‘computer-implemented inventions’. For various reasons it is more difficult to obtain patent protection for these from the European patent office than from the US authority. But combined with the evolution from a mechanical/electrical world to today’s world where ‘breakthrough’ inventive activity is focused on macro and nano science and on cloud-based software applications, this has resulted in intense patent-protected inventive activity in the US in cloud computing, the ‘smartphone wars’, massive investment in patent monetisation, and a torrent of investment and economic activity related to this. There is less incentive to make such investment in the EU given the greater difficulties in securing robust IP protection in EU jurisdictions (although nothing whatever to prevent EU and Irish software companies from building patent portfolios in the US as monetisable assets and to discourage litigation).
A more severe problem than the high cost of European patenting perhaps is lack of engagement by EU companies with the patent system in high growth business areas.
The contrast between jurisdictions in just one area of invention, cloud computing, is striking. Cloud computing is a vast and diverse field, including areas as diverse as electronic banking, social media, cable and satellite content delivery, online auctions, surveillance and so on. Our own independent research reveals that US applicants dominated patenting in this field from 1990 to today. The top of the pecking order is US, Korea, China, Japan, Germany, Canada, UK with roughly 59%, 7%, 5%, 4%, 3%, 2% respectively of the total pool of inventions. Irish applicants contributed 0.4%.
Unfortunately most of that activity represents tax-driven filings from Ireland by a small number of global services firms. Nett of that, it transpires that in general the indigenous Irish software industry does not engage in meaningful patenting. Consequently such companies risk being filleted if/when they develop significant operations in litigious markets such as the US, and are disadvantaged in building enduring value in their businesses.
It’s a well worked piece on how we may implement more financial integration if that’s what we wish to do.
I don’t see how much financial integration is to help though since economies need money to function well and at that moment money can only come from bank loans.
More integration won’t encourage more bank loans. Even if it did every bank loan creates new money but also new debt so we can’t alleviate the problems of the debt crisis per se.
@ skeptic, MH, genauer
It is unarguable that many smaller businesses and individuals in the EU have decided not to bother patenting and exploiting ideas because they have literally been priced out. Europe has given its innovators a ridiculous barrier to entry compared to the US for example.
Taking out a patent in just one EU state leaves an innovator’s idea published so that anybody can copy it and a firm that exploits the idea in the rest of Europe will have economies of scale, imports to the patent protected market will inevitably emerge and the small patent holder will not have the resources to litigate against these cheaper imports.
A decade or so ago US patents seemed to be granted more sloppily, but some of the recent stuff making it past the UK office has been difficult to regard as “novel”.
https://twitter.com/lindayueh/status/217994834630279170
so apparently Ms Merkel is channeling Ms Thatcher “eurobonds – that is out… Eurobills..that is out…. Debt redemption funds…that is out”
@Sophont
I thought in order to ‘channel’ someone they had to be dead? Or do you know something we don’t know?
Wasn’t de Gaulle also famous for saying ‘non’.
God I’m bored. Trying to make out a little software problem in some Scottish town could have happened in some other country miles away. I hate working with IT people, they are so intense. Don’t know what they’re getting so worked up about….. 😉
2 more days to go………
@ grumpy
The software patent sector is a mess with lots of litigation and trolls in search of killings.
Up to 250,000 patents may apply to a single smartphone and how can any company know in advance all the potential patents that maybe infringed?
In the context of economic growth and challenges ahead, an interesting fact is that more than three quarters of the patents granted in respect of work at America’s top 10 patent-generating universities (University of California system, Stanford University, Massachusetts Institute of Technology, University of Wisconsin, the University of Texas system, California Institute of Technology, the University of Illinois system, University of Michigan, Cornell University and Georgia Institute of Technology) in 2011 had a foreign-born inventor.
06/27/2012 27.06.2012
The Coming EU Summit Clash
Merkel Vows ‘No Euro Bonds as Long as I Live’
German Chancellor Angela Merkel has come out stronger than ever against euro-zone debt sharing, telling a group of parliamentarians that there would be no euro bonds “as long as I live.” Her tough stance guarantees conflict with Italian Prime Minister Mario Monti at this week’s pivotal EU summit in Brussels.
Merkel also made clear on Tuesday that she is unhappy with a crisis strategy paper (downloadable here as a PDF file) developed by a quartet of EU leaders and completed this week. The plan, developed by European Council President Herman van Rompuy, European Central Bank head Mario Draghi, European Commission President Jose Manuel Barroso and Euro Group chair Jean-Claude Juncker, calls for the creation of a banking union complete with euro-zone wide deposit guarantees and the creation of a joint crisis fund.
http://www.spiegel.de/international/europe/chancellor-merkel-vows-no-euro-bonds-as-long-as-she-lives-a-841163.html
@Dr Merkel
No one politician may stall the march of a continent.
@ MH et al
The real interest of the patent issue in the context of this thread is what it reveals about the nature of the EU i.e. that it is first and foremost a collection of nation states that are expected to compete with one another. This explains the strength of the competition rules which have remained largely unchanged since the Treaty of Rome. There is no common EU industrial policy other than some flagship demonstration projects dicated by pressure from outside the EU, notably Airbus.
The ideal outcome to the European Patent dispute would have been agreement on a single language – English – and location of the HQ in Paris. It seems that we may get the latter but not the former.
Both Italy, and especially Spain, given that country’s interests in Latin America, have a legitimate grievance about the choice of language regime which was limited to German (which used to be the standard), English and French.
The topical interest lies in the fact that the decision on the HQ has been included in the package that is being put together. If London has any leverage on retaining the EBA, I cannot see where it is.
06/27/2012 27.06.2012
The World From Berlin – Press Review
‘States Must Sacrifice Sovereignty to Save Euro’
Do European leaders trust each other enough to take the steps necessary to secure the long-term existence of the euro? German commentators warn that fundamental questions must be answered at Thursday’s EU summit.
http://www.spiegel.de/international/europe/german-press-review-on-split-in-europe-ahead-of-eu-summit-a-841232.html
Cartoon of the day …
http://www.presseurop.eu/en/content/cartoon/2254401-relaunch
@DOCM
Regarding the ‘leaning out’ of burdensome and expensive EU patenting procedures, how long it has taken to secure progress and ‘legitimate grievances’.
I think one simply has to ‘follow the money’ here. During decades of obfuscation by parts of the legal industry in EU states threatened by loss of rents for many low value-adding legal requirements, China has embraced Western patenting practices and is committed to increasing compliance with IP law, while India continues to develop a global IP services industry.
I think that while the European Commission has brought EU policies, funds and projects as well as an entire Directorate-General to foster collaborative RDI and use of IP, it faces an impossible task when trying to bring about constructive engagement between largely agrarian peripheral states and core states with breadth and depth of technological capability.
@ Tony Owens
You lost me there! The problem lies in the nature of the legal agreement – as reflected in the treaties – between the Member States. By and large, I think that it is a good agreement. Countries should compete with one another but in arriving at the level playing field required for this to be an even contest, vested interests – as you point out – often queer the pitch (to mix my metaphors a bit).
Genius is not confined to core countries cf. the startling statistics quoted by MH above on the origin of patents filed in the US.
@ Tony Owens
You lost me there! The problem lies in the nature of the legal agreement – as reflected in the treaties – between the Member States. By and large, I think that it is a good agreement. Countries should compete with one another but in arriving at the level playing field required for this to be an even contest, vested interests – as you point out – often queer the pitch (to mix my metaphors a bit).
Genius is not confined to core countries cf. the startling statistics quoted by MH above on the origin of patents filed in the US.
@ All
A blunt and accurate statement in the FAZ by a commentator that simply stating no is not a policy. And if that stance is maintained, the consequences must also be spelt out by the political leader holding it.
http://www.faz.net/aktuell/wirtschaft/europas-schuldenkrise/eurobonds-ausloten-in-bruessel-11801207.html
Lucinda waffling on about 10 billion & EIB…. on Morning Ireland Radio_1 … petty parochial platitudinous … and she is back to the 10 billion … Sweden? ….
EuroBonds … ‘moving in a positive direction in my view’ ..
I’VE HAD MORE THAN ENOUGH. WITH DUE personal RESPECT to Ms Creighton, THIS TD IS COMPLETELY OUT OF HER DEPTH AT EUROPEAN LEVEL …. RESPONSIBILITY RESTS WITH THE TAOISEACH WHO APPOINTED HER TO A POSITION FOR WHICH SHE IS CLEARLY NOT QUALIFIED ….
MAY WE HAVE A NEU MINISTER FOR EUROPE WHO IS UP TO THE TASK? NOW.
@ All
This article by Jeremy Warner in the Telegraph sums up what might be described as the classic Conservative view of the euro; Thatcher was right!
http://www.telegraph.co.uk/finance/comment/jeremy-warner/9360124/Angela-Merkel-isnt-bluffing-like-everyone-else-in-Europe-shes-defending-national-sovereignty.html
It also takes as gospel the view that a single currency cannot function without federal integration of the participating states. Merkel seems intent on proving this to be true.
The leader of the opposition in the Bundestag, Steinmeier, and her former foreign minister, has stated bluntly that she has now become part of the problem rather than the solution and that her changes of tack and hesitation have made the crisis worse.
Her “over my dead body” remark has become a major subject for discussion not only in Germany but across the globe.
@David O’Donnell
What’s really frightening is that there might not even be anyone better suited to the job in the ranks. Imagine if she’s the best they’ve got! Where does that leave us?
@ All
This article by Dr. Gunnar Beck in the NYT, refuting the idea that Germany has been the major beneficiary of the euro, also deserves a home on this thread.
http://www.nytimes.com/2012/06/27/opinion/germany-the-euro-winner-hardly.html?_r=2
What is extraordinary about the articlet is that it fails to ask the obvious question viz. why have German overall growth rates been so low? Would the distorting impact of concentraing on exports as the near sole engine of growth have anything to do with it?
@DOCM
… a little matter of German Unity (a fabulous achievement albeit its inclusion in the deal on EMU has had some dire consequences for others) … I hear you are mentioned in dispatches in the STASI files … now where did I put me wikileaks account … ?
@PR Guy
it is beyond a joke .. Hayes’ praise of the Irish financial system is no better … parochials are totally out of their depth …
Berlusconni is making life difficult for Monti …. who is lashing out at Angela
Italian officials said they were extremely concerned how markets might react Monday if the Brussels talks fail to break new ground. The summit was heading towards “complete uncertainty”, Mr Monti said.
Mr Monti is said by aides to be furious with Mr Berlusconi’s recent anti-European tack which is seen as undermining Italy ahead of the summit. Mr Berlusconi reportedly repeated on Tuesday that it would not be a bad thing if Germany exited from the Euro.
http://globaleconomicanalysis.blogspot.ie/2012/06/monti-lashes-out-at-germany-merkel.html
Euro Crisis Summit
What Merkel Really Wants from Europe
Chancellor Angela Merkel is taking a hard line on the euro crisis this week, insisting that shared debt be avoided at all costs. Her shrill tone, however, is born out of fear. Just as Europe finds itself on the verge of historic reforms, Berlin is losing control of the debate. Idealism, and the euro, might be the victims
The Thursday political cartoon in the Financial Times Deutschland couldn’t be easier to decipher. It depicts the Grim Reaper standing over an aged, bed-ridden Angela Merkel saying: “It is time.” Merkel responds: “For euro bonds, I know.”
The drawing refers to the chancellor’s comments made Tuesday afternoon during a meeting with parliamentarians belonging to her junior coalition partner, the Free Democrats. Euro bonds, she said according to meeting participants, would not be introduced in the euro zone “as long as I live.” The statement was widely interpreted as Merkel finally losing patience with demands from southern European countries that euro-zone debt be communitized. Instead of bending to the political breeze, Merkel had finally turned into “Iron Angie.”
But is that really what she meant? There are several indications that the answer could be no. First and foremost, the Chancellery has been at pains since Tuesday evening to elaborate on the context within which the “as long as I live” sentence was uttered. In reality, several papers, citing Chancellery sources, are reporting on Thursday that she was outlining the complexity of the reforms necessary before such shared debt could be introduced. As such, euro bonds aren’t likely “in her lifetime.” In other words, the Chancellery is insisting, Merkel remains the voice of calm and reason rather than one of hysteria and division.
http://www.spiegel.de/international/europe/merkel-seeks-historic-reforms-as-euro-crisis-intensifies-a-841495.html
06/28/2012 28.06.2012
The World from Berlin
Merkel’s Hard Line ‘Could Kill the Euro’
German Chancellor Angela Merkel’s comment that euro bonds would not be introduced in her lifetime has made headlines in Germany and provoked intense discussion. Commentators say that while the harsh tone is atypical of the cautious leader, her hard line could have disastrous consequences.
http://www.spiegel.de/international/germany/german-commentators-say-merkel-s-hard-line-could-cause-end-of-euro-a-841489.html
CARTOON OF THE DAY (AND PROBABLY OF TOMORROW …
European Council
Master of ceremonies
28 June 2012 Le Soir Brussels
http://www.presseurop.eu/en/content/cartoon/2260311-master-ceremonies
Text from Blind Biddy in Brussells:
THE CONFLATIONIST FALLACY JUST GOT A GOOD KICK UP THE PROVERBIAL