Why Europe Keeps Failing........ merged with "EU Seizes Cypriot Bank Accounts"

[The Bread Guy]

I am reminded of a famous quip attributed to, but never confirmed by British soldier and diplomat Pug Ismay: "NATO," he opined and the rest of the European superstructure he implied, "is here to keep the Reds out, the Yanks in, the French up and the Germans down." There was and still is more than a grain of truth in that and I think that e.g. Acheson and St Laurent, amongst others, knew it when they designed the thing.

This brings to mind this tidbit from "Yes, Minister"

.....    Sir Humphrey: Minister, Britain has had the same foreign policy objective for at least the last five hundred years: to create a disunited Europe. In that cause we have fought with the Dutch against the Spanish, with the Germans against the French, with the French and Italians against the Germans, and with the French against the Germans and Italians. Divide and rule, you see. Why should we change now, when it's worked so well?

    Hacker: That's all ancient history, surely?

    Sir Humphrey: Yes, and current policy. We 'had' to break the whole thing [the EEC] up, so we had to get inside. We tried to break it up from the outside, but that wouldn't work. Now that we're inside we can make a complete pig's breakfast of the whole thing: set the Germans against the French, the French against the Italians, the Italians against the Dutch. The Foreign Office is terribly pleased; it's just like old times.

    Hacker: But surely we're all committed to the European ideal?

    Sir Humphrey: [chuckles] Really, Minister ....

 

[Kirkhill]

This brings to mind this tidbit from "Yes, Minister"

Now if only we could get the Cevennes and the Ardennes taking pot-shots at each other again we would really be back to the good old days.  :nod:

 

[busconductor]

A classic example of a country who experienced advanced progress and development is Singapore. First, she opened her economy to foreign investments. Second, she slashed taxes. Third, he abolished the right to strike and collective bargaining. While she was experiencing progress, revenues were slowly distributed to welfare recipients. Now that she collects 20 billion in surplus revenues every year, welfare recipients are now refusing to make use of them invoking excess or too much welfare.

If we are going to invoke Singapore as model, we can build a case against the Communist Party of Canada for libel given the fact that minimum wage laws are respected, welfare programs are still in place, there is Medicare or universal health care. Economic sabotage in the form of illegal strikes, illegal slowdowns and irrational collective bargaining can also be invoked in a case of libel. The aggravation that the Harper government experienced, caused by radical demonstrations and violent rallies can give the Auditor General and the Prosecutor valid evidence to build a case of economic sabotage against the perpetrators. Just speaking my mind.

 

[Fishbone Jones]

A classic example of a country who experienced advanced progress and development is Singapore. First, she opened her economy to foreign investments. Second, she slashed taxes. Third, he abolished the right to strike and collective bargaining. While she was experiencing progress, revenues were slowly distributed to welfare recipients. Now that she collects 20 billion in surplus revenues every year, welfare recipients are now refusing to make use of them invoking excess or too much welfare.

If we are going to invoke Singapore as model, we can build a case against the Communist Party of Canada for libel given the fact that minimum wage laws are respected, welfare programs are still in place, there is Medicare or universal health care. Economic sabotage in the form of illegal strikes, illegal slowdowns and irrational collective bargaining can also be invoked in a case of libel. The aggravation that the Harper government experienced, caused by radical demonstrations and violent rallies can give the Auditor General and the Prosecutor valid evidence to build a case of economic sabotage against the perpetrators. Just speaking my mind.

You recognise anyone here? http://www.youtube.com/watch?v=dTO_fpa_diM&feature=related

Just wonderin'

 

[Edward Campbell]

Since I could not avoid seeing busconductor's post, I feel in necessary to correct his statement. Trade unions were not banned in Singapore, but back, in the late 1960s, their ability to "bargain" for such matters as promotion, transfer, employment, dismissal, retrenchment, and reinstatement, issues that accounted for most earlier labor disputes, were severely curtailed. The National Trade Union Congress in Singapore, its version of the Canadian Labour Congress, has 60+ members unions.

 

[Edward Campbell]

Here, reproduced under the Fair Dealing provisions of the Copyright Act from Project Syndicate, is an opinion piece about how to stop/i] the failures, with which I heartily agree:

http://www.project-syndicate.org/blog/the-money-is-gone--the-war-is-over-by-stefano-casertano

The Money Is Gone, the War Is Over

Stefano Casertano

Nov. 26 2012

Stefano Casertano, a senior fellow at the Brandenburg Institute for Society and Security (www.bigs-potsdam.org), is a columnist for The European, Linkiesta.it, and Finanza & Mercati.

A monetary war has been fought in the Eurozone and Greece has lost. It's in the best interest of the Greek people and of the rest of Europe to cancel the country's debt and organize its exit from the common currency.

Greek opinions about Germans are changing. When "austerity measures" were first imposed, Greek newspapers and posters infamously depicted Chancellor Merkel as a Nazi leader. But the reaction has lately become more sophisticated: now we hear that Germans want to pursue a strict interpretation of Protestant ethics (which knows no redemption on earth) and punish the Greek people.

But when you ask Germans, they don't feel like they're punishing Greece. Instead, the German version of the story is that the beautiful Mediterranean country has been afforded plenty of chances to reform itself. Moreover, Germans argue, the original sin lies with the Greeks as well: Athens keenly insisted on entering the Euro and used a bit of accounting magic to meet requirements. If the country fails, it's certainly not Germany's fault.

Reconciliation between those two positions seems impossible – as is true in most cases when somebody owes money to somebody else and the latter cannot pay.

But to overcome this precarious situation, we ought to distinguish between moralism and pragmatism. Let's go for the moral argument first: there are a few facts that we should recognize. Yes, the Euro was a poorly planned endeavor. The idea that Greece and Germany could become part of the same monetary and economic zone was crazy. Yes, fifteen years ago it was cool to be inside the Eurozone, and if you weren't, you were either a loner (Switzerland), controlled a lot of oil money (Norway), or had a big financial sector (Great Britain). Yes, the responsibility for the entrance of weak economies into the Eurozone also lies with the strong economies who allowed standards to slip. It's like a professor who allows a cheating student to pass the exam. When the cheating is revealed, the professor responds: "Yes, but he _really_ wanted to pass." Which leads us to the final "yes" fact: yes, it's not all Greece's fault that the country entered the Eurozone and now finds itself in a difficult situation.

In the end, the main response to the moral argument is: who cares? Who cares about why and how Greece entered the Eurozone? Who cares about state accountants tip-tapping on Excel fifteen years ago? Does this discussion make tomorrow's solutions more likely? Surely not. Let's leave this question for beach conversations during your next vacation to Greece after a couple of ouzos (no ice, please!).

We must move beyond trying to find scapegoats; please. At least in this regard, Europe should display unity: the mess is a genuine European mess, which means that it affects all of us.

Unfortunately (at least for German taxpayers), there is another set of considerations to be made, and they're all starting with an emphatic "no." The first one is probably the most important: no, we are never going to get all the money back that was lent to Greece. This isn't a pessimistic opinion but simple math: the Greek economy is collapsing. Even the IMF forecasts cannot keep pace with the decline of Greek GDP. Whenever a new PDF is posted online, the Greek economy has already contracted again. No, austerity does not work. No, it will never work.

Greece is no Northern country. Pay cuts and tax increases usually lead to popular discontent that makes reforms less likely. This is a story that Germany is actually quite familiar with: German welfare reforms in 2004 were financed through budget deficits, not through cuts. Until 2004, the Italian economy had been growing faster than Germany's economy – someone even published a book about "The Fall of a Superstar," and people believed it. Since the implementation of the reforms, Germany has experienced faster growth than its peers.

For Greece, it is now too late. But since we won't see our money back anyway, maybe an easier solution becomes possible. I'm talking about the choice between "deep crisis" and "apocalypse." One scenario would be the continued enforcement of austerity. The second scenario would be the pardoning of debt. I'm just not quite sure which term applies to which scenario. Let's give it some thought.

If debt is pardoned, lenders lose money. That would set a bad example for Italy and Spain (and, _bienvenue au club_, France). But the debt pardon would also allow the Greeks to really do something differently. They could return to the Drachma and would cease to be frontpage material in European newspapers. Greece could also avert the destruction of opportunities for several generations of Greeks. And the islands of Santorini and Mykonos would become cheap again (well, maybe not Mykonos).

If debt is not pardoned, lenders lose money as well. Greece would then become a geopolitical mess adjacent to the Balkans (which has historically never worked out well). Unemployment and organized crime would flourish. The country could still hope for a bailout from China – which could invest money to reform Greece and exploit its riches.

So we're still not quite sure which scenario is the debt crisis and which one is the apocalypse. In both cases, we lose our money. In the second case, not only do we lose money, China also stands to gain it. That seems unwise to me. Why should we let other geopolitical powers benefits from Greece's weakness? Would it not be more wise to help Greece exit the Euro, pardon its debt, and aid economic reconstruction?

These are harsh words. But reality is harsh, too: the Eurozone has fought a monetary war, and Greece has lost. We cannot punish the country any further. After World War II, the United States spent all its efforts to rebuild West Germany and Italy to prevent the Soviet Union from doing the job for them. China is no evil empire in the Soviet sense, but I'd still be happy if Greece stayed inside the sphere of influence of the old continent.

My, sad, guess is that none of Portugal and Spain, in the near term, Italy, in the mid term, and France, in the long term, can qualify to share a currency with e.g. Finland, Germany and the Netherlands. They, like Greece, all fudged their accounting - and still do so - in the interests of short term gains. The Northern Europeans (a cultural rather than a geographic expression) are not only tired of carrying the Southern Europeans, they no longer have the fiscal capacity to do so, in the long term. China is a bit of a red herring (pun intended); it may or may not invest in Greece, it may or may not "buy" a seaport, it will, however, be wary of venturing so far from "home" and any investments it does make are likely to be grounded in sound economics, not expansionism.

 

[a_majoor]

A controlled drawdown by announcing a series of agreed upon "haircuts" for the various debtor nations will be tough going (investors will see their assets decline by perhaps 60%, and many private investors may never be able to recover from that), but it is either that or a wave af uncontrolled defaults across the EUzone and spreading quickly across the globe as the collapse of the EUzone takes down international trade and trading partners.

Of course, the same sorts of arguments can be made about Canada, the United States and many other nations as well. A graphic on today's National Post (26 Nov 2012) shows just how bad the situation has gotten in Canada with various provincial debts, and there is no graphic that I have found which includes unfunded liabilities like pensions and benefits.

The other takeaway is that the situation after the reset needs to include a very strong mechanism to ensure this does not happen again. The United States blew its commanding economic position with the introduction of the "Great Society" programs in the 1960's, entitlement spending grew like a cancer and now the US is $16 trillion dollars in debt, so they brought themselves down in less than a single lifetime.

 

[Edward Campbell]

There is a tiny, maybe only temporary, flash of good news from Ireland: retail sales are up, measurably, both month-over-month (1.7%) and, by a larger percentage, year-over-year (3.1%).

 

[a_majoor]

A writer comments on the growth of the EU and decline of Nationalism in the FT. I would take exception to his rather narrow conception of Nationalism (even the Ancient peoples had a form of Nationalism based on ethnic identiy and local; the Greek City States, for example) and wonder just how well the model of local autonomy coupled to a super national entity would work (The Holy Roman Empire would be an example of poor integration, and the wide variety of German States and Principalities prior to Prussia uniting them suggests the possible end state of such an experiment. "These United States" was an exception mostly due to the very similar ethnic and cultural backgrounds of the settlers prior to the Revolution:

http://www.readability.com/read?url=http%3A//www.ft.com/intl/cms/s/2/34783668-3370-11e2-aa83-00144feabdc0.html%23axzz2Cw7aYKtw

A question of identity
By Simon Kuper
The nation-state is shrinking to just a flag, some sports teams and a pile of debts
©Luis Grañena

“The hour has come to exercise our right to self-rule,” says Artur Mas, Catalonia’s president, sounding like a 19th-century statue of a nationalist hero on horseback. Catalans vote on Sunday in what amounts to a referendum on independence from Spain. Scots are galloping down the same road: they vote on independence in 2014. And Flemish nationalists won big last month in Belgian local elections that you may have missed. If these characters get their way, the map of western Europe will undergo its first changes since Ireland became independent in 1922.

It’s a pity Eric Hobsbawm died in October, aged 95. The jazz-loving Marxist historian was the man on nationalism in Europe, but he’s missing what may be the continent’s final nationalist episode. Today’s secessionist movements don’t betoken the rise of nationalism in Europe. Rather, they betoken almost the exact opposite: the waning of the nation-state. Mas et al aim to ditch old redundant nation-states in order to create new redundant nation-states. The history of nationalism in Europe looks to be creaking to an end.

I view nationalism as an outsider. Living in Paris with my American wife and my British passport, supporting Holland at football and South Africa at cricket, I’m baffled that anyone would want to die for their country. And, in fact, for most of history they didn’t. Nationalism – the notion that people who shared a culture and language should govern themselves in one state – is a fairly new idea. To quote the opening words of Elie Kedourie’s book Nationalism: “Nationalism is a doctrine invented in Europe at the beginning of the nineteenth century.”
Hobsbawm and another great thinker on nationalism, Ernest Gellner, largely agree with that. Nationalism scarcely existed before the industrial revolution. Let’s be frank: the 13th-century “Scots” in Mel Gibson’s Braveheart were not motivated by anything resembling modern nationalism.
More

The key change, says Gellner, came when people moved from farms to cities. Their new jobs often required some education. Meanwhile a bureaucracy arose to administer the new schools, railways and armies. For the first time, most people had to be literate. The crucial question then became: in which language? If you were Czech, say, living in the Austro-Hungarian empire, you wanted that language to be Czech.
In short, nationalism arrived relatively late. “Catalanism as a (conservative) cultural-linguistic movement can hardly be traced back further than the 1850s …” wrote Hobsbawm. “The language itself was not authoritatively standardised until the twentieth century.” He thinks it was only General Franco’s later crude attempts to suppress Catalanism that made Catalan a strong identity.

While Europeans were still fighting wars, the nation-state provided defence. The Scots-English union derived much of its emotional meaning from two world wars. The period 1918-50 was “the apogee of nationalism”, says Hobsbawm.

But later the thing declined. New technologies created a supranational world: cheap flights, international financial markets, the internet and cable TV channels that helped teach the young generation the new global language of English. In the 19th century, mastery of the national language was your ticket into the elite; now, in a country such as Turkey, the elite is increasingly educated in English.
. . .
Many national governments in western Europe have forfeited their best tools: national borders, currencies and wars (no fighting in this region since May 1945). They committed to free trade. Inevitably, then, the nation-state began withering away. Belgium in 2010-11 went 541 days without a national government – effectively becoming a failed state – and hardly anyone noticed.
The nation-state is shrinking to just a flag, some sports teams and a pile of debts. Catalans, Scots and Flemings might as well get out. They just shouldn’t think their own little states will be more use. They appear aware of this. They game-plan is to couple glorious nationhood with the European superstate. When Scots and Catalans realised the European Union might not admit them, they cooled on independence.

In fact, the EU’s recent rise exemplifies the demise of nationalism. During the economic crisis, the EU has been morphing into something of a federal state: central control over national budgets, European bailouts, perhaps banking union. Europeans have sulked, but they’ve mostly accepted this.
That doesn’t mean they love the EU. Nobody ever ran into the street drunk, waving the European flag. The emotional choice now isn’t between nation and Europe. Rather, people are gradually replacing nationalism with an array of transnational loyalties. Someone might identify with the global community of English-speakers, or as a Londoner, black person, Muslim, Justin Bieber fan, member of the global elite, or possibly all these things. Most people also still identify with a nation, but that’s becoming just one identity among many.

Catalans, Scots and Flemings probably won’t secede. But if they did, they might soon wish they were still prancing around reciting historical grievances and blaming other people for their problems. Hobsbawm, as a Marxist, would have known how to describe this last hurrah of nationalism in Europe: history repeating itself as farce.

simon.kuper@ft.com

 

[busconductor]

Since I could not avoid seeing busconductor's post, I feel in necessary to correct his statement. Trade unions were not banned in Singapore, but back, in the late 1960s, their ability to "bargain" for such matters as promotion, transfer, employment, dismissal, retrenchment, and reinstatement, issues that accounted for most earlier labor disputes, were severely curtailed. The National Trade Union Congress in Singapore, its version of the Canadian Labour Congress, has 60+ members unions.

If I stood to be corrected then the more should the Conservative government cut taxes and  impose austerity measures. The Political Left needs to be "jolted". Nobody else can understand them but themselves. The argument that Singapore's trade unions are "reactionary" in contrast to a "more reactionary" Philippine or Canadian trade union which is often invoked by communists and the Political Left for lack of luster and bombastic speeches, illegal strikes and work stoppages and slowdowns should be confronted with belt-tightening measures with respect to generosities afforded by the government through doctored acquittals in court in exchange for cooperation with the police state, etc. They become more emboldened committing violence in the workplace, rallies and demonstrations. Strictly apply the laws on them. Fine them or jail them for mere violation of their rally permits, illegal parkings, littering, etc..I think that would solve the problem rather than beat them with rattan sticks for mere littering just like what they do in Singapore.My 1 cent opinion and with due respect,Sirs!

 

[Good2Golf]

Folks seem focused on Greece and its potential (inevitable?) return to the Drachma...possibly Portugal, Italy and France to follow respectively to their own ore-EZ currencies.  What if the Germans see the light, realize that maybe the UK was on to something way back, and figure that it might not be such a bad thing going arm's length to the EZ and themselves return to the Deutche Mark?

 

[a_majoor]

The EU is actually a good idea under the correct circumstances and proper administration. Since neither condition obtained for most of Southern Europe, then they should either leave or get the boot. Maybe they can join the "Francozone" administered from Paris.

So long as Germany ensures its partners actually follow the rules, a Northern European EUzone is both possible and desirable. Of course, given the conditions needed, the potential EUzone partners may choose not to become very junior partners to Germany.

 

[Old Sweat]

So long as Germany ensures its partners actually follow the rules . . .

That didn't work all that well in the first half of the 20th century.

 

[Kirkhill]

I'd only go so far as agreeing EFTA was/is a good idea.

The EU is a modern incarnation of a very ancient idea.  And it was a crap idea then. 

 

[Edward Campbell]

Here, reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail, is a fairly direct answer, in so far as Europe minus a very small handful of exceptional countries is concerned:

http://www.theglobeandmail.com/report-on-business/international-business/european-business/tech-drives-nails-into-coffins-of-europes-weak-economies/article5856181/

Tech drives nails into coffins of Europe’s weak economies

ERIC REGULY
ROME — The Globe and Mail

Last updated Saturday, Dec. 01 2012

Suppose Greece, Portugal and Spain had zero debt. Would they thrive?

Unlikely. This feckless trio was on a downward economic spiral well before the so-called debt crisis ruined their parties. Yes, they were growing, but it was a phony growth, propelled by credit-fuelled consumption, cheapo money and the deluded belief that flipping houses was the route to BMWs, Brioni suits and beach holidays.

Blame, in part, technology. The dud countries in the European Union, were, and are, losing the race against the machines. Their workers are being replaced by technology and the survivors are not inventing enough of their own technology to keep the economy rolling forward.

This is the dirty secret of the agonizing EU, International Monetary Fund and European Central Bank effort to spare the wrecked EU economies from destruction. Their fix-it playbook depends largely on financial engineering – interest rate reductions here, debt maturity extensions there. On the off chance that the whole messy exercise in voodoo economics works, in the sense that budget deficits are eliminated and national debt loads come down to non-absurd levels, then what? If the post-crisis plan calls for a romp back to their old economic models, the EU and the euro are truly doomed because those models no longer work.

Technology is having a devastating effect on employment, which in itself is not new. What is new is that the job destruction everywhere among low-skilled workers seems on the verge of being repeated among white-collar jobs. That is the theory of Erik Brynjolfsson and Andrew McAfee, digital economy specialists at MIT and authors of Race Against the Machine, a book about the digital revolution and how it is reshaping employment and entire economies.

Technology has been displacing jobs since the Industrial Revolution, but the lost jobs were more or less replaced with new jobs. Take agriculture. As farms became mechanized with the arrival of tractors and harvesters, farm employment plummeted. At the end of the 19th century, half of Americans worked on farms. By 2000, only one in 50 Americans worked on farms, according to a Foreign Policy article called The Third Industrial Revolution, by David Rothkopf. Over the same period, the proportion of Americans employed in services went from less than a third in 1900 to 80 per cent.

About 30 years ago, something ugly started to happen, according to Messrs. Brynjolfsson and McAfee: Wages of unskilled workers began to drop as the machines gained momentum. The lower pay, however, did make workers more competitive with technological rivals. Now, with technology so cheap, ubiquitous, powerful and adaptive – 3D printing has the potential to turn your home into a manufacturing site – skilled workers are coming under threat.

Mr. Brynjolfsson and Mr. McAfee aver “technological unemployment is emerging as a real and persistent threat to middle-class employment.”

Brian Subirana, an information systems affiliate professor at MIT who is now based in Barcelona, uses the GPS – global positioning system – to illustrate technology’s threat on the cab driving profession. Not long ago, cabbies (at least the European ones) were highly trained. In Britain, aspiring cabbies spent years on “The Knowledge” – memorizing streets and routes so they could navigate the city without a map. Then came the GPS and, suddenly, anyone anywhere could get in the taxi game. The barriers to entry have been shattered.

Ditto in higher paying careers, such as design and architecture. Want a new kitchen? Go to IKEA with room measurements and one can be designed on a computer screen in minutes and delivered to your house and installed not long later. “The need for people is decreasing,” Mr. Subirana says. “Technology can be much better than people.”

Which brings us to Greece and the other ailing EU countries. Greece especially is cursed with a highly undiversified economy that is dominated by tourism, shipping, agriculture, textiles and some industrial products, but not many. Employment in each of them, with the possible exceptions of tourism and shipping, are highly vulnerable to technological advances. Greece’s unemployment rate – 25 per cent nationally, a stunning 57 per cent among youth – climbs by the minute because of recession and austerity. But it is also climbing because traditional industries need fewer employees.

Somehow, some time, Greece’s financial horror show will come to an end, through default, exodus from the euro zone or a massive sovereign debt writedown by public and private bondholders. That would give Greece a fresh start, at least on paper. But to what end?

Greece has a rapidly aging population. Many, perhaps most, of its best and brightest, have fled the country. The country’s infrastructure and universities are falling apart and would take decades to rebuild. Athens does have a technology cluster, known as Corallia, but it is small and struggling to stay alive. But most of all, Greece is saddled with industries where the employment trend is downward, thanks to technology.

To be sure, technology is killing jobs all over the planet. But in some countries, like the U.S. and Germany, it is also creating new jobs and industries through sheer entrepreneurial drive. Where would the American economy be without Apple, Amazon, Facebook, Google, eBay and all their small wannabes? Greece has to find a second act once it gets rid of its debt. But other than turning the entire country into retirement home for the sun-seeking wrinklies, the options look scant.

The handful of countries that are able to exploit technology to create "new" jobs share a few common traits:

1. They are not illiberal ~ some, like Japan and Singapore are deeply conservative and others, like Finland and the USA are very liberal but it appears to me that the more illiberal traits a country possesses - generally displaying a fondness for statist solutions that promote equality of outcomes at the expense of opportunity, which reward failure and punish success, and which are suspicious of private property (read Ontario and Quebec in 2012) - then the less likely it is to survive in the 21st century as anything other than a colony of some sort;

2. They have a well educated population; and

3. In part to counter the top, negative attribute, they have efficient, effective "social welfare" regimes that includes cost effective medical care for all.

 

[busconductor]

I not saying that this 'guy owes me for what.. or whatever'. But to tell you the truth I "lose sleep" over Canada's debt burden. If only nobody would raise he** if Parliament Hill passes legislation imposing additional 300 dollars to every middle class citizen to pay the debt, I won't mind. The threats of not having been able to pay the national debt should be the concern of the Liberals, NDP and the Communist Party of Canada. Given that Communist Party of Canada has a history of economic sabotage and that they parrot the same lines as those of the NDP and Liberal Party, I would conclude that these political parties don't wish Canada well. No matter how unpopular balance budget legislation is, the Conservatives would not play that kind of rabble rousing like what the Liberals  do and slug it out with them. These things only prove that the Conservatives mean well. My two cent opinion an with due respect sirs!

 

[Fishbone Jones]

:

 

[Brad Sallows]

>if Parliament Hill passes legislation imposing additional 300 dollars to every middle class citizen to pay the debt, I won't mind.

We had surtaxes before; I suppose we could have them again.  But surtaxes aren't really necessary unless we lack fiscal discipline.

 

[Fishbone Jones]

Let's stay on track.

The thread is about Europe.

Staff

 

[Edward Campbell]

"Fail by example" might be a useful motto for the Eurozone.

Rather than actually try to address its own, serious problems Christian Noyer, the governor of the Banque de France, wants the EU to rig the rules against the UK according to this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the Financial Times:

http://www.ft.com/intl/cms/s/0/736bd72a-3c9a-11e2-a6b2-00144feabdc0.html#axzz2DyuTHcxZ

UK’s euro trade supremacy under attack

By Josh Noble in Hong Kong and Alex Barker in Brussels

December 2, 2012

The City of London should be deposed as the euro’s main financial centre so the single currency club can “control” most financial business in the eurozone, France’s central bank governor has said.

Christian Noyer of the Banque de France said there was “no rationale” for allowing the euro area’s financial hub to be “offshore”, in a blunt assessment that will fan UK concerns over EU rules being rigged against it.

“Most of the euro business should be done inside the euro area. It’s linked to the capacity of the central bank to provide liquidity and ensure oversight of its own currency,” Mr Noyer told the Financial Times while touring Asia to promote Paris as a renminbi trading centre.

“We’re not against some business being done in London, but the bulk of the business should be under our control. That’s the consequence of the choice by the UK to remain outside the euro area.”

Mr Noyer is an influential voice on the European Central Bank governing council and his comments will revive Britain’s worst fears of a plot to shift the centre of gravity for financial services from the City to the continent.
The intervention comes at the start of a potentially fraught week of EU diplomacy, where London will again demand financial services safeguards against the political clout of a more integrated eurozone.

EU ministers meet in Brussels on Tuesday to broker a deal on giving the ECB sweeping powers to supervise banks, in the first leg of a banking union that will not include Britain.

Some senior diplomats think a breakthrough is possible. But big differences remain, including over the ECB’s remit over German savings banks. Mr Noyer argues it is small lenders that have posed the biggest problems in the eurozone. “The banking union should cover all banks, otherwise it’s useless,” he said.

George Osborne, the UK chancellor, backs the principle of a banking union for the eurozone but he will insist on voting reforms to stop the new bloc imposing its rules on those outside.

His demand for a minimum number of “outs” to back any decision at the European Banking Authority, an agency that sets technical standards across the EU, are strongly resisted by a French-led group that regard it as an effective UK veto.

In a sign of the challenges ahead, Anders Borg, the Swedish minister of finance, is also warning that the current package is unacceptable because it is unfair to non-eurozone countries, whether they want to join or remain outside the banking union.

Since the creation of the single currency, the City has served as its main financial hub. More than 40 per cent of worldwide euro foreign-exchange is handled in London, a bigger share than the eurozone combined.

As a result, London is acutely sensitive to any alleged discrimination across the EU single market. Britain last year sued the ECB over its “location policy” for clearing houses, which if enforced would require critical parts of London’s financial infrastructure to decamp to the euro area.

France strongly supports the policy on grounds of financial stability. The ECB argues such essential business should be done in the euro area so that liquidity support can be guaranteed when needed and crises are not handled by multiple central banks with conflicting interests.

Copyright The Financial Times Limited 2012.

I happen to think a single € central bank is a good idea. It should be in Berlin and governed by a board representing only those countries that are in full compliance with all the terms of the Maastricht Treaty (1992), that would mean that about five of the Eurozone's 17 members could serve on the Board of Governors and France would not be amongst them.