14 ms·

It's not as clean cut as the article makes it. The main funding powers in Europe are Germany, France and the UK. The UK has a unique position in that it is a n

by iuguy 16y ago

It's not as clean cut as the article makes it. The main funding powers in Europe are Germany, France and the UK. The UK has a unique position in that it is a net contributor to Europe, bails other countries out but does not have the Euro. To claim that the UK is somehow insulated from effects of the Euro is disingenuous. A large part of our trade is with Europe, and Europe or the US being adversely affected affects us. France is another big player in the Euro and will contribute to bailouts, but only so far. Germany will look to the UK to make up the difference where possible, then countries like the Netherlands and so on until it finds someone. If Germany pulls out of the Euro thats it, the Euro is over. However if the Euro dies overnight then expect massive upheaval in Europe, rising nationalism and the potential for war. This however is unlikely thanks to the Lisbon treaty, a treaty that centralises European power. It is likely that the EC will want to transfer control of financial policy to Brussels for those that receive larger bailouts (as they can no longer be trusted to run their own economies without risking the rest of Europe - this will be one of the reasons put forward) and Lisbon will be the vehicle to do it. What I would love to see is actual reform of the EU as an institution as well as reform of financial obligations from member states, but sadly it's more likely we'll see the European equivalent of the old republic trying to extend it's reach in order to protect itself.

notahacker 16y ago
Our interest in bailing out Ireland was unusual in the level of exposure our recovering banking sector has to Ireland. Possibly, because of our traditional support for national sovereignty within the EU, we're even more willing than most countries to do so without compelling the Irish to address their budget imbalance by raising their artificially low taxes. I'm not sure the same self-interest in applies to aiding Portugal though. The fragmentation of the Euro would undoubtedly have consequences for the UK, but I'm not sure that they would be wholly negative in the shorter term (a bankrupt country unilaterally withdrawing and allowing the Euro to appreciate might even be good for UK exports). Given the parlous state of our own finances, I'm not sure the economic case for contributing to a bailout of other countries is clear cut (given that it's by no means guaranteed to succeed...), and certainly it would be politically disastrous for the British government to commit to any additional spending. Other countries have more invested in making the Eurozone a success, but ultimately the survival of the Euro depends largely on the continued support of France and Germany as the rest of the Eurozone isn't exactly inundated with money, which leaves inevitably aligns its future very closely with the interests of those countries.
- iuguy 16y ago
  As always on HN, the debate is always stimulating and informative compared to other places. I think you're right about Ireland. There's also a lot more in common culturally with Ireland than with Portugal, and while Anglo-Irish history is a tricky subject, I would imagine people would take the concept of helping Ireland more seriously than Portugal. Your point about fragmentation is quite interesting to me. Perhaps if Portugal and Spain were 'encouraged to leave' by the EU that might be a politically bitter pill to swallow, but perhaps a financially acceptable solution. After all, a large part of the Eurozone no longer meets the Copenhagen criteria. Unfortunately neither the EC or EU Parliament seem to have any grounding in reality or rational thought.

by iuguy 16y ago

notahacker 16y ago

Our interest in bailing out Ireland was unusual in the level of exposure our recovering banking sector has to Ireland. Possibly, because of our traditional support for national sovereignty within the EU, we're even more willing than most countries to do so without compelling the Irish to address their budget imbalance by raising their artificially low taxes. I'm not sure the same self-interest in applies to aiding Portugal though. The fragmentation of the Euro would undoubtedly have consequences for the UK, but I'm not sure that they would be wholly negative in the shorter term (a bankrupt country unilaterally withdrawing and allowing the Euro to appreciate might even be good for UK exports). Given the parlous state of our own finances, I'm not sure the economic case for contributing to a bailout of other countries is clear cut (given that it's by no means guaranteed to succeed...), and certainly it would be politically disastrous for the British government to commit to any additional spending. Other countries have more invested in making the Eurozone a success, but ultimately the survival of the Euro depends largely on the continued support of France and Germany as the rest of the Eurozone isn't exactly inundated with money, which leaves inevitably aligns its future very closely with the interests of those countries.

iuguy 16y ago
As always on HN, the debate is always stimulating and informative compared to other places. I think you're right about Ireland. There's also a lot more in common culturally with Ireland than with Portugal, and while Anglo-Irish history is a tricky subject, I would imagine people would take the concept of helping Ireland more seriously than Portugal. Your point about fragmentation is quite interesting to me. Perhaps if Portugal and Spain were 'encouraged to leave' by the EU that might be a politically bitter pill to swallow, but perhaps a financially acceptable solution. After all, a large part of the Eurozone no longer meets the Copenhagen criteria. Unfortunately neither the EC or EU Parliament seem to have any grounding in reality or rational thought.