Did Cameron Just Kill the Euro?

I find it hard these days to praise any establishment political figure. Too often their actions are devoid of principle, too often their words are hollow, and too often their demeanour smacks of a rank ignorance on matters of economics and liberty.

And undoubtedly, Cameron’s austerity policies are not sound. As I have noted in the past, the time for austerity at the treasury is the boom, not the slump.

But today David Cameron seems to have bucked that trend.

From the BBC:

David Cameron has refused to join an EU financial crisis accord after 10 hours of negotiations in Brussels.

Mr Cameron said it was not in Britain’s interest “so I didn’t sign up to it”.

But France’s President Sarkozy said his “unacceptable” demands for exemptions over financial services blocked the chance of a full treaty.

Britain and Hungary look set to stay outside the accord, with Sweden and the Czech Republic having to consult their parliaments on it.

A full accord of all 27 EU members “wasn’t possible, given the position of our British friends,” President Sarkozy said.

There is an obvious fact here: scrabbling to reach an agreement in the interests of political and economic stability — which is exactly the path Japan has taken for the past 20 years, and America for the past 3 — allows broken systems to continue to be broken. All this achieves is more time to address the underlying issues, which as we are discovering is something that does not happen, because markets and policy makers fool themselves into believing that the problems have been “solved”, and that there is “recovery”.

Cameron’s intransigence could well be the spark that Europe — and perhaps even the globe — needs to degenerate to the point where the necessary action — specifically, some kind of debt jubilee — can occur.

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23 thoughts on “Did Cameron Just Kill the Euro?

    • Yeah, maybe, but he’s also defending our democracy (even if it’s by proxy) — Britain needs to be in control of its budget, and its money. That’s why our borrowing costs are now lower than Germany’s, or anyone else in Europe. I don’t want the European Union bureaucrats or Angela Merkel telling us how much we can spend, how much money we need. British democracy is not perfect but at least it’s not as bad as European technocracy.

  1. Oh, but Cameron taking steps to protect “the City” doesn’t sound so heroic after all. From what I read, “the City” bears most of the blame for what went on during the years leading to the 2008 crash (i.e. even US fin. institutions outsourced some activities there to avoid stricter regulation in the US – e.g. the now famous Joe Cassano etc.).

    Regarding democracy, I’ll crawl out on a limb and hypothesize that the EU model of contradictory views & squabbling might offer a better long term protection against zombification – the zombification and downfall that historically was the ultimate outcome for any group that feels it is bound together by affinities that go beyond the practical & tangible. Anyways, history will tell.

    • What he actually said didn’t sound heroic at all. But, I feel that standing up against the bureaucratic notion of progress in Europe — ever closer integration, ever greater conformity, ever greater technocracy — is absolutely heroic. Ultimately, Cameron’s banking regulations — implementing Glass Steagall-style separations — are some of the strongest I have seen, and seem to lend themselves to exactly what I want — deregulated capitalism without the bailouts. Europe has a different and far more statist model in mind.

      We shall see.

      • If Orban is a fascist cretin that what the hell is Angela Merkel doing to Greece? I’m all for the lesser of two evils, and Jobbik are a bunch of, well, fascists, but it’s up to the Hungarian people to save their country, not a technocratic elite who show a characteristically fascistic disdain for democracy, public opinion and dissent.

        • I don’t have such strong opinions with regard to what they’re doing to Greece. If getting out of the Euro and going back to the drachma would be the clear solution, then make no mistake, the Greek leaders would have long ago left the Eurozone. The Greeks are broke with or without the Euro, so it’s very unclear what will happen to them if they leave the Euro. Also, they’re not held captive by the Eurocrats and are free to ultimately leave the Eurozone (which is likely that they will at their own risk).

          You’re saying that it’s up to the Hungarian people to save their country, but history shows that countries are just as likely to be destroyed by their leaders as they are likely to be saved by their leaders (you’re living in a country that has a long democratic tradition so perhaps this is why you have so much trust in one country’s institutions). And the Eurocrats are demanding things that any democrat or liberal would agree with: freedom of the press, independence of the central bank etc. I myself feel much safer that my country is in the EU, so that our leaders will be limited in their actions based on principles that anyone would agree with (basically what the Eurocrats are currently demanding from Hungary).

        • I myself feel much safer that my country is in the EU, so that our leaders will be limited in their actions based on principles that anyone would agree with (basically what the Eurocrats are currently demanding from Hungary).

          This is a very interesting opinion. I can’t say I completely agree, though.

          I personally believe that democracy will always be expressed through the people, whether that is the people of a country, or a continent, or the world. Ultimately when I talk about “Hungarians” I am not talking about their institutions or leaders. I’m talking about people on the street. Leaders and institutions are in fact almost always the ones who lock in the tyranny. European institutions are ultimately just as capable of this as national ones.

          And it is hardly just Hungary that is implementing authoritarian controls. Nations in the EU core are starting to do it, including Italy: http://www.zerohedge.com/news/guest-post-has-italy-gone-fascist

          Ultimately it is the responsibility of the non-political classes – not national or supranational institutions — to prevent the elite from running amok. That’s as true in Britain as Romania, or Hungary, or Italy or America.

        • I’m not necessarily saying that I support the EU as it currently is, but I definitely favor the idea of an EU (that would act as described by me above to limit various states’ anti-democratic tendencies). And right now indeed, the EU (as it currently stands) is walking on thin ice. Some (like AEP) will say that these extremist movements are the result of Austro-liquidationist policies imposed by the EU, but it’s clear that in the case of Hungary these begun long before the current economic crisis in the EU. In Italy (and other countries) they might indeed be the effect of Austro-liquidationist policies but I believe this is more a matter of “blame the most proximate apparent cause”. In the US it’s the same thing, and the Occupy movements are made up of revolutionaries in search of an enemy. In the EU it’s much simpler to find the enemy.

          But now, to address your points, I would say that history shows that democracy (while desirable) is also very unstable when we rely only on the people in the streets. Chavez, Hitler, Peron, Putin (these come to mind right now) were all democratically elected, but not only that: they also enjoyed/enjoy a tremendous amount of popular support right until the end. I’m not saying what others are saying that we should invade all undemocratic countries to bring them on the right path, but what I’m saying is that the idea of a supranational body based on various rules that a country can voluntarily choose to be a part of is a good idea and can help support a more stable and lasting democracy.

        • PS: Something else: when I was talking about extremist movements in Italy I was definitely not referring to what that ZH article is talking about. Those are just the “financially repressive” measures of a broke state and they are meant to combat tax evasion and other things like that. Whether this is the correct solution to state over-indebtedness is an entirely different matter. But I would put those measures in an entirely different category than those in Hungary that I was talking about (restricting freedom of the press, the independence of the central bank – probably so they can just print more without making any real reforms etc.).

        • PS: Switzerland and UK are perhaps smaller (and saner) versions of the EU in this respect. John N. Gray noted in one of his books that circa ~50-100 years ago (can’t remember exactly) Switzerland (and ~2 more countries) were the only countries that had a traditional democracy and enjoyed a general level of freedom and stability (the others that fit the bill were monarchies). This is perhaps owing to this idea of multiple distinct identities embedded in a supra-identity framework. This also has its risk – from what I read Switzerland and UK have long been under the threat of dissolution if the tensions between those multiple identities escalate (which is what’s happening now in the EU).

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  3. Was Cameron trying to defend British sovereignty? Was he trying to help the City? Was he trying to appease his backbenchers and thereby save his own neck? Who cares? Do any of us really know why we do anything?

    The important thing is that the EU’s democratic deficit is just as important as its countries’ budget deficits. Democracy may be a shitty system, but ask the Greeks and the Italians if they’d like it back.

  4. Well I am pulling cash out of all banks, and placing in a secure vault service.

    I am happy to lose 5% to inflation over the next year. Not too confident about the next year. I want ready access to cash.

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