They have to summon the political courage to make the case for greater economic integration. A fiscal union can also be fashioned in such a way that limits moral hazard. But all of this requires leadership, not least from Germany. The fact that the alternative – a series of ever larger and ineffective bail-outs, culminating in far bigger defaults and a systemic banking sector crash – is much worse, ought to focus minds. After all, under that scenario the political glue holding the union together could dissolve altogether.He goes through the normal arguments, which from his perspective make a great deal of sense,
restructuring the debts of Greece, Ireland and Portugalis one such.
an aggressive programme of government bond purchases. Monies from the European Financial Stability Fund (EFSF) could also be used to tide the countries over until they regain access to the financial markets on affordable termsIs another, which given the rapid slowing of Bond purchases by the ECB recently is suggests that there is neither the will nor the money to do.
Finally he suggests that,
Governments need to support the Commission's drive to foster closer economic integration and to co-ordinate their policies to ensure that they are compatible with balanced economic growth across the eurozone. Huge current account balances are not consistent with a stable currency union, because one way or another they require massive (and hence politically and economically destabilising) transfers between the participating economies. However, even if trade imbalances are reduced, there will have to be greater fiscal supra-nationalism. This could take the form of a common E-bond, some minimal fiscal union, or ideally a combination of the two. Without some element of fiscal supra-nationalism, the adjustment costs facing countries that cede trade competitiveness within the eurozone will simply be too high.Tough call but coherent. But iff you accept his starting premise. Viz,
Time is running out to prevent the eurozone crisis from imperilling Europe's banking system and with it the integrity of the currency union. It is beholden on policy-makers to minimise the economic (and hence political costs) to the EU.Which has got to be deeply contentious. He is claiming that policy makers (those we would call politicians) should be duty bound to show their loyalty to an abstraction, a dream of the European Union.
Surely those who are elected should have as their duty serving the wishes and needs of their constituents, no more, no less. For them to act on the drive of a faith, an abstraction rather than on the hopes and wishes of their own electorate is both undemocratic and wrong.
Mr Tilford calls for Europe's politicians to act irrationally, to dispense with reason in order to service a belief system. This is folly and dangerous folly at that.