Courtesy of Mish
The treaty hammered out by French President Nicolas Sarkozy and German Chancellor Angela has been watered down to complete meaningless with new provisions that would allow countries to "temporarily deviate from the rules in case of an usual event" or in "periods of severe economic downturn."
Bear in mind the there is an existing "Growth and Stability Pact" and among the first violators of that pact was Germany. Eventually every nation in the EMU violated the pact.
The point of the Merkozy Treaty was to prevent that from happening again. So why was the treaty watered down?
The Answer is Ireland
The Financial Times comments on the Irish legal threat to European fiscal treaty
The Irish government is likely to face a court challenge if it decides not to hold a referendum on a new European fiscal treaty, potentially plunging the country and Europe into months of legal uncertainty.
Sinn Féin, the fourth largest party in Ireland’s parliament, told The Financial Times on Thursday that the party had sought legal advice on the issue and was “seriously and actively considering” making a challenge to the Irish Supreme Court.
“We think the fiscal compact should be put to the people because of the draconian austerity that this will mean for years to come,” said Pádraig Mac Lochlainn, Sinn Féin’s foreign affairs spokesman.
In 1987 historian Raymond Crotty successfully challenged a decision by the Irish government not to hold a referendum on the Single European Act in the courts. Since then every significant EU treaty change has been put to public vote.
So behind the scenes Irish conspirators working with the EU have put in language that waters down the treaty hoping to do two things.
- Water down the treaty so that it does not have to be voted on
- Change the rules of the treaty later quietly, after the fact, with majority rule votes or other procedures
Give the Voters a Chance
The very last thing the unelected EU officials want is a public vote on anything. They intend come hell or high water to make their socialist nanny-zone state complete with a bureau of nightmarish regulations and agencies governing virtually every aspect of everyone's lives.
I praise Sinn Féin's insistence that voters be given a chance.
If Ireland is stupid enough to sign this treaty or any modifications to the treaty that would allow majority-rule voting on treaty changes, Ireland can kiss its lower tax corporate rate goodbye.
Ireland's lower tax rate irritates the heck out of the EU, yet it is the one thing that prevents a complete collapse of the Irish economy. See the New York Times article In Ireland, Low Corporate Taxes Go Untouched for a discussion.
Not only would Ireland lose its lower tax rate, a majority-rule scheme would see the ultimate nanny-zone dream come to fruition: eurobonds (likely packaged as stability bonds).
As the economic collapse in Europe strengthens (see Money Supply Figures Suggests Italy Headed Into Depression; Non-Performing Spanish Loans Hit 134 Billion Euros, 7.51% of All Loans, Highest in 17 Years; Eurozone Unemployment Charts for a discussion) there will be still more pressure on countries to "temporarily" agree to all sorts of bad ideas. Rest assured nothing will be temporary.
Ireland would be better off outside the EMU, and so would Germany. Moreover, the UK would be better off outside the EU or by some means the EU will cram down the Tobin Tax on financial transactions down London's throat.
Let those who want a one-size fits all socialist nanny-zone have it. I assure you, no one will like the result if it happens.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
