Posts tagged ‘Euro’

01/03/2012

Britain Should Adopt the Euro

Many Americans have a hard time understanding the European Union (EU), because countries that do not use the Euro currency are nevertheless allowed to be EU members. They cannot relate, since every U.S. state is required to use the Dollar, with no option.

The Euro, which was introduced in 2002, is presently the official currency in only 17 of 27 EU nations.  Seven countries, who enlisted in the EU in 2004 and 2007, will convert between 2012 and 2014 under timetables adopted at the time of admission. Three small non-EU tax havens also use it: Monaco, and San Marino and Andorra. But three EU states have opt-out, including: Britain (Pound Sterling), Denmark (krone), and Sweden (krona).

Since the recent economic crisis, it is unlikely the UK will replace the Pound with the Euro in the immediate future. Although the Euro would make foreign trade easier, and the failure to adopt it will adversely affect international investment, jobs, and economic prosperity, 66% in Britain have opposed a monetary conversion, because they fear a decline in national sovereignty and a loss of control over their economy. They worry a transfer of power from the Bank of England in London to the European Central Bank would give Frankfurt the ability to control interest rates, inflation, and unemployment. For these political and economic reasons, the UK decided not to adopt the Euro and continued using the Pound.

The question now is whether Britain’s refusal to join the monetary union will harm the EU? In the event of an EU recovery, will the UK start to become irrelevant? Since the Euro was a major success in terms of European unification during its first ten years, my guess is the new currency will survive the current crisis and the EU will emerge even stronger. Old England may in the long run be held down by the weight of their own Pound. In regional circles over time, the English currency will start to be viewed as funny money, since Europeans will be using the Euro. If Britain does not officially convert, their people may start to do so in the ordinary course of business, as a matter of fact, and inevitably the Pound may be lost anyway. Just when most think the adoption of the Euro would be the wrong move, some intelligent future British Prime Minister should courageously advocate its adoption.

Advertisements
11/29/2011

EU: Not Ready For U.S. of Europe

The origin of the European Union dates back to 1952, when six nations formed the European Coal and Steel Community. The Treaty of Rome (1957) broadened the relationship into a Common Market, known as the European Economic Community (EEC). A European Court of Justice (ECJ) followed to monitor compliance. A Customs Union (1968) was added to abolish duties between members, and to set a common tariff as to foreign goods.

The EEC grew to 12, as the UK, Ireland, and Denmark enlisted in 1973, Greece was added in 1981, and Spain and Portugal joined in 1986. The Schengen Agreement (1985) gave EEC citizens the right of free movement in and out of the other member states.

The EEC became the European Union (EU) in 1992, under the European Union Treaty. The EU soon grew to 15, as Sweden, Finland, and Austria signed up (1995). Questions arose as to how much power the EU should have, and what authority should be retained by the states. While customs and commercial policy were yielded to the EU, many other law-making areas remained national. Although the EU had a Parliament, questions arose as to the number of votes each state would have in the EU. To correct some of these issues, the Treaty of Nice (2000) was ratified.

At the same time, the EU created an Economic and Monetary Union (1999). A European Central Bank opened in Frankfurt, which issued the Euro (2002), and abolished national currencies. Britain, Denmark, and Sweden opted out of the Euro, as criteria were set for new EU states, before they could adopt the Euro. The states no longer governed monetary policy, as the Central Bank set interest rates. Although the Bank opposed deficits by national governments, members retained control over fiscal policy. Critics of this said the EU could not maintain tight monetary policies, while states were allowed to have expansive fiscal policies.

The EU states made an attempt to be guided by one written Constitution, in lieu of a series of treaties, but the effort failed when France and the Netherlands rejected it (2005). Nevertheless, 10 additional countries became members of the EU in 2004, and Bulgaria and Romania brought the number to 27 in 2007.

The states of the EU are currently administered by a 27-member Commission, which is their primary source of legislation. The Commission has the power to issue regulations and directives to states. The EU also has a 27-member Council of Ministers, which has the final say on most legislation. Since each state has one vote in the Council, smaller countries have disproportionate influence. The European Parliament is a 732-member elected body, but it has no general law-making power. It must base what it does on existing treaties. It may challenge the acts of other institutions and reject budget proposals, but the Council remains more powerful. Since the Parliament is relatively weak, issues of representative democracy have been raised. The EU also has a 27-member European Court of Justice which has the authority to review: EU treaties, the conduct EU institutions, and enforcement actions brought against the states.

While the EU currently has law-making functions, they are largely limited by treaty to common market issues. They have no authority to legislate regarding national pensions, or health care, for example. The EU has no general power to tax and spend. Under the current arrangement, it would be difficult for a majority of states to change the behavior of another country.

To complicate matters, it will be a real challenge in Europe to take benefits away, because people have rights to them under various Human Rights Treaties. Europeans enjoy the right to collective bargaining, and protection in the event of an unfair dismissal at work. They have a right to fair and just working conditions. They have a right to social security and health care.

The immediate problem in the EU is national governments control their own fiscal policies, and the crisis of the Euro is without a mechanism to save it. The difficulty in creating a fiscal union, or a political union which would entail a loss of state sovereignty, is the strong sense of nationalism that exists in most European countries. A radical change in thinking will definitely be needed before the peoples of the EU could ever become a United States of Europe.

11/23/2011

Republican Debate Foreign Policy (11-12)

The Republican Presidential candidates debated again on Nov. 12, 2011.

CHINA: Romney said we have something China needs, which is a global market, but they must play by the rules and cannot manipulate currency to cause prices to fall below market levels. He would sue China in the WTO to win the right to selectively impose tariffs. Huntsman said the WTO does not allow us to sue over currency issues, and trade war would only hurt U.S. exports. Perry believes China will end up on the ash heap of history.

EURO: Huntsman warned Europe is second only to Canada as a U.S. export market, and if they go down, it will spread back to us.

RUSSIA: While discussing Iran, Romney sounded like he considered Russia an enemy, as he accused Obama of giving them what they wanted. It was not clear if he knew what he was saying.

ISRAEL: Paranoid Bachmann thinks “the table is being set for a worldwide nuclear war against Israel,” as she baselessly accused Obama of not being willing to stand with them.

FOREIGN POLICY: Ron Paul noted our foreign policy is bad, because we pretend we are at war. We are only at war against a tactic, he said. There is in fact no declared war. Gingrich said our foreign aid should start at zero for each country every year. Egypt should explain why they should receive a penny. He would adopt a strong policy against what he called UN “absurdities.” Perry thinks we are in a real war, and would deal with every country, including Israel, by denying foreign aid if they do not support us.

AFGHANISTAN: Huntsman said there is a lack of security in Afghanistan, but it is time to come home. We achieved our objectives by uprooting the Taliban, dismantling al-Qaeda, and killing Osama bin Laden. Elections were held. The U.S. should not use 100,000 troops to do nation-building there. Romney would not negotiate with the Taliban, because he said we don’t negotiate with terrorists. He claims our commanders in the field do not want our troops withdrawn, but Obama is taking them out early. His timetable is to stay until 2014. Perry said he would complete the mission (whatever that means). He thinks we are making progress, and a timetable to pull out is irresponsible. He said our military is doing the best they can, considering the lack of support from the administration, and the telegraphing to the enemy that we are leaving. Santorum said victory over the Taliban does not mean wiping them out, because we can’t do that. It means neutering them, so they are no longer a security threat. Bachmann said Obama sent a surge of only 30,000, instead of the 40,000 requested, and made a fatal decision to withdraw by Sept. 2012. Gingrich said the Taliban survive, because they have sanctuary in Pakistan. Cain was asked what it is about the situation in Afghanistan that has been going on for 10 years that is so unclear that he cannot answer questions about it. He said victory is not clearly defined. He would define the mission.

PAKISTAN: Romney said Pakistan is a fragile nation which is close to a failed state. He wants to make sure they allow us to go after Taliban and the Haqqani Network. Santorum said we cannot be indecisive about whether Pakistan is a friend, because they have nuclear weapons. He would continue aid for Pakistan, and would work through our difficulties. He would work with the Pakistani military and their intelligence network, because they do not back the Haqqani Network. Gingrich said we do not getting reliable intelligence from Pakistan, and we have to rely on friends. Bachmann said Pakistan is a place where terrorists receive training, but she would not deny aid, because they have nuclear weapons. Cain said he didn’t know if Pakistan was a friend or foe.

IRAN: Ron Paul said it is not worth going to war against Iran to prevent them from gaining nuclear weapons. Intervention would have to go through Congress, because the Commander-in-Chief cannot make that decision. What is going on right now is the same war propaganda used against Iraq. If a Declaration of War is made, you fight to win, and get it over with. Romney would support the Iranian dissidents who took to the streets and would impose sanctions. He said Obama should have made it clear we will take military action to keep Iran from obtaining nuclear weapons. If Obama is re-elected, he predicted Iran will gain nuclear weapon, but if Romney is chosen, they will not. In addition to crippling sanctions, he would encourage regime change, and if that fails, he would use military force. Perry would sanction the Iranian Central Bank and shut down their economy. Santorum said Iran must not get a nuclear weapon. He hopes we have been acting covertly to make sure it does not happen. He wants to work with Israel and let them take out Iran’s nuclear capabilities, like they did in Iraq and Syria. Gingrich would maximize covert operations to block and disrupt the Iranian program. He would take out their scientists. He would coordinate his efforts with Israel. Cain would assist the Iranian opposition who are trying to overthrow the regime. Because Iran uses oil as a weapon, he wants U.S. energy independence. He would put economic pressure on Iran through sanctions. He would deploy ballistic missile defense Aegis warships in the Persian Gulf.

ARAB SPRING: Cain thinks Obama was on the wrong side in nearly every Arab Spring situation. He thinks Obama mishandled the revolutions. Our relationship with Egypt may not survive, because the Muslim Brotherhood may gain control. Obama said the President of Yemen must go, even though he is our friend.

SYRIA: Ron Paul said the Syrians need to deal with Syria. It is a tragedy many died, but we would only get in trouble if we got into it. We should support self-determination. Romney said it is time for the Assad dictatorship to end. We should help with covert activities. He said Syria is an ally of Iran, and we should aid Turkey and Saudi Arabia. Gingrich said it was good the Arab League suspended Syria. The administration dumped Egypt’s Mubarek in a heartbeat, but did not go after Assad. He would take covert action against Assad.

GUANTANAMO AND TORTURE: Ron Paul correctly pointed out torture is illegal under our laws, and international law. He added water-boarding is torture. He said there is no evidence reliable information is gained. It’s uncivilized and immoral, he said.  Huntsman, who lived overseas four times, said we diminish our standing in the world as to liberty, democracy, and human rights, when we torture. Water-boarding is torture, and we should not use it. Perry is for enhanced interrogation techniques, because he thinks we are involved in a war. Santorum would allow enhanced interrogation techniques, because he thinks they are successful in obtaining information. He would keep Guantanamo open. Bachmann would use water-boarding, because she thinks it is useful for gaining information. She made the ridiculous statement Obama is letting the ACLU run the CIA. She claims Obama wants to lose the war on terror, because we now have no place for terrorists. Cain does not agree with torture, but trusts the military leaders to determine what is, and what is not, torture. He called water-boarding an enhanced interrogation technique, but not torture. He would allow the military to use enhanced interrogation techniques, because he thinks anyone picked up must necessarily be a terrorist.

CIVILIAN COURTS: Paul said over 300 individuals charged with terrorism were convicted in civilian courts and most are in prison. We should not give up so easily on the rule of law, he said. Santorum thinks civilian courts are one of the worst ideas he ever heard of, because people there have constitutional rights. People who attacked our country should not enjoy rights, he said. He also said he believes in the Geneva Conventions, but when they don’t play by the rules, they don’t enjoy rights under Geneva.

ASSASSINATION: Romney said it was correct for the President alone to order the death of American citizens suspected of terrorism. He claimed one individual allied himself with a group that declared war on the U.S. and if they bear arms against us, they are fair game. Gingrich said they were more than suspects. They were found guilty of trying to kill Americans, not by a court, but by a panel. He said enemy combatants have no right to go to court. Waging war on the U.S. is outside criminal law. It is correct to kill people who are trying to kill you.

BUDGET: Huntsman said our debt is a national security risk. Greece has a 170% debt to GDP. Italian debt is 120% to GDP. Japan is 100% debt to GDP. Our debt is 70% to GDP and moving up. We need to send Medicaid and Education back to the states. The Ryan plan puts everything on the table, he said. Romney would eliminate programs we cannot afford, such as Obamacare. That would save 95 billion per year. He would eliminate Public Broadcasting, and the Endowment for the Arts. He would re-direct Medicaid to the states. Gingrich wants the unemployed to receive training, so they do not get something for doing nothing.  Bachmann said the debt is out of control since LBJ created the welfare state. She said military expenditures should also be reduced. Instead of a cost plus billing, we need a fixed cost system. We have to modernize military medical costs. Gingrich thinks the Navy is shrinking and would invest in it and rebuild it.

11/18/2011

Republican Debate: Michigan (11-9-11)

The Republicans debated in Michigan on Nov. 9, 2011:

CHINA TRADE: Romney would sue China in the WTO, because he said they are unfairly cheating, and not playing by the rules, as they engage in predatory manipulations of their currency, and make Chinese goods artificially low-priced. Huntsman warned randomly slapping tariffs on Chinese goods would trigger a trade war, which is not a good idea, since China would do the same to our exports. Santorum called tariffs a tax on “you.”

EURO CRISIS: As to Europe, Romney said they should take care of their own problems. What is happening in Italy and Greece, he said, is where we are headed if we don’t change. When asked about U.S. contributions to the IMF used to help the Euro Zone, he said the U.S. must focus of our own deficits. Huntsman warned if we do not get on top of our debt, we will soon look like Europe. Cain said there was not a lot we could do about Italy, because they were already beyond the point of return.

OCCUPY WALL STREET: Huntsman wants to be the President of the 99% as well as the 1%. He agreed we should not bail out corporations, because we spent trillions with nothing to show for it. He disagreed with the anti-capitalism message some made.

BANKS: Huntsman is concerned about “too big to fail” and wants a proper size for banks. We must address the problem of banks too big to fail, because they are setting us up long-term disaster. He said six institutions have 9.4 trillion or 60 to 65% of our GDP with implied taxpayer guarantees of protection, which is unfair to taxpayers. They need to be “right-sized.” The banks need to pay to take the risk away from taxpayers. Cain wants to get regulators off the backs of the banks.

FEDERAL RESERVE: Gingrich would fire the Fed Chair Ben Bernanke, and would audit the Fed with a complete disclosure so we know who was bailed out and why. Paul said the Fed is engaged in price-fixing by setting interest rates well below market levels. We are cheating the elderly of interest income they could earn on their CDs, as banks get loans at zero percent.

HOUSING: What about the 25% who owe more to the bank than their house is worth? Gingrich said “short sales” need to be easier. He thinks the banks profit more from foreclosing than by doing “short sales.” He thinks unemployment is keeping housing from coming back. Romney said holding off the foreclosure process, like the president has done, won’t work. The government cannot buy up all the homes in America. Fannie Mae and Freddie Mac gave loans to people who could not afford to pay them back. We won’t see home prices return, unless we let the market work. Bachmann said at the time of the meltdown, 50% of homes were financed by Freddie and Fannie, and now its 90%, and yet they want another 7 billion. Cain would make Freddie and Fannie private entities. Paul said the housing debt has to be liquidated, as we are just prolonging the housing bubble agony. Fannie Mae and Freddie Mac just keep demanding more money, Paul said.

CORPORATIONS: Romney said it is not a choice between job creation and maximizing profits. Profits help expand businesses and cause them to hire people, he said. Profitable enterprises hire people. He accused the Democrats of not liking business. Perry wants the market and private sector to make decisions. He would let consumers choose winners and losers. He said if a company is too big to fail, it is too big.

LABOR: Cain said the NLRB should not be telling Boeing what to do in South Carolina.

REGULATIONS: Perry said regulations are killing America, and we need to pull back on them. If it kills jobs, do away with it, he said. He would eliminate three agencies, Commerce, Education, but he could not remember the third, until someone prompted him to say EPA. But then he recanted, and said not the EPA. He later said he was trying to remember the Energy Dept.

AUTO BAILOUT: Romney said the auto bailout was wrong, adding they should have gone through a managed bankruptcy. He opposed giving GM to the UAW, and Chrysler to Fiat. Huntsman did not think the 68 billion dollar auto bailout was a good use of taxpayer money. He said Americans are sick and tired of bailouts.

ENERGY: Huntsman wants energy independence. Bachmann said we need to legalize American energy. Santorum wants to produce energy in this country. He wants to cut all the subsidies, and let the market work. He does not favor incentives to get energy businesses going.

HEALTH: Huntsman said we need to address health care cost containment with the 50 governors. He would not have a costly mandate. Half of health care spending is nonsense, he said. We have to get cost out of the system. Patients need to be empowered. We need truly affordable insurance. Paul supports medical savings accounts and would allow opt-outs from Obamacare. We need market forces in medicine, he said. Perry said if Medicare were run by the states, it would save a ton of money. Romney would let the states do their own programs, but thinks individuals must have insurance. Health care has to work more like a market, where people have a stake cost. The malpractice system is nuts, he said, and should be taken over by the federal government. He said government is playing too heavy a role, and patients need to have a stake in cost. He was asked about providing subsidies for those who cannot afford health insurance. Gingrich would turn health care over to the states for experimentation. Bachmann said health care is too expensive. She said Obama promised we would save $2,500 per year in premiums. We need to end the insurance monopoly in every state and allow a free market. Santorum wants the government out of the health care business, and replace it with a consumer driven market.

SOCIAL SECURITY: Gingrich said President Johnson put Social Security into the general budget, and politicians now hide behind it. The money is there and available and the country ought to pay the debt it owes to those who put it there. Bachmann opposes an extension of the payroll tax cut, because it is blowing a hole in the Trust Fund. Perry talked about going to some kind of vague blended price and wage program.

EDUCATION: Paul said there is no authority in the Constitution for the federal government to be involved in education. He would get rid of student loans. Gingrich was asked about student loans and the fact they cannot be wiped out in bankruptcy. Perry said we have to control college Boards of Regents.

SPENDING AND DEBT: Romney said we cannot continue to pass massive debts to the next generation. Romney wants to cut spending. Paul said spending is taxing. He would cut 1 trillion from five departments in his first year. Bachmann said Washington receives 2.2 trillion but spends 3.7 trillion.

TAXES: Bachmann believes taxes cause jobs to leave the U.S. We have the 2nd highest corporate tax rate in the world, she said. If state and federal rates are combined, she claimed we have a 40% corporate rate. Capital went to places where rates were falling. We have to lower our rates. Santorum was asked if his proposed zero tax on manufacturing would be flatter, simpler, or fairer. He said he was not picking winners and losers. He said the government made us uncompetitive, and we need to compete on taxes. Perry proposed a 20% flat tax on personal and corporate incomes. Cain would throw out the current tax code. We need something simple, since complexity is costing 430 billion a year. He wants all treated the same, without winners or losers. Romney was asked why he was holding on to the progressive income tax. He said he wanted flatter rates.  He wants special breaks removed. He would reduce the corporate rate from 35% to 25%. Bachman said there is something wrong with the income tax when only 53% pay it, and 47% do not. She wants everyone to pay something. Huntsman wants to phase out loopholes, deductions, corporate welfare, and subsidies. He would lower rates.

HARASSMENT: Cain said he was being tried in the court of public opinion based on unfounded sexual harassment accusations. Voters don’t care about the character assassination, he said. Romney would not say if a CEO like Cain could be kept.

11/03/2011

Greek Referendum: Democracy 101

After Greece joined the European Economic Community (1981), ratified the European Union Treaty (1992), and adopted the Euro currency as part of the EU Monetary Union (2002), they gave up their sovereign right to print money, or to spend in excess of limits set by the European Central Bank.

Although Greece was required by the Central Bank to maintain a Balanced Budget, and to limit their National Debt to no more than 60% of GDP, the Greeks failed to control spending, and their Debt rose well beyond the EU limits, to a crisis level.

Under the recent Greek Bailout Plan, promoted by the leading EU powers Germany and France, Greece was required to cut their budget in consideration for loan forgiveness and other assistance.

There was one small problem with the bailout plan: someone forgot to ask the Greek people if they approved. In the birthplace of democracy, the EU attempted to dictate from the top down, ignoring the principle that consent must come from the governed.

If Greek Prime Minister George Papandreou had allowed the EU to proceed without submitting a referendum to the people, seeking their approval, and draconian spending cuts were made without regards to the wishes of the people, a revolt may likely have erupted in Athens. It is naïve to assume Greeks would simply allow the Central Bank in Frankfurt to reduce their jobs and pensions without a fight.

Papandreou wisely realized the only way benefits could be cut and taxes can be raised in Greece is with the consent of a majority of the people. While the referendum poses risks, such as a vote that disapproves of the EU plan, observers must recognize that the absence of democratic participation would have led to an even greater risk of civil war, and at the very least, the violent removal of George Papandreou and his government.

The absolute best case scenario is for the Greek people to approve of the referendum so the EU plan has the will of the people behind it. We should not criticize George Papandreou for resorting to time-honored Greek democratic principles to solve this crisis.

10/12/2011

Republican Debate New Hamp (10-11-11)

The Republican candidates met in New Hampshire on Oct. 11, 2011 to debate economic issues.

INTERNATIONAL TRADE: Romney said we have been run over by China for 20 years, and he would issue an Executive Order identifying them as a currency manipulator, and then prosecute them in the WTO.  He did not want a trade war, but did not want to let them use us either. Huntsman worried if we apply penalties, we will get the same in return, because we also manipulate our currency, and a trade war would hurt our agricultural exporters.

EURO CRISIS: Gingrich said the Greek economy should not be using the Euro-Zone Currency. Ron Paul uncovered the Federal Reserve sent 5 billion overseas to bail out foreign banks.

DEFENSE SPENDING: Romney will not cut defense spending.

BANKING: If the economies of the entire world were collapsing, Romney would take action. He said we need to prevent a contagion from affecting U.S. banks. President Bush had to take action to keep all banks from closing. Santorum opposed the bailout of the Wall Street banks, and the creation of the Troubled Asset Relief Program (TARP), which Romney, Huntsman, Perry, and Cain supported. Bachmann said the banks cannot grow, because they are being required to comply with new rules. Cain thought the Wall Street protesters should target the government.

FEDERAL RESERVE: Gingrich said the fix has been in since the Bush Administration. Newt said Paulsen, Bernanke, and Geithner are not smart, and he would fire Bernanke and Geithner over the crisis. He singled out Bernanke for spending billions bailing out one group, over another. He said it is wrong for one man to have that kind of secret power. He wants all Fed documents released, so we can better prepare for the next crisis. Romney would also discharge Bernanke. Cain had no objection to a Fed audit. Paul called the Fed the engine of inflation and the source of recessions.

INTEREST RATES: Paul said Greenspan kept interest rates too low for too long. Easy credit caused a bubble and then it burst and now we need a correction. We should not have someone at the Fed deciding what interest rates should be, or how much money we should have. We should go back to the gold standard, Paul said. Because the Fed is setting artificially low interest rates, Bachmann blamed the financial meltdown on the government.

HOUSING: We built too many houses, Paul said, and then the Wall Street speculators got bailed out, but the Middle Class lost homes. Freddie Mac and Fannie Mae caused overbuilding and distortions, and the government must get out of housing. Bachmann said the government pushed housing goals, as Freddie and Fannie put mortgages in a difficult place. Gingrich said the easy ability to buy homes is where we went wrong the last decade. He blamed the Countryside deal on the lobbyists for Freddie Mac.

JOBS: Romney said funds should not have been used to bail out GM and Chrysler. The NLRB should not be telling Boeing it cannot build in a non-union state. He said we borrowed 800 billion for a job stimulus, but didn’t see any jobs. Huntsman would regain our industrial base by lowering taxes and lessening regulations. Santorum said we are uncompetitive, and must reduce corporate taxes from 35% to zero on those who invest in plant and equipment in this country. Perry wants our manufacturing back.

ENERGY: Perry would repeal regulations that interfere with the energy industry. He would put 1.2 million people to work in the industry, so the U.S. can become energy independent. It was wrong, he said, for Obama to invest in Solyndra, a solar energy firm. When asked about doing the same in Texas, he said his legislature had oversight and created 54,000 jobs. Santorum would drill in Pennsylvania, saying it is a gas capital.

HEALTH CARE: Romney said Americans are not satisfied with the status quo. Although he would repeal Obamacare, he asked, what are we going to replace it with? In Mass, he dealt with the 8% who were uninsured. He said Perry has one million uninsured kids in Texas, while Mass has less than 1%. Romney said Obama’s plan raises taxes and spends trillions. Huntsman wants a health care solution that works in the market. He warned the IRS is already gearing up with 19,500 employees to administer the insurance mandate. Santorum would repeal Obamacare, but not by waivers. He would repeal the taxes and spending for it, so the insurance mandate would have no teeth.

MEDICARE: Gingrich was asked: Are the last two years of life under Medicare wasteful spending? He did not want death panels. Bachmann warned Part B for hospitals will be broke in nine years. She thinks Obama would push people out of Medicare into Obamacare, and 15 political appointees will make major decisions for 300 million Americans. Perry says Medicare needs to be block-granted to the states.

BUDGET & DEBT: Cain wants revenues to equal spending. Perry would propose a Balanced Budget Amendment, because we raise taxes, but never get spending reductions. Paul said the debt is a burden on the economy. Bachmann opposed increases in the Debt Ceiling, because she did not want to give Obama another 2.4 trillion. We spend 40% more than we take in, she said, and cut backs on spending would be only part of the answer. Romney said we cannot have more tax revenues, because that would kill jobs.

TAXES: Romney would not raise taxes. We don’t need Cain’s 999 tax plan, said Perry. The last thing Bachmann would do is let Congress impose a national sales tax, a suggested by Cain. Santorum said Cain’s plan would not pass, because no one supports a national sales tax. Huntsman would not do Cain’s tax plan, but instead something doable, like eliminating loopholes and deductions for individuals, as recommended by the bipartisan Simpson-Bowles Commission. Huntsman would also phase out corporate welfare and subsidies. He said he had a flat tax in Utah.

9-9-9 PLAN: Cain would throw out the entire tax code, including the progressive income tax, the capital gains tax, death taxes, and payroll taxes, and he would replace it with a 9-9-9 plan: 9% corporate business flat tax, 9% federal income tax, and 9% national sales tax. He was asked why Americans would be willing to pay more for bread and milk, under his new 9% national sales tax. He gave an incorrect answer, suggesting ordinary people are now paying 15.3%, when in fact they pay only 7.65%. He tried to suggest they would be save 6%. He thought people would have more for sales taxes, since they would pay less in payroll taxes. Cain also appeared ignorant of how Congress works, when he said he would ask them to require a 2/3rds vote before increasing any of his 999 taxes. He would need a Constitutional Amendment.

06/21/2011

European Union Needs More Power

Since 54% of the 483 million-member European Union (EU) come from Germany, France, Britain and Italy, too much is being made of the Euro Crisis, as only 2% of the EU population lives in Greece, 2% in Portugal, and less than 1% in Ireland. The Euro Crisis simply does not directly affect 95% of the European Union.

Britain, one of three to opt out of the Euro, with Denmark and Sweden, is now smirking on the sidelines and hyping the crisis, as the German Bank tries to craft bailouts for Greece, Portugal and Ireland. But British criticism of the Euro-zone is not the answer. The Euro instead needs more, not less power. What the UK could do to help and restore Euro confidence is to boldly abandon the Pound and adopt the Euro.

Here, in America, many are unable to follow the EU story, since the organization did not even exist when they were in school. The EU had its origins with the European Coal and Steel Community (ECSC) (1952), and the Common Market, also known as the European Economic Community (EEC) (1957). The EEC later became the European Community (EC) (1967), and finally the European Union (1992), which now has 27 member states.

The EU established an Economic and Monetary Union, which opened a European Central Bank in Frankfurt (1998), and circulated a Euro Currency (2002). Britain, Denmark and Sweden opted out of the Euro. The Central Bank controls Euro monetary policy and affects national spending, since Euro-zone states are now unable to print their own currencies and must make up for budget shortfalls by borrowing. The EU adopted a Stability and Growth Pact to limit national budget deficits, but Greece, Ireland and Portugal failed to comply. With no money to print, and none to borrow at reasonable rates, a crisis developed.

A European solution is not as easy as the one implemented in the U.S. during the recent financial crisis, where Congress and Federal Reserve Bank stopped things from spinning out of control. Although EU institutions look like those in the U.S., since they have an executive in Brussels (Commission and Council of Ministers), a 732-member Parliament in Strasbourg, and a Court of Justice, in Luxembourg, they are not as strong as their U.S. counterparts. The EU is not really a political union able to make its own decisions, but rather an organization which is dictated to by its 27 member states. The EU Parliament has no general lawmaking power and cannot tax and spend. All the EU can do is issue directives to member states and ask national governments to implement EU policy.

Some say the EU will never become the USA of Europe, but it’s just a matter of time. It took the U.S. 172 years to assemble 50 states in one union across North America, and it will take many years to complete the European Union picture.

For now, instead of Britain, Denmark and Sweden resisting the Euro currency, as they have in the past, they should courageously convert to it and give the EU more power. All 27 member-states should grant their EU institutions the authority they need to keep their currency strong, so they can correct the budgetary problems in the member states, such as Greece, Portugal and Ireland.

05/16/2011

Euro Currency Will Survive Crisis

The financial crisis in Greece, Ireland and Portugal would have been strictly national in decades past, but since the circulation of the Euro currency, the matter is now a European Union problem.

The European Union (EU) began when six nations formed the European Economic Community (1957). [1] After Britain, Denmark and Ireland joined (1973), Greece, Spain, and Portugal became members (1980s). Once the EU replaced the EC (1992), Austria, Sweden and Finland were added (1995), followed by 10 largely eastern European countries (2004). [2] Most recently, Romania and Bulgaria pushed EU membership up from 25 to 27 states (2007).

Unlike the U.S., where adopting of the U.S. Dollar is a condition to statehood, membership in the EU, and the use of the Euro, are separate matters. Three EU members opted out of the Euro. Britain stayed with the Pound Sterling, Denmark turned down the Euro in a referendum (2000), and Sweden also voted no (2003).

Britain feared the European Central Bank in Frankfurt would set interest rates, and their own Bank of England would lose control. They felt they could maintain better economic stability, lower inflation, and less unemployment, by continuing with the Pound.

Sweden’s vote against the Euro was based on a fear recessions would cause big states like Germany to take over their economy, and they would lose their welfare system. The issue was so hot Foreign Minister Lindh was assassinated for promoting the Euro.

Today, even though the EU has 27 members, only 17 have adopted the Euro, as their currency. [3] While five European states, that are not EU members, also use the currency, [4] there remain 10 EU nations that have not yet converted. Seven however agreed, when they joined the EU, to replace their currencies over time. [5]

Despite the recent crisis in Greece, Portugal and Ireland, it is just a matter of time before the Euro is adopted throughout Europe. Once all of those admitted to the European Union in 2004 and 2007 start using the Euro, more nations will join the EU, such as Macedonia, Croatia Serbia, Bosnia, Albania and Iceland, and they too will adopt the currency. Those not seeking EU membership, like Norway Liechtenstein and Switzerland will soon become isolated as to their money, and pressure will build to accept it, or people will simply start using Euros as a matter of fact.

The first near decade of the Euro has been a major success. Along with the U.S. Dollar, it is now the world’s most valued currency. One can reasonably predict that after the EU solves the crisis in Greece, Portugal and Ireland, the Euro will only emerge even stronger than it was before the recent economic troubles began.


[1] Belgium, France, Luxembourg, Netherlands, Germany and Italy

[2] Poland, Hungary, Czech Rep., Slovakia, Estonia, Latvia, Lithuania, Slovenia, Malta and Cyprus

[3] Austria, Germany, Luxembourg, Spain, Belgium, Greece, Netherlands, Finland, Ireland, Portugal, France, Italy, Slovenia, Malta, Cyprus, Slovakia, Estonia

[4] Andorra, Monaco, San Marino, Montenegro, Kosovo

[5] Czech Rep. (koruna), Poland (zloty), Latvia (lats), Hungary (forint), Lithuania (litas), Romania (leu) and Bulgaria (lev)