Post by tufta on Sept 11, 2010 12:32:40 GMT 1
Luboš Motl is a very talented guy from Pilsen, Czech Republic. In his blog he has made some very insightful observations.
Trichet: Eurozone won't admit countries like Slovakia
by Luboš Motl
motls.blogspot.com/2010/09/trichet-eurozone-wont-admit-countries.html
As we have learned from Reuters and others, the European Central Bank's chairman, Jean-Claude Trichet,
is furious about Slovakia's refusal to subsidize the Greek freeloaders.
(If you need to know, "triche" means "cheats" in French.)
He has revealed that had he known that Slovakia was going to refuse to participate in similar money transfers, his ECB would have vetoed the Slovak accession to the eurozone. Also, he said that if there are other countries that are at risk of misbehaving in the same way, he will veto their entry in the future.
Greece, for its failure to fulfill the accession criteria (before it fabricated its paperwork) and for having behaved in the most irresponsible way, has received hundreds of billions in gifts from the likes of Trichet (of course, paid from other pockets). However, Slovakia which has honestly fulfilled the accession criteria and which kind of knows how to be fiscally responsible gets trashed. That's the eurozone version of justice.
His statement obviously means that the ECB under Trichet won't allow the Czech Republic to join: the Czech Republic is the first country that is "like" Slovakia. The only good news here is that no one in the Czech Republic really wants to join them, anyway. ;-) The new right-wing Slovak government has shown its fiscal responsibility and principles and I applaud it.
But I still think that the new Czech right-wing government (it may be almost the first time when post-1993 Czechia and Slovakia became "synchronized" in the political orientation of their governments) would be even more principled in its efforts to torpedo similar acts of moral hazard. And I think that Trichet knows it very well. So his pronouncement was primarily about the Czech Republic.
The eurozone is a contrived, artificial construct because it is not an optimum currency area and its citizens do not share their national identity or genuine solidarity, either. However, because it was already created, I still think that it is important to realize that the eurozone is not a new country, family, company, church, or sect: it is just a region that shares a currency.
An Arab and a Jew may share gold or U.S. dollars as their preferred currency for payments or savings but that doesn't mean that they will share a credit card and buy pink pillows for their new bedroom. Quite on the contrary, it is more likely that one of them will throw the second one to a chasm. The Chinese were not considered to be compatriots by the Americans even though they had a de facto (Sino-American) currency union with the U.S., either. Obviously, almost the same thing holds for the euro, too.
The ECB's task is to preserve the value of the euro: its task is not to impose a non-existent compassion on the member states or to organize international money transfers, especially not transfers from a relatively poor member who works hard to a nominally wealthy member who doesn't work hard but who wants to keep his pensions that he cannot afford and that are 5 times as high simply because he's used to them.
There exists a substantial opposition to this kind of subsidizing of Greece in Germany.
You must realize that the fiscal responsibility in Germany, Czechia, and Slovakia is very similar in extent and character. The Czechs have been trained by centuries of German influence (and genetic mixing) which is one of the reasons why these things simply are similar. And even if the Slovaks were miseducated by the fiscally irresponsible Hungarian attitudes during the Hungarian empire, we have taught them better during the years of Czechoslovakia. ;-)
However, in Czechia, and especially in Slovakia, average people are also pi times poorer than in Germany which makes similar aids even less acceptable to the electorate - and the politicians who reflect the voters' will.
A strikingly different example are our Southern Slavic cousins in Slovenia, a small nation of former Yugoslavia that has joined the eurozone years before Slovakia. They seem to be obsessed with a plan to dissolve their nation in Europe and to be more politically correct than their nearest European competitors. They just don't seem to have any national identity, pride, or national interests anymore. It's OK with me - it's their identity - but it's simply a fact that not everyone has to be thinking in the same way and not everyone is thinking in the same way.
Trichet: Eurozone won't admit countries like Slovakia
by Luboš Motl
motls.blogspot.com/2010/09/trichet-eurozone-wont-admit-countries.html
As we have learned from Reuters and others, the European Central Bank's chairman, Jean-Claude Trichet,
is furious about Slovakia's refusal to subsidize the Greek freeloaders.
(If you need to know, "triche" means "cheats" in French.)
He has revealed that had he known that Slovakia was going to refuse to participate in similar money transfers, his ECB would have vetoed the Slovak accession to the eurozone. Also, he said that if there are other countries that are at risk of misbehaving in the same way, he will veto their entry in the future.
Greece, for its failure to fulfill the accession criteria (before it fabricated its paperwork) and for having behaved in the most irresponsible way, has received hundreds of billions in gifts from the likes of Trichet (of course, paid from other pockets). However, Slovakia which has honestly fulfilled the accession criteria and which kind of knows how to be fiscally responsible gets trashed. That's the eurozone version of justice.
His statement obviously means that the ECB under Trichet won't allow the Czech Republic to join: the Czech Republic is the first country that is "like" Slovakia. The only good news here is that no one in the Czech Republic really wants to join them, anyway. ;-) The new right-wing Slovak government has shown its fiscal responsibility and principles and I applaud it.
But I still think that the new Czech right-wing government (it may be almost the first time when post-1993 Czechia and Slovakia became "synchronized" in the political orientation of their governments) would be even more principled in its efforts to torpedo similar acts of moral hazard. And I think that Trichet knows it very well. So his pronouncement was primarily about the Czech Republic.
The eurozone is a contrived, artificial construct because it is not an optimum currency area and its citizens do not share their national identity or genuine solidarity, either. However, because it was already created, I still think that it is important to realize that the eurozone is not a new country, family, company, church, or sect: it is just a region that shares a currency.
An Arab and a Jew may share gold or U.S. dollars as their preferred currency for payments or savings but that doesn't mean that they will share a credit card and buy pink pillows for their new bedroom. Quite on the contrary, it is more likely that one of them will throw the second one to a chasm. The Chinese were not considered to be compatriots by the Americans even though they had a de facto (Sino-American) currency union with the U.S., either. Obviously, almost the same thing holds for the euro, too.
The ECB's task is to preserve the value of the euro: its task is not to impose a non-existent compassion on the member states or to organize international money transfers, especially not transfers from a relatively poor member who works hard to a nominally wealthy member who doesn't work hard but who wants to keep his pensions that he cannot afford and that are 5 times as high simply because he's used to them.
There exists a substantial opposition to this kind of subsidizing of Greece in Germany.
You must realize that the fiscal responsibility in Germany, Czechia, and Slovakia is very similar in extent and character. The Czechs have been trained by centuries of German influence (and genetic mixing) which is one of the reasons why these things simply are similar. And even if the Slovaks were miseducated by the fiscally irresponsible Hungarian attitudes during the Hungarian empire, we have taught them better during the years of Czechoslovakia. ;-)
However, in Czechia, and especially in Slovakia, average people are also pi times poorer than in Germany which makes similar aids even less acceptable to the electorate - and the politicians who reflect the voters' will.
A strikingly different example are our Southern Slavic cousins in Slovenia, a small nation of former Yugoslavia that has joined the eurozone years before Slovakia. They seem to be obsessed with a plan to dissolve their nation in Europe and to be more politically correct than their nearest European competitors. They just don't seem to have any national identity, pride, or national interests anymore. It's OK with me - it's their identity - but it's simply a fact that not everyone has to be thinking in the same way and not everyone is thinking in the same way.
