It’s hard to know which is worse between David Cameron’s concern for regulations that might harm the ‘City of London’ - i.e the stock market traders, hedge fund managers and bank executives who caused the crisis - at the expense of everyone else; or the Eurozone governments’ fantasy that balanced budgets will solve everything.
Both ignore the actual causes of the crisis – deregulation of the financial sector leading to massive fraud causing a crisis when it was discovered and global recession.
In addition the Eurozone ‘fiscal unity’ plan ignores the fact that trade between countries with stronger and weaker economies will inevitably lead to trade imbalances and so deficits in the governments of the weaker economies unless there is major redistribution from wealthier to poorer economies, invested in development.
The Franco-German plan at least recognises that re-regulation of the financial sector is necessary to avoid another crisis, even if it doesn’t go far enough in re-regulating.
Balanced budgets will do nothing to prevent another banking crisis, because it doesn’t prevent debts being run up by the banks and other ‘financial institutions’ in the private sector again, nor does it stop them developing and fraudulently trading new ‘financial instruments’.
A balanced budget does nothing to guarantee a strong economy either. In fact it may prevent borrowing to invest in developing new technologies and infrastructure that would lead to development in the future; and it prevents governments ending recessions through stimulus packages.
Why would any national government give up control of how much it taxes and borrows to the Euro-zone?
Even states of the US in a federal system don't give up that power (though extreme free market ideology has led many of them to practically abolish taxes, leading to bankruptcy at the state level in California and elsewhere).
There is pretty much no chance of the Greek, Spanish, Portugese or Italian public approving of the fiscal unity plan in referenda even if it gets through their parliaments; and even the French are intensely nationalistic and unlikely to give up that much sovereignty.
Some French and German politicians have already suggested Greece might wish to leave the euro - so perhaps the fiscal unity plan is intended to force the weaker economies out of the euro-zone, leaving it with maybe France, Germany, Poland, Belgium, Holland, Poland and the Czech Republic.
Why is there a focus solely on levels of debt when Germany's debt as a percentage of GDP in 2011 is expected to be 81.1% of GDP according to German government projections (1). So how can it lecture Greece or Italy on debt? Like other European countries, it's debt only became a critical problem due to the recession which resulted from the financial crisis.
So I don’t blame Cameron for refusing to sign up to the fiscal unity deal – I blame him for only defending the interests of city traders who have retained incomes including bonuses averaging over £100,000 a year , including a 12% average pay increase in the last six months (equivalent to 19% in the last year when 5% inflation is taken into account), while he sacks hundreds of thousands of public sector employees on a fifth or less of that wage who provide healthcare, education, policing and emergency services while many city traders profit from the suffering of others and are grossly over-paid for jobs that do more harm than good to other people (2) - (3).
City of London financial traders are the last people who need protected from ‘bureaucracy’ – they need reined in hard, with regulators coming down on them like a ton of bricks to prevent them causing another crisis - and if the government really want to tax the 'haves' and not the 'have nots', they'd be better raising taxes on city traders rather then sacking teachers and nurses.
(1) = Wall Street Journal 28Oct 2011 ‘German Government Now Sees '11 Debt-To-GDP Ratio At 81.1%-Spokesman’, http://online.wsj.com/article/BT-CO-20111028-713887.html
(2) = Astbury Marsden Compensation Survey 2011 – Banking Infrastructure London,http://docs.google.com/viewer?a=v&q=cache:tN8-iJkGpa8J:www.astburymarsden.com/documents/Astbury%2520Marsden%2520Compensation%2520Survey%25202011_Banking%2520Infrastructure%2520London%2520small.pdf+Astbury+Marsden+report+city+pay&hl=en&gl=uk&pid=bl&srcid=ADGEESjCp35WxasQC0uKU6hyPufcF3PKQgqywr0k1qNAEGK_4wMSeFBhohPhKrGo7oTiY4RLukF4E51KGYTxH6kmRfhX-1zs80hIKdv6Ckao6ZzZxFrjD6HI5anmt52lZR3QiNTc0ttx&sig=AHIEtbS9vlPCGJzgvi4HFde7s45wAlnw_w
(3) = Guardian 28 Nov 2011 ‘Banks under fresh pressure to curb bonus and dividend payouts’,http://www.guardian.co.uk/business/2011/nov/28/banks-curb-bonuses-dividends