The UK: 'Isolated' vs. 'Insulated'

LONDON — When he rejected a new European accord on Friday that would bind the continent ever closer, Prime Minister David Cameron seemingly sacrificed Britain’s place in Europe to preserve the pre-eminence of the City, London’s financial district. The question now is whether his stance will someday seem justified, even prescient.

MFF Frankfurt, Germany

I'm an American, living in Germany for the past 3 years, and with close family in the UK. I travel constantly throughout the EU as well as to England--and all I can say is: the problem is Britain, not Europe. England has had post WWII the most bizarre attachment to the US and all things American, a sort of hero worship that is at times even embarrassing to witness.

As the last UK elections have shown, the Brits are much more aligned to Wall Street and Big Money than to core European values like a solid welfare state and strict regulation of markets. They don't feel European and I've met few Europeans who feel England is part of Europe, either. Traveling in the EU is simple and easy--entering Germany is the easiest, most stress-free country entry I ever experience, but the same cannot be said for the UK.

Part of it is, of course, a result of being an island.

All I can say is: I feel sorry for the regular British folk, duped by their unscrupulous politicians so that they never get to understand how much more important is their link to their own continent rather than the one across the pond.

Al Minneapolis

This just lays bare the fact that the UK government, like its US counterpart, is a creature of the big banks. It also exposes the folly of letting your industrial and manufacturing sector shrivel up in the hope that the financial sector shall takeover as the bedrock of your economy.

The financial sector does not create capital, it only funnels them from those who have spare capital to those who need more of it. New York and London became the dominant financial centers when the UK and the US had the largest, and wealthiest industrial and manufacturing sectors in the world and thus generated the most wealth and capital. In fact London's dominance is now but a vestige of their long dissipated industrial might.

I can very well imagine Merkel thinking "our country's industry and manufacturing is much larger than the UK's, why should we grant special privileges to the UK's financial sector to the detriment of my own country's financial sector when our economy is a much bigger generator of capital than the UK and it's shrunken industrial base? It's not our fault that the UK pursued policies that were harmful to their industry."

campbell spain

As a British citizen living in Spain I am saddened by David Cameron.Britain had the chance to reform the City after the scandals of 2008 but a Tory Government has too many "ties" to the City to act. The City cost UK taxpayers a fortune but wave a few Union Jacks around and everything is forgotten. A mistake of historical proportions has been made.

N P Johnson Sheffield, England

I feel rather disappointed by this country's negative attitude. Look at a map. It's part of Europe. Ok there's 21 miles of water. So what? Hawaii's part of the USA, as is Manhattan. Being an island's nothing to do with it. Ireland, Malta, and Cyprus are all islands and happy to be in the EU. We had an Empire? So did France, Spain, Portugal, Holland? We won the war? Yes but that finished 66 years ago. Not everybody in England is Eurosceptic. It tends to be more the case in the prosperous Home Counties in the south of England around London, where the Conservatives have their power base. Further north the Tories are much less popular, especially in the cities. Labour/LibDems are generally more pro-European. The problem in England is the press. Rabidly Europhobic tabloid papers print whatever suits their point of view, and which is not necessarily accurate. How can the public make a decision in a referendum without being given both sides of the argument and all of the true facts?

robert iacobacci annapolis, md

Since their tentative entry into the EU, Briton has shown their half hearted faith in the institution and its goals. Content to reap the benefits but unwilling to share the burdens that are part of a full fledged commitment. Perhaps this is a good time for the E.U to ask for a decision. The loss of England at this point would do little harm and the British can discover if they perhaps need Europe more then it needs them.

ance Lee Pacific Palisades, California

England's decision - the Conservative party hardly exists in Scotland - is self-destructive. Cameron has played to his party's right wing, a minority of his party, no doubt hoping this will defuse them and let him get on with managing the economic crisis. But it is a defining vote, and he has made himself one of those rightwingers by doing so. If he is comfortable there, he should feel pleased.

The price is high. England now will not participate In whatever measures the other 17 - 26 EU countries take to secure the euro. It will not be able to protect The City, its Wall Street, from whatever body arises by treaty among these states. It will be an outsider. It cannot participate in the shape new European institutions take, who runs them, and how they are run. It will have no membership on its bodies, and no special understandings to protect its interests. It has marginalized itself.

And if, an 'if' of some controversy, a new euro-centered 'national' state arises successfully, the road to further European integration will have been opened, without England. In such a situation, faced by an entity with a far larger population and economy, it can hardly think its financial prominence can continue or be defended.

This decision plays only to a fraction of its internal politics, on whose members the sun never sets in their eyes, even amid their darkness. And it bares a disingenuous political class unwilling to face or speak the truth.

joe new york

The really important and, so far, un-asked question is why Britain insisted its financial institutions be exempt from any jointly agreed upon financial regulations. I'll tell you why. Because the problem is not Greece, or Italy, or Spain, or Ireland, or Portugal or Germany. The problem is in England and the United States. Those two countries are the origin of the speculation that caused a global financial contagion and remain the center of a cancerous derivatives market that has, WITHOUT MEDIA ATTENTION, exploded again this year to over $707 trillion dollars, breaking the record it set in mid-2008, just before the crash.
You think the United States would cede control over its financial institution regulatory framework to an international organization? Uh-huh. Not in a million years. The belly of that beast is too ugly. Britain has extraordinarily lax regulations with respect to leveraged re-hypothication of borrowed capital. That's why it became very attractive to companies like A.I.G. and M.F. Global. You think they want to let someone else lift the curtain on that?
When the mother of all margin calls occurs and the global debt titanic goes down, and the global derivative pyramid scheme the U.S. and Britain built collapses, it will be every man for himself.

Dean Vantari Atlanta, GA

The City vs the People, that is the crux of the matter here. There is a disconnect between the financial sector and the real economy of Europe. All the hand wringing about defaults are the premise of investment bankers, not the People of Europe. It may actually be healthy to maintain a fire wall to isolate the financial speculators in the City, and the Street, from further poisoning the real economy, where real goods and services are exchanged, not digital representations swapped for intangibles. Wealth is not created in any speculative "market", it is created by the work and innovation of real human beings.

W. van Tuinen The Netherlands

Why does every American news article I read talk about 'huge rifts' and 'deep divides'? There are no rifts. There is Britain on one side and everybody else on the other. And Britain matters much less to Europe than they would like and American analysts seem to believe.


My government agrees with the changes now on the table and so do I.
I see no looming totalitarianism but an organisation that:
- has resulted in a peace so fundamental that the idea of war between countries in the EU is now basically unimaginable.
- introduced a common currency and open borders, which have allowed all EU citizens to travel all over the continent and become more open-minded and multi-cultural. Even with the financial troubles of the last several years, I myself have found a job in Ireland and work there now without any political hassle.
- provided an economic growth and integration that allows me to live in the luxury I do today.
- has introduced rules and regulations binding all over Europe that safeguard the quality of the food we eat and the appliances we use, where single governments were too slow or corrupt to do this.
- is now slowly but surely working to change a financial system that launched the whole world into a depression. And as far as I can see, the EU is the only government even attempting this.

I am pro-EU and have full confidence in the ability of the EU.

friedmann Paris

The policy of the UK towards Europe is suicidal. Imperial England ruling the open seas is no more. Its special relationship with the US is mostly a servile relationship. Moreover, it is in the US national interest to chose the stronger side (a UE led by Germany) over a country in decline, however important its past tole in world history. Surely, the other EU counties are also declining. But, they seem to have understood that the only way to leverage their weak individual power is through a united, and strong Europe. This involves pooling together some of their sovereign rights of the past to build a novel political entity, the foundation of which is what Jürgen Habermas calls “constitutional patriotism” . Even, Cameron’s belief that he is protecting the City by refusing to sign is probably wrong. I would not be surprised that in the not too distant future, Frankfurt will take business away from London. Of course, this implies the Euro rescue plan works.

Mick Boston

Let’s talk about the democracy deficit. Its a little rich of London to complain about the EU as composed of bunch of undemocratic, unaccountable, and top down faceless bureaucrats and cozy political appointees.
When one considers that the majority of the Britain’s conservative government is elected under a first past the post system and is almost entirely composed of members from southern England. This from a party that is consistently opposed to devolution of powers to the constituent nations of the UK and is adamantly opposed to any type of proportional representation voting system as such suspiciously foreign even though it is in use in parts of the UK. They can fly their St. George’s flag all they want but it is abundantly clear that the UK is run for and by the benefit of the "City". Just ask any Glaswegian, Cardiffian, Manchurian, or Liverpudlian what they think of "London" and where their once prized industries have gone.

-neal02- Germany

I am writing from Germany and the first thing I did after get up from bed was looking for my socks. I do not want to dominate the British nor march into Czechoslovakia.

so far I have heard no constructive proposal of the british but who wants a say, must contribute. That talks about the failure of the euro countrie sucks. The EU has established a single market across the territory of all its members. A monetary union, the eurozone, using a single currency comprises In 2010 the EU generated an estimated 26% (16.242 billion international dollars share of the global gross domestic product making it the largest economy in the world. It is the largest exporter,the largest importer of goods and services, and the biggest trading partner to several large countries such as China, India,and the United States. The euro is designed to help build a single market by, for example: easing travel of citizens and goods, eliminating exchange rate problems, providing price transparency, creating a single financial market, price stability and low interest rates, and providing a currency used internationally and protected against shocks by the large amount of internal trade within the eurozone.

If the Britons withdrawal from the EU they will not participate in this market.
Surely the Euro will not collapse even if many would like.

Patrick Frankfurt, Germany

To all Brits and Americans hailing Mr. Cameron as a fighter for democracy and liberty.

You are kidding yourselves if you tell me the "NO" from Mr. Cameron is in first place the voice of the British people but the will of the so much elected City of London.

British people you are just a supporting side-kick.

Emmanuel New York, NY, USA

The Brits. Masters of deception...but this time they went too far. On this one I'd rather bet my future with no nonsense Germany than follow the foggy treacherous corrupt ways of Wall Street and Old England banksters. Mr Cameron, you are dead wrong!



Angela Merkel knows well what she's doing

As far as I see it from here in Germany, Angela Merkel knows well what she's doing.

There are at least three overlapping problems:

1. short term liquidity problems in the south
2. longer term government debt problems in the south
3. growth problem in whole EU, quite similar to the US growth problems

Merkel's solution is quite simple:

First enforce a mechanism to solve the long-term debt problems in the south, then put in money to solve the short-term liquidity problems in the south, and then to go for structural economic measures and bring growth.

Merkel has the means to enforce this way. First the south including France has to commit to enforce fiscal discipline. If they do not, the interest spread to the BUND grows and their banks fail. Greece, Italy and France could give out Euro- or EFSF-bonds to prevent it, but without Germany they don't fly. So they have to fulfill the German wish or their government finances and their banks will go south. If a governent does not fulfill German wishes, Merkel wil just keep the debt crises cooking on little fire until the resisting government changed. What we saw in recent months was several southern governments did not like Germans control their finances, but Germany solved these problems by keeping the crisis cooking and in this way exchanging these governments.

After the Southern countries commit to fiscal discipline, the money printing machine, called Euro-bonds or whatever, will be used to solve short term debt problems. After all this, when Germany rules over fiscal and monetary policies, structural measures to tackle growth will be tackled. Helpful for tackling the growth problem will be to have kept the Euro as a hard currency.

Having the Euro kept hard will allow it to become a better reserve currency and to better compete with the US-Dollar or gaining the profits of seigniorage for giving out the world's reserve currency. What we see now is a large US-campaign to put stones in the way to the German solution to the Euro crisis, because the US wants the Euro week to keep it's profits of seigniorage for giving out the world's reserve currency. Seignorage is big money, and it's literally money for nothing - except having a large economy and some fiscal and monetary discipline. That's what the battle is all about now.

My prediction is, that Merkel will win that game, because the US has no way anymore to let other countries throw stones in the way too big to step over. Even David Cameron had to see that this game against Germany to keep Dollar and Pound in their current position as reserve currency by sabotage is lost.

multumnonmulta said...

BANDOLERO, thank you for your comment. I am in agreement with most your statement except for this: "After the Southern countries commit to fiscal discipline."

Indeed, that's quite a, shall we say, unnatural assumption that can go wrong in so many ways. The North/Germany either gives fair leadership, or else. Also, while the nerves-testing game goes on, the confidence a all levels is plummeting, which can send it all down in flames.

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