Eurozone Should Consider “Banking Union”
The executive branch of the European Union — the European Commission (EC) — is set to release a report today that recommends allowing the funds in the European Stability Mechanism (ESM) to be used directly to increase capital in the…
To further stop expensive bank bailouts from pulling down governments’ own finances, allowing the euro zone’s new rescue fund [the ESM]] to directly boost the capital of banks “might be envisaged,” the European Commission said.
Envisaging such a “banking union” may be easy for Greece, Spain, and Italy, but it will not be so straightforward in Germany and perhaps some other Northern European nations. Allowing the ESM to recapitalize failing banks means fiscal union, and Germany has steadfastly refused even to discuss such a solution to the eurozone’s banking crisis.
The EC proposal is cast as something short of full fiscal union, but, in fact, it’s the first step down a slippery slope to fiscal union. Essentially the EC is forcing the eurozone to choose between austerity and stimulus, between Germany and Greece, and between national sovereignty and a euro-union.
Paul Ausick
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.