I am wondering how many of you can distinguish between economics and what financial journalist particularly but also others including politicans are calling economics? That is not a criticism but more a comment on what is being thrown at us as 'gospel' truth. In fact much of it is populist finance speak from people involved in (you all guessed) finance rather than economics. The reality is that banks and other financial institutions are getting richer by the second on the back of the supply and demand for futures and their derivatives. In effect, rather than companies existing to produce and make profits, financial institutions are looking some years ahead and pre-measuring 'asset classes', which are property to be planned let alone built, cars to be design some time, oil, gas and other forms of energy along with metals, other minerals, etc, etc, to be discovered, designed, developed and so on. It is no longer as simple as 'ordinary' people wanting commodities as most of you think. Financial markets are accrueing vast amounts of profits to invest in futures which are bought and sold at even greater profits for the wealthiest individual or corporate investors. We are simply the desirable end market and even now some futures are so far ahead of time that not only we but also our children will probably be long gone before those things become tangible. If any of you wish it is easy enough to read up on this topic with a simple websearch and you will find all the factual, pro, contra and whatever type of detail you want.
The biggest problem with this is that nobody knows anything for sure. Gordon Brown is a dull human being as we saw when he was PM, a real Calvinistic Scot, but he knows his economics. However to say what he did was asking for trouble, he may be right or wrong, but even he may well not live long enough to see either way. So why did he bother.
The reality is that after the 2008 crisis the financial services industry has changed little but has developed lots of very clever strategies for circumventing regulation and making more and more money. It is the proverbial bubble but nobody knows if or when it will burst. The EU and all of its problems are mainly conditioned by that. Thus Berlusconi, for example, as an immensely wealthy media network owner (plus plenty of other bits and pieces) was both regulating and circumventing, thus creating massive profits and debts simultaneously. The debts reflect on the nation, the profits probably go to Swiss accounts or their ilk. France is far from immune from this and so make or break in never ruled out. It matters little ultimately whether one is pro or contra EU and uses € or £ because both are as susceptible as the other to the bubble bursting. Indeed, the biggest risk is the $ going pop and dragging everything down with it. So why do you think China, India or Brazil want a strong Euro? Obvious when you are aware just how precarious the global economy is and the use of a single standard ties everybody to the USA's performance. The Euro has to survive for those who need a stable currency package as the US dollar has been since WW2 without a break. Sterling, sadly perhaps, is becoming sidelined and that is what such people as Osborne and Cable are trying to not admit at present. If the Euro goes down then Sterling will go down but the bottom line is that both may well follow the dollar unless Europe consolidates to buffer the effect. Back to the futures, regulation and so on, it then depends on a complete political rethink and massive amount of reregulation, actual financial laws and institutions to oversee that to stop the entire conomy bleeding into the hands of a small banking elite who are trying to grow it beyond the amount of currency even available on paper. Indeed, currencies are themselves part of the futures and people invest on their value so many years ahead. It is, unless you happen to be as rich as Croesius with little chance of losing the lot, speculative madness and has to stop somewhere. To that end the EU has the potential as a body but never as single nations to move in that direction. Would they achieve it? Ask anybody another...