A Midday EU Special

A left-leaning - but free marketeer - academic, Professor Scholes, has said that the eurozone has squandered its chance of making the system work.

Echoing my comment the other day that nothing was done when the cows were (very) fat, he's opined that:-

They had the opportunity from 1997 to 2010 to think about how to make the euro work and create a fiscal union. They did nothing.

For a common area to work it has to be 'socialised' with common taxation and fiscal transfers. People have to think that Italians are the same as Germans, and can work in each other's country. There has to be a homogeneity of beliefs.

Now the West risks repeating the errors of Japan the longer it refuses to confront the mountain of bad debts and fails to clears the way for a new cycle of growth.

I think it would have been better to get it over right away, even though it would have been a huge shock to the system. We had this heart attack and they keep treating every other part of the body, the hands, the feet, or the ankles.

The apparent calm induced by global policy makers and central banks during the bubble created a massive risk-free illusion and primed the system for disaster.

If things can be too calm, and volatility too low, people stop worrying. The tiger looked caged, but the cage door was open.

In the UK, there's controversy over plans to introduce an EU directive which, as ever, has been gold-plated by British bureaucrats. "The Business Secretary has agreed to a European directive to give agency workers the same rights as full-time employees of British companies. It will cost firms more than £1.8 billion a year, leading to warnings from major employers that they will have to cut jobs. The law, which will give more than one million workers the right to the same holiday time, pay, maternity leave and other perks, will come into force next month. Under the legislation, agency workers will effectively have to be treated as full-time workers after 12 weeks. The Institute of Directors says the law could have been introduced in a far more limited form."

And here in Spain, the (socialist!) government has introduced a reform which will effectively allow companies to keep employees on temporary contracts for their entire working lives. Which is surely not what "liberalising the employment market" really means. It's attacking the problem from the wrong end.