Tuesday, 3 July 2012

Speech by President Van Rompuy

In the transcript from Herman Van Rompuy's speech today to the European Parliament after last week's European Council meetings, he states amongst other the following:

First, we put together and decided on a “Compact for Growth and Jobs”. It will mobilise €120bn for immediate investment, which will boost the financing of the economy and help create jobs.

A 10 billion euro increase of the capital of the European Investment Bank will increase the Bank's overall lending capacity by 60 billion euro.
The other 60 billion euro comes, first, from the structural funds which will be devoted to
growth enhancing measures in the current period (55 billion) and, second, from the pilot phase of Project Bonds that will be launched this summer and will go to key initiatives such as energy, transport and broadband infrastructure (almost 5 billion).

In addition, he also stated "it is imperative break the vicious circle between banks and sovereigns, and we reached a number of important agreements to this effect among the Eurozone 17" as was discussed in this blog a few days ago.

Well, him and his team gotta come up with something as they are partly paid to do so. Unfortunately, it will not work for a few reasons (of many): 1) Mr Rompuy and his team(s) are not qualified (nobody is!) to decide what may or may not work, 2) more central planning will not work as we have seen many times before (does anyone in the Council still remember the Soviet Union).

We wish Mr Rompuy good luck with a hopeless project and now feel even more sorry for the EU taxpayers (and the outside countries donating bailout money). They will continue to kick the can down the road for a while longer until they all understand that the Economic Moneratary Union (EMU) is inherently flawed (or was it "structurally" flawed maybe?). But at that stage EMU members and their people might be so disgruntled they'll accept anything. Let's not hope that will be the case.

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