EP25 · Economy · first published 2020-06-19
The Markka and the Coming Federation | Tuomas Malinen | Neuvottelija 25
Tuomas Malinen of GnS Economics and Sami Miettinen revisit the three scenarios they set out in their book on the euro's future six years earlier: zombification through the ECB's balance sheet, a move to federation, and fragmentation of the euro area. Malinen reads the pandemic as a classic asymmetric shock being explained away as a symmetric one, and argues the EU has moved onto a path that breaches its own treaties in both the recovery fund and the ECB's pandemic programme. The episode covers the Karlsruhe court's deadline for the Bundesbank, Finland's hidden contingent liabilities, and why a floating currency works as a countercyclical safety valve. It closes with Malinen's pointed promise about leaving the euro and a scenario in which the recovery package fails in national parliaments.
The Markka and the Coming Federation | Tuomas Malinen | Neuvottelija 25
Summary: Tuomas Malinen of GnS Economics and Sami Miettinen revisit the three scenarios they set out in their book on the euro’s future six years earlier: zombification through the ECB’s balance sheet, a move to federation, and fragmentation of the euro area. Malinen reads the pandemic as a classic asymmetric shock being explained away as a symmetric one, and argues the EU has moved onto a path that breaches its own treaties in both the recovery fund and the ECB’s pandemic programme. The episode covers the Karlsruhe court’s deadline for the Bundesbank, Finland’s hidden contingent liabilities, and why a floating currency works as a countercyclical safety valve. It closes with Malinen’s pointed promise about leaving the euro and a scenario in which the recovery package fails in national parliaments.
Companion episode: this is the full-length conversation from the same session. The shorter Neuvottelija 24 walks through the same claims slide by slide in sixteen minutes; this episode opens them up in full.
Key Themes
- A third appearance and the pandemic’s first real hit: Discussed from 00:00 onward.
- An asymmetric shock explained away as symmetric: Discussed from 02:30 onward.
- The book’s three scenarios six years on: Discussed from 05:00 onward.
- Malinen’s view that the EU has breached its own treaties: Discussed from 07:30 onward.
- The Karlsruhe deadline and a Bundesbank withdrawal: Discussed from 10:00 onward.
- Abandoning the capital key and PEPP as a direct credit line: Discussed from 12:30 onward.
- The 2012 Greek packages and whose banks were rescued: Discussed from 15:00 onward.
- Why non-euro countries are in it now that Britain has left: Discussed from 17:30 onward.
- Hidden contingent liabilities and export guarantees: Discussed from 20:00 onward.
- Federal development without a referendum: Discussed from 22:30 onward.
- How an exit would be prepared and the backup payment system: Discussed from 25:00 onward.
- Capital controls and cross-border contracts: Discussed from 27:30 onward.
- The nineties: a fixed rate and falling rates after floating: Discussed from 30:00 onward.
- Countercyclical floating and an example from the timber trade: Discussed from 32:30 onward.
- The Calmfors report and the Pekkarinen group’s mandate: Discussed from 35:00 onward.
- Malinen’s promise about the gains from leaving the euro: Discussed from 37:30 onward.
- Moral hazard and why public projects are not magic mills: Discussed from 40:00 onward.
- Malinen’s criticism of how the EU communicates: Discussed from 42:30 onward.
- What a year of extra time costs and US state debt levels: Discussed from 45:00 onward.
- 2011 as the decisive moment and the blocking minority that never formed: Discussed from 47:30 onward.
- A scenario in which the package fails in parliaments: Discussed from 50:00 onward.
- Currency unions have been unwound before: Discussed from 52:30 onward.