STOCK MARKET WATCH -- Friday, 29 June 2012

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41. WORD OF THE DAY: Sovereignty

http://www.businessinsider.com/word-of-the-day-sovereignty-2012-6



Here is an under-appreciated irony: One of the underlying themes of the European summit is the erosion of sovereignty for the sake of integration. In the US today, the Supreme Court decision on President Obama's national health care program, reinforces if not strengthens the power of the sovereign (in this case, to tax). The US state may have gotten stronger, while the European state is set to weaken.

The first day of the European summit contained a few surprises. First, many understood Germany's Schaueble's comments about being about to accept some mutualization of euro zone debt and would support short-term measures to deal with the financing problems effecting some governments (Spain and Italy), to be a shift in policy. It was not.

Schaueble set the conditions upon which Germany could agree on some shared liability for euro zone debt: if it was convinced that the path toward establishing centralized controls over national fiscal policy was irreversible. The Wall Street Journal quoted him as saying, "There will be no jointly guaranteed bonds without a common fiscal policy."

The second surprise was the willingness of Spain and Italy to cut their nose to spite their face, as it were. They say they will not support a 120-130 bln euro growth measures if there do not get support for their bond markets. Monti too separately made a gesture intended to demonstrate his resolve: He will not return to Rome, he says, without an agreement to support Italian bonds.


Read more: http://feedproxy.google.com/~r/MarcToMarket/~3/oPtRc-WVj-w/word-of-day-sovereignty.html#ixzz1zBBF5UCm