Things still not looking good for eurozone

carzony

19.07 Million people unemployed :eek: and last month it rose by 33,000 people. Will it ever improve :mad:



http://www.rte.ie/news/2013/0402/379397-eurozone-unemployment/

Scofflaw

...it's a recession. They don't go away overnight.

cordially,
Scofflaw

Scofflaw

Scofflaw wrote: »

...it's a recession. They don't go away overnight.

cordially,
Scofflaw

But...my husband did not come to Ireland until his late forties spent his life in north wales, his is an engineer in the construction industry, the construction industry is very sensitive to any down turn in the economy he has seen two recessions in the UK in his working life,.. this is the point of my post both recession in the UK were effectively over in less that a year and then things went back to normal.

How come this recession is going on so long.

How come Ireland always appearers to be a recession and the periods when Ireland has not been in a recession have been very short and seem to be more irrational exuberances than any real changes or have I got that wrong.

Scofflaw

mariaalice wrote: »

But...my husband did not come to Ireland until his late forties spent his life in north wales, his is an engineer in the construction industry, the construction industry is very sensitive to any down turn in the economy he has seen two recessions in the UK in his working life,.. this is the point of my post both recession in the UK were effectively over in less that a year and then things went back to normal.

How come this recession is going on so long.

How come Ireland always appearers to be a recession and the periods when Ireland has not been in a recession have been very short and seem to be more irrational exuberances than any real changes or have I got that wrong.

UK recessions are usually briefer than Irish ones, but not over in a year, whatever your husband's experience. The usual duration of UK recessions since the 1970s has been closer to 2 years on the basis of continued contraction, with recovery to pre-recession GDP taking 3-4+ years.

And the UK isn't coming out of this one at any speed, either. While sources briefly cheered the "recovery" of the UK in 2010, the UK has effectively been in recession since 2008. Calling it a "double dip" - or now a "triple dip" recession acknowledges that it's all part of the same recession.

The problem this time seems to be partly that we should have had a global recession in 2001, and Greenspan pumped the US through it, carrying us all along for the ride, and partly the deregulation of the financial industry, which provided enormous but unsustainable increases in wealth through the Nineties and early Noughties. If this depression turns out to be similar to the Great Depression of the 1930s, it will probably be a result of the latter (lax financial regulation), as it was then.

cordially,
Scofflaw

Tombo2001

mariaalice wrote: »

But...my husband did not come to Ireland until his late forties spent his life in north wales, his is an engineer in the construction industry, the construction industry is very sensitive to any down turn in the economy he has seen two recessions in the UK in his working life,.. this is the point of my post both recession in the UK were effectively over in less that a year and then things went back to normal.

How come this recession is going on so long.

How come Ireland always appearers to be a recession and the periods when Ireland has not been in a recession have been very short and seem to be more irrational exuberances than any real changes or have I got that wrong.

Any given country will experience economic cycles.....this will see periods of strong growth and periods of weak growth or recession.

Some countries manage this process well. Arguably Britain is one of these. It manages the economy so that the boom times dont get too overheated, and that the recessions are difficult but not disastrous.

In Ireland, we don't have a long period of history to evaluate.....but its fairly safe to say that our government has not historically led us well in this regard.

When we have recessions, they tend to be made far worse by the actions of our government.

In the 2000s.....when the economy was getting overheated due to low interest rates and should have been tempered, instead the Ahern govt ratcheted up government spending on health and social welfare, and fuelled the construction boom to pay for this (via huge stamp duty tax revenues).

In the 1970s and 1980s, the Irish governments under Haughey and Fitzgrald went into denial about a recession and borrowed massively, and was caught out by a spike in interest rates.

In the 1930s, the De Valera led 'economic war' with Britain was a self inflicted blow to the Irish economy.

In the 1950s, the lack of change away from an agri economy when the rest of the Europe and the US were industrialising meant huge emigration.

So there it goes in Ireland.

In Britain, I dont know the economic history so well, but it seems that country has a much stronger Central bank/ Treasury and has a much stronger tradition in sophisticated economic thought than is evident here. The Bank of England has had a strong influence on economic performance that counteracts the sometimes negative influence of politicians.

Finally, dont confuse the performance of the economy with the performance of an industry. You husband might have found the recession in North Wales muich more severe if he worked in mining. Construction here is very difficult, on the other hand there is no recession if you work in IT.

uncle_sam_ie

Scofflaw wrote: »

...it's a recession. They don't go away overnight.

cordially,
Scofflaw

They use to call it a Depression and your correct this one won't being going away overnight.

hfallada

On the plus side. Greater unemployment therefore reduced demand and inflation. Hopefully an ECB cut and reduce tracker repaymebts

antoobrien

uncle_sam_ie wrote: »

They use to call it a Depression and your correct this one won't being going away overnight.

A depression is a recession lasting two or more years. Recessions (2 or more consecutive quarters of negative GDP growth) end when there is any quarter of growth.

Even here in Ireland we are seeing low levels of growth, so it's probably fairer to say we're in period of economic stagnation (i.e. stabilised but not really going up or down much) when we need sustained growth.

hfallada wrote: »

On the plus side. Greater unemployment therefore reduced demand and inflation. Hopefully an ECB cut and reduce tracker repaymebts

With the ECB lending rate so low (0.75%), there's not an awful lot of room for lowering that rate.

Amberman

Scofflaw wrote: »

...it's a recession. They don't go away overnight.

cordially,
Scofflaw

What we have is a depression in many parts of Europe, thanks largely to the Euro and the Troika. People tend not to be able to recognise a depression these days, because thats the things with soup kitchens, bread lines and such, like in the great depression.

Recessions typically don't last 5 years...by the time they are a few years old, the system has cleansed itself.

We are still deteriorating....further from the end of the tunnel than we were last year, or the year before. The confiscatory desperation of the Eurocrats should be proof enough of that.

Scofflaw

Amberman wrote: »

What we have is a depression in many parts of Europe, thanks largely to the Euro and the Troika. People tend not to be able to recognise a depression these days, because thats the things with soup kitchens, bread lines and such, like in the great depression.

Recessions typically don't last 5 years...by the time they are a few years old, the system has cleansed itself.

We are still deteriorating....further from the end of the tunnel than we were last year, or the year before. The confiscatory desperation of the Eurocrats should be proof enough of that.

While people do regularly trot out the line that this is the fault of the euro, very few seem to be able to substantiate it other than by references to other people saying the same thing. And while austerity is undeniably unpopular, it is the choice of the governments, not the eurocrats (who have only the job of overseeing the agreed measures). Finally, while some are certainly suggesting debt-based stimulus as a silver bullet to end a debt overload crisis, the general view appears to be that this is inherently contradictory, although possibly that's the result of the prevailing neo-liberal doctrinal framework and the rejection of Keynesianism.

cordially,
Scofflaw

Amberman

Scofflaw wrote: »

While people do regularly trot out the line that this is the fault of the euro, very few seem to be able to substantiate it other than by references to other people saying the same thing.

cordially,
Scofflaw

Honestly, you're not patronising.

Gloomtastic!

Scofflaw wrote: »

although possibly that's the result of the prevailing neo-liberal doctrinal framework and the rejection of Keynesianism.

So why aren't we seeing a rise in political support for far right economic policies in Ireland or the rest of Europe (with the exception of the UK perhaps)? If it makes economic sense why aren't we doing it?

Amberman

Scofflaw wrote: »

And while austerity is undeniably unpopular, it is the choice of the governments, not the eurocrats (who have only the job of overseeing the agreed measures).

cordially,
Scofflaw

Show me ONE, just ONE case, where the medicine of choice of the IMF hasn't been austerity?

Remember...just ONE...then I'll shut up.

Scofflaw

Amberman wrote: »

Honestly, you're not patronising.

Well, all you have to do is substantiate the claim. After all, why would you be making the claim if you couldn't support it?

Amberman wrote:

Show me ONE, just ONE case, where the medicine of choice of the IMF hasn't been austerity?

Remember...just ONE...then I'll shut up.

Er, are the IMF eurocrats? And how would it being IMF policy contradict it being Member State policy?

cordially,
Scofflaw

Scofflaw

Gloomtastic! wrote: »

So why aren't we seeing a rise in political support for far right economic policies in Ireland or the rest of Europe (with the exception of the UK perhaps)? If it makes economic sense why aren't we doing it?

Because "neo-liberal" isn't the same as "far right"? Otherwise I'm not sure what the question means - who says either neo-liberal or far right economic policies necessarily make sense?

cordially,
Scofflaw

Amberman

Scofflaw wrote: »

Er, are the IMF eurocrats?

cordially,
Scofflaw

What?

No, the troika are different from the Eurocrats. I never said they were the same.

Still, ONE instance of where the IMF medicine wasnt austerity seems to have escaped you.

And for good reason...

Scofflaw

Amberman wrote: »

What?

No, the troika are different from the Eurocrats. I never said they were the same.

Still, ONE instance of where the IMF medicine wasnt austerity seems to have escaped you.

And for good reason...

Well, yes, because the IMF certainly like austerity as a policy. But that has nothing to do with what you originally said, and the contradiction I gave.

On the other hand, the IMF have recommended stimulus/fiscal expansion in the current depression:

Let me start with what happened in 2008. Some may recall 2008 as the year when Lehman collapsed; others as the year of the largest drop in the Dow Jones since the 1930s. But there was an even more unusual event: the IMF, for the first time in its history, called for a global fiscal expansion across all countries that could afford it. It had never happened before. Monetary policy had been seen as the tool to respond to a deceleration in economic activity, not fiscal policy.

http://www.imf.org/external/np/speeches/2013/010613.htm

Although of course there's a caveat there of "countries that could afford it".

cordially,
Scofflaw

KyussBishop

Scofflaw wrote: »

While people do regularly trot out the line that this is the fault of the euro, very few seem to be able to substantiate it other than by references to other people saying the same thing. And while austerity is undeniably unpopular, it is the choice of the governments, not the eurocrats (who have only the job of overseeing the agreed measures). Finally, while some are certainly suggesting debt-based stimulus as a silver bullet to end a debt overload crisis, the general view appears to be that this is inherently contradictory, although possibly that's the result of the prevailing neo-liberal doctrinal framework and the rejection of Keynesianism.

Do you not view the Euro, and how its current configuration allows political/economic deadlock during crisis, as perhaps the primary fault impeding recovery?


To try and substantiate that:
If we had our own currency we could have taken a whole range of other options to deal with the crisis and to bring our country back to competitiveness; without going into detail just yet, you'd agree there?

Also, while we do not have control over our own currency, and while the EU is deadlocked without being able to agree recovery policies, effectively our government can't choose any alternatives other than austerity, and thus it's not a choice? (unless you were referencing all EU governments collectively)

I don't put fault on Eurocrats there mind, more collective fault on the member states.


With the point on debt: The only real debt-based solution within the Euro, I think is Eurobonds and (as politically impossible as it is to implement them) that would basically be treating Europe like one big country (depends on how it's configured of course, stating it this way for simplicity); so long as the EU's overall public debt vs GDP stayed within sustainable levels, it could provide quite an enormous stimulus EU-wide, and bring recovery.

There's also Post-Keynesian monetary reform, bringing money creation under government control (potentially removing private bank access), which can be used both with or without the Euro.

Scofflaw

KyussBishop wrote: »

Do you not view the Euro, and how its current configuration allows political/economic deadlock during crisis, as perhaps the primary fault impeding recovery?

Not really - if it were, everyone else would be recovering, while the eurozone wouldn't, and that doesn't seem to be the case.

KyussBishop wrote: »

To try and substantiate that:
If we had our own currency we could have taken a whole range of other options to deal with the crisis and to bring our country back to competitiveness; without going into detail just yet, you'd agree there?

I'd agree that there are things we could try, certainly.

KyussBishop wrote: »

Also, while we do not have control over our own currency, and while the EU is deadlocked without being able to agree recovery policies, effectively our government can't choose any alternatives other than austerity, and thus it's not a choice? (unless you were referencing all EU governments collectively)

I don't put fault on Eurocrats there mind, more collective fault on the member states.

Well, we signed up for the Stability Treaty, by referendum, and that would seem to be an agreement on our part to shrink public spending, rather than grow it.

KyussBishop wrote: »

With the point on debt: The only real debt-based solution within the Euro, I think is Eurobonds and (as politically impossible as it is to implement them) that would basically be treating Europe like one big country (depends on how it's configured of course, stating it this way for simplicity); so long as the EU's overall public debt vs GDP stayed within sustainable levels, it could provide quite an enormous stimulus EU-wide, and bring recovery.

There's also Post-Keynesian monetary reform, bringing money creation under government control (potentially removing private bank access), which can be used both with or without the Euro.

Eurobonds are a euro-level solution, though - it's not really possible to envisage them in any other scenarios. I'm not sure how bringing money creation under government control helps particularly.

Part of the problem here seems to be that there's an assumption that if only the EU Member States weren't opposed to a fiscal stimulus, then we could have a big fiscal stimulus, and everything would be all right again. But that assumes that spending/inflating your way out of the crisis is both possible and the best method for doing it. My own recollection of the last time this was seriously tried, which is basically the Seventies/Eighties, is that it not only didn't work, but that it made things worse. Why is that not the case now?

I should clarify that I'm entirely behind fiscal stimulus where you can afford it, but that obviously those countries that can't afford it would need to take - take, rather than borrow - money from wealthier countries in order to do it, and that those wealthier countries taxpayers' have both an objection to that and a right to object, while there is also no guarantee that they will continue to be prosperous during the depression.

cordially,
Scofflaw

Geuze

The EZ17 un rate is rising, now at 12%.

Both the US and EU rates were at 10% during the worst stages of the recent recession.

Yet the US rate has fallen to 8%.

Geuze

The ECB should act by cutting the refinancing rate from 0.75% to 0.25%.

OK, some people say that it'll be ineffective, as it won't be passed on to retail lending rates.

But it would give some relief, surely.

KyussBishop

Sorry for the length and multiple posts here; not intending to barrage with text, just hard to avoid explaining some things adequately, without going into it at-length:

Scofflaw wrote: »

Not really - if it were, everyone else would be recovering, while the eurozone wouldn't, and that doesn't seem to be the case.

That assumes those other places do not have alternative policy options that could be enacted though, that the Euro (effectively) prohibits?

Neoliberal/neoclassical doctrines seem to dominate, both inside and outside of the EU, but while that imposes an ideological hurdle to enacting recovery policies, the Euro imposes a near-impenetrable physical, political and economic barrier, where countries have to jump off a cliff (exit the Euro), to be able to enact alternative policies.

Scofflaw wrote: »

Well, we signed up for the Stability Treaty, by referendum, and that would seem to be an agreement on our part to shrink public spending, rather than grow it.

Yes, but that level of choice did not allow an option for recovery policies, it was basically 'Austerity vs Austerity + Lose access to bailout funds', so we would be screwed if we needed another bailout.

Scofflaw wrote: »

Eurobonds are a euro-level solution, though - it's not really possible to envisage them in any other scenarios. I'm not sure how bringing money creation under government control helps particularly.

Yes, Eurobonds would be a Euro-level solution, requiring something very akin to a federal EU; a political impossibility for sure, but (short use of money creation) is, from what I can tell, the only real option for recovery rather than austerity in the EU.

Bringing money creation under government control, is the Post Keynesian solution that pretty much obsoletes Eurobonds (though I only mention it in passing due to the controversy around it).
Instead of private banks putting created money into the economy with credit, and taking it out with debt repayments + interest (unsustainable because the economy can't handle more debt), government puts created money into the economy by spending (limited by inflation targets), and takes it out with taxes (inherently sustainable as there is no debt; don't even need bonds/public-debt to finance spending).

KyussBishop

On issues with the 70's/80's and spending:

Scofflaw wrote: »

Part of the problem here seems to be that there's an assumption that if only the EU Member States weren't opposed to a fiscal stimulus, then we could have a big fiscal stimulus, and everything would be all right again. But that assumes that spending/inflating your way out of the crisis is both possible and the best method for doing it. My own recollection of the last time this was seriously tried, which is basically the Seventies/Eighties, is that it not only didn't work, but that it made things worse. Why is that not the case now?

Well, spending/stimulus doesn't mean inflation though; inflation is largely caused by resource bottlenecks (such as a shortage of labour or essential goods), so government can keep spending so long as the money isn't running up against a supply shortage (i.e. up to the point of full employment, because there will usually be some kind of abundant resource to put people to work with, until labour itself becomes scarce).

So, you would want to spend your way out of the crisis, but definitely not inflate your way out.

The problem with the 70's was that inflation in oil prices (an unavoidable resource, a bottleneck) caused economic disruption and knock-on inflation all throughout world economies, pushing governments into deficit and debt to maintain previous spending levels, and in Ireland FF pushed our level of debt to silly levels.
In the 80's, my understanding is that Ireland's problem then was largely the debt-loads we had taken on from the 70's, and right at the end of the 70's was the second oil embargo, which set up our problems for the 80's.

So, you definitely don't want so much stimulus, that public debt becomes unsustainable; the EU-wide public debt though, would allow significant room for spending before sustainability became a threat.


All of this is what makes the Post-Keynesian money creation policies so powerful: With it you don't use public debt at all; keeping within inflation targets and managing public policy plus the balance of trade, are the main concerns.

The 'Keynesian' economics from that period actually didn't represent Keynes thinking/views very well; Post-Keynesian economics stays far closer to the original spirit of his views.

KyussBishop

On Eurobonds:

Scofflaw wrote: »

I should clarify that I'm entirely behind fiscal stimulus where you can afford it, but that obviously those countries that can't afford it would need to take - take, rather than borrow - money from wealthier countries in order to do it, and that those wealthier countries taxpayers' have both an objection to that and a right to object, while there is also no guarantee that they will continue to be prosperous during the depression.

With Eurobonds and something close to a federal EU (which of course isn't politically possible), the Eurobonds could be put out on the markets and the funding generated could be provided to the European Investment Fund; the EIF would then invest that money in infrastructure (and other worthy projects) all around the EU, including Germany and such.

This wouldn't be an inter-nation transfer of money in itself (because it is debt, that would get repaid), but the repayment of these bonds would be a bit like that, because all EU nations would be repaying them proportionally (depending on how the bonds are used and how payment of them is agreed, but lets say proportional for simplicity).

The powerful thing about this though, is that for countries (like Ireland) that wouldn't currently be able to afford to pay their share of the bonds, other EU countries can pick up the slack for us, and we can repay it later at our own pace when we get back on our feet; by keeping tally internally within the EU, we can stretch out our repayments over extremely long periods, or temporarily suspend them completely, while still being able to meet our debt obligations in the end.

The primary important thing then, is that the EU's overall public debt vs GDP remains within sustainable levels; everything else can sustainably be handled internally within the EU.


I'm still developing my understanding, arguments and explanations regarding Eurobonds, so not sure if I've explained it well, but the way I look at it, is as treating Europe like a single country, like the US and its states (with the overall US spending and national debt being the important thing, and issues with inter-state finances being fairly manageable).

Again, worth noting that public use of money creation, 100% eliminates all of these concerns about states accounting for bond debts (it is a silver bullet in a sense, just even more politically impossible than Eurobonds).

Amberman

Scofflaw wrote: »

Well, yes, because the IMF certainly like austerity as a policy. But that has nothing to do with what you originally said, and the contradiction I gave.

On the other hand, the IMF have recommended stimulus/fiscal expansion in the current depression:



http://www.imf.org/external/np/speeches/2013/010613.htm

Although of course there's a caveat there of "countries that could afford it".

cordially,
Scofflaw

Talk is cheap. The worst of this crisis has been behind us for years, according to Eurocrats. Don't look at what they say, look at what they DO.

Again, just show me ONE place where expansionary fiscal policy has actually happened where an IMF bailout has been involved.

Remember...just ONE.

The answer is that it hasn't happened...ever.

Every economy the IMF has ever "bailed out" has crashed viciously, depressing asset values across the board and forcing privatisations of state assets.

John Perkins, in confessions of an economic hitman, says that this is the goal...to allow insider corporations to swoop and grab productive assets for pennies on the dollar.

I'm not so sure...but their near 100% track record of success kinda makes me wonder....and I find Perkins to be quite credible. He seems to lay out the consequences of the playbook of the IMF and World bank pretty well.

Amberman

KyussBishop wrote: »

On Eurobonds:

With Eurobonds and something close to a federal EU (which of course isn't politically possible), the Eurobonds could be put out on the markets and the funding generated could be provided to the European Investment Fund; the EIF would then invest that money in infrastructure (and other worthy projects) all around the EU, including Germany and such.

This wouldn't be an inter-nation transfer of money in itself (because it is debt, that would get repaid), but the repayment of these bonds would be a bit like that, because all EU nations would be repaying them proportionally (depending on how the bonds are used and how payment of them is agreed, but lets say proportional for simplicity).

The powerful thing about this though, is that for countries (like Ireland) that wouldn't currently be able to afford to pay their share of the bonds, other EU countries can pick up the slack for us, and we can repay it later at our own pace when we get back on our feet; by keeping tally internally within the EU, we can stretch out our repayments over extremely long periods, or temporarily suspend them completely, while still being able to meet our debt obligations in the end.

The primary important thing then, is that the EU's overall public debt vs GDP remains within sustainable levels; everything else can sustainably be handled internally within the EU.


I'm still developing my understanding, arguments and explanations regarding Eurobonds, so not sure if I've explained it well, but the way I look at it, is as treating Europe like a single country, like the US and its states (with the overall US spending and national debt being the important thing, and issues with inter-state finances being fairly manageable).

Again, worth noting that public use of money creation, 100% eliminates all of these concerns about states accounting for bond debts (it is a silver bullet in a sense, just even more politically impossible than Eurobonds).

But wouldnt the interest rate on the bonds be applied across the EU as a single entity? Therefore, German borring costs would soar, while weaker countries costs would fall.

To say that this isnt an inter country transfer is a stretch IMO.

Scofflaw

Amberman wrote: »

Talk is cheap. The worst of this crisis has been behind us for years, according to Eurocrats. Don't look at what they say, look at what they DO.

Again, just show me ONE place where expansionary fiscal policy has actually happened where an IMF bailout has been involved.

Remember...just ONE.

The answer is that it hasn't happened...ever.

Every economy the IMF has ever "bailed out" has crashed viciously, depressing asset values across the board and forcing privatisations of state assets.

John Perkins, in confessions of an economic hitman, says that this is the goal...to allow insider corporations to swoop and grab productive assets for pennies on the dollar.

I'm not so sure...but their near 100% track record of success kinda makes me wonder....and I find Perkins to be quite credible. He seems to lay out the consequences of the playbook of the IMF and World bank pretty well.

Sure - having been about to say that I'd be surprised to ever find the IMF recommending anything other than austerity, I just thought I'd check, and found the above, which duly surprised me slightly.

Still no idea what it's supposed to have to do with the point we were originally discussing.

cordially,
Scofflaw

Amberman

The troika policies have caused this long, drawn out depression. Thats the point I was making.

There is nothing even resembling a recovery in sight of the horizon.

I personally can't see how Europe gets out of this without a war...and neither can Kyle Bass, Marc Faber (who lives in the same city as me) and many others.

That's why I moved to Thailand.

Scofflaw

Amberman wrote: »

The troika policies have caused this long, drawn out depression. Thats the point I was making.

There is nothing even resembling a recovery in sight of the horizon.

I personally can't see how Europe gets out of this without a war...and neither can Kyle Bass, Marc Faber (who lives in the same city as me) and many others.

That's why I moved to Thailand.

Ah, I see - and my point was that the policies aren't just "troika policies" but the policies of the majority of Member State governments as well. In our case, austerity is genuinely something the public have voted for, given the successful passing of the Stability Treaty by referendum.

And, as I said, the adherence to such policies is most likely the outcome of historical experiments with the spend/inflate model of depression exit. Nobody enjoys austerity, least of all politicians, and nobody expects it to work quickly, which is why there need to be penalties for not sticking the course - but the silver bullet alternatives at best don't address the underlying problems, and at worst make things worse.

cordially,
Scofflaw

Amberman

Scofflaw wrote: »

Ah, I see - and my point was that the policies aren't just "troika policies" but the policies of the majority of Member State governments as well.

I think I see the point you are making now.

In our case, austerity is genuinely something the public have voted for, given the successful passing of the Stability Treaty by referendum.

Its not going down so well elsewhere though. Greece, Italy and Spain come to mind.

And, as I said, the adherence to such policies is most likely the outcome of historical experiments with the spend/inflate model of depression exit.

Thats why I predict war. Austerity without fixing structural issues is self defeating. There is no real appetite to cleanse the toxic European banking system.

Nobody enjoys austerity, least of all politicians, and nobody expects it to work quickly, which is why there need to be penalties for not sticking the course - but the silver bullet alternatives at best don't address the underlying problems, and at worst make things worse.

The current austerity is making things worse. It is self defeating.

What silver bullet alternatives are you talking about?

KyussBishop

Amberman wrote: »

But wouldnt the interest rate on the bonds be applied across the EU as a single entity? Therefore, German borring costs would soar, while weaker countries costs would fall.

To say that this isnt an inter country transfer is a stretch IMO.

There's not directly any inter-country transfer, and where there would effectively be some indirect transfer, it can be setup so it's only in the short-term, with it being balanced out in the long term when countries get back on their feet and repay their share.

The cost of borrowing would increase for Germany alright, yes, but you could even do a special agreement with them to have the rest of the EU add that extra burden onto their internal EU 'tally' of debts, and pay it at their leisure (so they can keep running their economy sustainably).