Whither the euro?

[Jeremy]

Huguenot Wrote:

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> In particular from a financial perspective those

> activities such as betting on failure, where the

> speculator has the means to enforce the failure

I think what you are describing sounds like market manipulation... which is already illegal!

[the-e-dealer]

I think it will. Wither that is.

[taper]

A condition for entry to the Euro should have been that only countries where you can flush bog roll down the bog could join.

[????]

The irony is Taper it woould have been a more transparent and effective test than the rubbishy fake 'conditions' they did use. The global economy is about to go down the toilet again 'cos of this idealsitic idocy and yet we still STILL get Little Englander shreaked at us for pointing out the uncomfortable truths that were always there to see about the whole stupid single currency fiasco

[Brendan]

At least when there is a crisis for one member of the community it becomes a crisis for the entire community and they are forced to work together to resolve it. It was sort of the reason for the EU in the first place wasn?t it? Granted it?s all a bit of a worrying mess but surely being forced to do the difficult thing for the mutual good if far preferable to countries closing themselves off to the concerns of those around them and becoming inwardly nationalistic and outwardly aggressive?

Sorry I forgot about the type of people who are reading this.

Never mind. Carry on.

[????]

Oh, so lets get into a car with no brakes to encourage community.

Millions are and will suffer because criticims of the Euro was dismoissed as bigorty not common sense and still it goes on

Go and ask the Greeks and Irish about mutual good and 'a bit of a mess'

...and most of us by next year.

'Type of people'... heard that for years from idealistic idiots who have wrecked whole countries...and our 'Type' are the bigots?

Annoying for you that the 'Bigots' called this right...disaster for all of us that we weren't listened too

[????]

you've know grounds to call poeple who didn't think this would work "Inward thinking and nationalistic" it's just a fucking rude slur and so typical

On the other hand we've every right to call you idiots

[Brendan]

And I will defend your right to do so with my dying breath. Even bigots deserve their rights now don't they.

Is it not fair to say that all this shit would have happended anyway even if there was no Eurozone? It just would have only happened to some people.

[Marmora Man]

Brendan Wrote:

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Is it not fair to say that all this shit would have happended anyway even if there was no Eurozone? It just would have only happened to some people.

Not quite correct - the countries in the deepest shit were only able to get that deep in it because the Eurozone as a whole was seen as a good risk. Ireland, Greece, Spain, Portugal and Italy all piled in and took the cheap money that the German and, to a lesser extent, French economies made possible.

A bit like lending to people with very rich relatives - expecting the eventual inheritance to repay the loan.

[????]

Right. Annoyed beyond belief at being continually labelled a bigot (about as well thought out as labelling all white South Africans racists) for calling the Euro out as the disaster it is proving. I?m going to spell out my views yet again.

1) I do not want the UK to withdraw from the Europe

2) I am not opposed to the principle of a Single European currency or even the UK joining it (hell, I?m not even opposed to a single global currency) ? I understand the benefits of a stable, strong global currency in the modern world

BUT

At the launch of the currency many voices, predominantly (but not exclusively) to the right of centre politically made a number of points about the huge risk that the Euro as it was launched incurred. The main one was that a single currency was largely unworkable and hugely risky without stronger fiscal and political union than currently exists within the European Union, and boy have they been proved right. On a micro level key elements of this would be.

- Decision making would be laborious and unwieldy with so many countries needed to ratify things like, erm, bailouts say and the markets hate uncertainty. Well anyone going to argue that hasn?t happened?

- Giving certain, er, financially less disciplined European countries interest rates based on German financial prudence was like giving a teenager a credit card without looking at the bill until the bailiffs came knocking. Certain governments binged on cheap credit to actual and potential disaster ? Greece, Portugal, Ireland?..er, maybe Italy. This wouldn?t have happened with strong fiscal control.

- The economic models and cycles in various countries was too different for a single interest rate, which was largely based on what was good for the German and French cycles/economies. Hence Spain and Ireland in particular saw a massive property boom on top of an already booming market, fuelled by low interest rates. Mr Brown and Balls deserve enormous credit for recognising this point in particular or god knows how much worse the boom and subsequent bust would have been here.

- Related to above, since the bust, Euro Interest rates have remained far higher than those in say the US or UK largely to fight inflationary pressure uin Germany, this has been an utter disaster for Ireland , Spain et al giving them no flexibility (dare I say sovereignty?). The UK in contrast has been able to slash interest rates to the lowest levels ever I shudder to think what would have happened here if they?d stayed at Euro levels

- Critics also pointed out that there were wide discrepancies in standards of accounting/economic data/tax collection that would eventually come out in the wash and were certainly fudged to get in in the first place (Greece, Ahem?.also not that convinced by Italy) and

- Sadly, and deeply undealistically of them, that the individual nations still saw themselves as individual nations too much to properly embrace this and boy has the crisis shown that to be true ? German taxpayers moaning about ?lazy Greeks?, Greeks blaming it on some German plot to take them over, France, Italy and Germany squabbling about how much of a ?haircut? the banks needed to take, largely taking a position on this based on how much their country?s banks were exposed. Ireland point blank refusing to give up its lower corporation tax rate, etc etc

- Eventually the Germans would be dominant as the most financially disciplined, most populous and significantly biggest economy. That?s not necessarily a problem but it WOULD and is beginning to be the reality

I could go on but it?s depressing beyond belief and we?ve not even got to the next stage of the crisis which is the political repercussions of all this. I think the Euro in its current form is dead, whatever happens literally millions are suffering as a result of this grand ideal and a global recession looms which will push whole countries to the wall (and I?m not that confident about UK plc in this scenarios) nd see serious civil unrest.

Tell me where I?m wrong, argue with me, but stop calling me a bigot because you?ve no answer to this.

There was also an ?argument? about the Euro based on bigotry and distrust of Foreigners as put forward by the moronic UKIP (and worse) and the idiot fringe of the Tory party.

Sadly but predictably and typically, many so called ?Progressives? and ?Idealists? and their papers have and to shameful degree accused/slurred ALL those opposed to the Euro as being in the latter camp effectively stifling debate. It?s tedious, it?s boring, it?s dishonest and, fundamentally, it?s stupid.

[DaveR]

"It?s tedious, it?s boring, it?s dishonest and, fundamentally, it?s stupid."

It's Huguenot!

[StraferJack]

Lot?s of good points in quids post but the main areas I disagree with would be:

Primarily, I wonder had the euro project NOT happened, if things would be significantly better as things stand. You can speculate any which way you like about how things might be better or what would be different, but the eurozone clusterf*** didn?t cause the current global financial meltdown, rather the reverse brought it?s structural problems to the fore

A number of countries which benefitted form the eurozone, and who extended themselves too much would, IMO be in a worse position today, insasmuch as they wouldn?t be facing a global crisis on the back of years of growth.

Secondly, it is possible to accept all warnings and criticisms of a large project beforehand and still decide that on balance it?s Still Something That Needs Doing. That doesn?t diminish the risks, but again, I?m not sure leaving things as they were was enough. I accept that some people will take that as following ideology blindly but that's not what I think

Millions suffering for sure but laying all of that suffering at the feet of the eurozone alone? It?s certainly a key factor but as I say, not the only one

A retrenching of countries looking out for their own interests might be forseeable, but is surely something to be argued against ? not just accepted as an outcome.

[????]

Thanks SJ - appreciate a decent debate.

Point 1 + 2 I think you'ere clouding membership of the EU with the Euro here. The enormous economic benefits of joining the EU to the likes of Spain and Ireland are self evident turning them into modern dynamic nations with, until recently, growing economies. Their economic growth prior rto the Euro was more than respectable and at largely at healthy and sustainable rates, withoiut the Euro this would have carried on without the excessive boom and horrendous bust though I absolutely accept that the 2008 bust wpould have happened and still been painful but not nearly as painful for these two. Busts are gonna happen (as Gordon sadly forgot) and they would bring the unstable structural issues behind the euro to the fore this particualr recession is truly horrific and worse than average so the circumstances are worse rhan 'average' and that has been 'unlucky' for the Euro but shit does happen and for all the reasons I identified and you acknowledge this was a big risk based on idealism not pargmatism. The worse case scenario - th total collapse of the Euro will put us back into a 30s style political/economic cycle and we all know how well that went in Europe. As it is Greece is effectively a demoralised, bankrupt, suffering and angry place now (that's a fair few million poeple!). Plenty of others on the edge too.

On the idealism point I accept your point that some people are motivated by ideals and go for it, in a sense that's bold and visionary BUT, you know my views on macro political 'idealism', done nothing but get the world into trouble. Basically some European politicians and the Brussells establishment with 'vision' which wasn't entirely convincingly endorsed by most of its citizens, dare I say even dumped on them should ahoulder the blame for this mess.

If the Euro surbvives it won't be as before and will involve a centralisation of decision making, budgets, taxation, fiscal policy, etc - to a degree that probably will happen becuase it will need to to stop whole nations going down the pan but that ISN'T something that any of the citizens of Europe have really been given a choice on, not very democratic at all. A bit like having a baliff/creditor take over how, when and on what you spend your money - i see enormous political problems down the road if the euro collapses or survives.

[StraferJack]

Can't argue with that, only to add the enormous political problems down the road are manifold and not limited to the Euro

I accept I didn't distinguish between the Euro and the EU zone in my post, but I am aware of the differences. I still think/believe that deeper integration amongst the eurozone is desirable given global direction

I can't disagree with the argument about populations not having much democratic say in the implementation of the euro, but the way I see it, the longstanding relationship between democracy and money is showing signs of a breakup anyway. Certainly Democracy is sleeping on the couch and Money is denying it prefers That Communist/Dictator down the road but the signs are thre. Counties like China are better capitalists than the western countries - there is just Less In The Way. And if we think western governments ride roughshod over it's citizens wishes now, then to try and compete with that level of control is going to see things get much worse. Better to unite under common themes (even if we can't all agree just now)

If countries want to co-exist but as sovereign nations then I believe that might be superficially comforting in short term but in the medium term they will have zero clout

Simplistic and possibly doomy thoughts, but the rationale behind my support of The European project anyway

[Huguenot]

There seems to be terrific confusion here over challenges with the single currency, and whether those challenges are responsible for economic difficulties in Europe.

Quids seems unaware that the UK is not part of the Eurozone, yet is undergoing economic challenges, austerity budgets and debates over taxation of its own. We have our own riots and protestors camped out in the capital's streets.

No clearer evidence is needed that it is not membership of the Euro creating these challenges, but macro economic conditions.

Greece is suffering the worst because of a series of overspending governments and poor taxation administration. The fact that Germany is not suffering the same woes is all the evidence you need that it is not the Euro that created these problems, but the Greek government.

Yes the Greeks had access to cheaper credit to fuel the binge, but had they not they would simply have suffered the austerity conditions and social unrest earlier down the line - but they would have suffered anyway. It was not the Euro that created this situation.

Historically the Greeks would probably have solved this through devaluation - which meant that instead of cutting government expenditure they simply cut the value of the currency, making everybody poorer. You can't do this within the Euro, and hence the 'problem'.

Whatever happens, as usual the political problems get solved, and it's not the END OF THE WORLD because of foreigners.

As for 'bailing out' foreginers, this is an antiquated nationalist sentiment that reflects the view of a minority.

As I've said before, and I'll say again - I don't know anybody in Ripon, but that didn't mean that when living in the UK I blamed them for Lonodon's woes and refused to pay my taxes. Why should the Greeks be any different?

We live in a globalised eocnomy, and barricading the doors and overinflating fears about foreigners creating economic crisis is the stuff of the Mail.

[????]

I stiil wait the day when Hugenot actually reads my posts properly. The Euro will collapse before that day I fear.

[Jeremy]

Huguenot Wrote:

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> We live in a globalised eocnomy

You can't consider Europe as a single homogeneous economy. We're still a long, long way from that. Differing balances of sectors and levels of "economic maturity" mean that there's a genuine argument for independent economic policies - i.e. setting interest rates and issuing currency.

Either that, or the members are going to have to get used to helping each other out. And at the moment, they don't seem too happy about doing that.

[Huguenot]

I agree Jeremy, I just don't understand why some people are trying to putting an arbitrary European slant on this.

Baltimore to Washington (30 miles)

http://t2.gstatic.com/images?q=tbn:ANd9GcRfypAed0TPjBcLd-TYJDILPF70HE-WogATC7H4I1XAAX0fAjfxXghttp://t0.gstatic.com/images?q=tbn:ANd9GcRFOHBJgUthCFfgCi8tDdgYIWrTZTs9dvDjlMG2aRRt5YSL2oQk

Athens to London (1,500 miles)

http://t1.gstatic.com/images?q=tbn:ANd9GcRP9M_h-1DcvdX68IIkwdq4MyIytfjnb8msOhYPV84iZkhaRkkAzghttp://t3.gstatic.com/images?q=tbn:ANd9GcRmo6sQ2k4ZCnN0kA9_hjSkpyzaEEceZT8vqjw0XNQreV3Cari_

[taper]

Isn't the issue with the Euro that basket case countries such as Greece by being in it (for political reasons; there is no economic rationale) transmit and amplify their parochial and otherwise irrelevant economic problems to the extent they undermine one of world's major currencies? I think the euro could work if solid currencies such as the DMark, Franc and Sterling were in it. But when peripheral and weak economies are allowed in for political reasons, the whole edifice is undermined.

[Huguenot]

Your initial premise is wrong taper - the principle rationale is economic, the political element only influenced the rate of sign-up (and in the case of Greece probably too soon).

The fixed exchange rates allow import and export companies (typically over 50% of GDP) to predict market values for both resources and services without the instability of multiple currency exchange rates. This allows and attracts inward investment and generates growth - this should be considered in multiples of 100s of percent.

For smaller companies (currently 51% of GDP in the UK), trading across multiple currencies either meant holding large cash reserves in each currency (of unpredictable value that might not be needed) or potentially losing as much as 40% of your reserves to currency exchange fees if you trade across 10 or more European countries. Holding large cash reserves in foreign currency would put SMEs out of business.

Once more for small companies, the cost of accounting in multiple currencies is very high - I do it myself, and estimate that it costs me around 5% to 10% of my income every year.

Once the Eurozone appeared it was less important for UK to get involved, mainly because the Eurozone itself massively reduced all these costs to British companies because there was only one Euro.

For this reason European nations often see British companies as parasites upon the risks taken by European countries.

So sanctimonious prigs like Cameron, and others poo-pooing the Euro whilst reaping its benefits often get told to 'shut up I'm sick of your voice' by European politicians ;-)

[silverfox]

Oh Oh ... a referendum in Greece is now being proposed. I must admit I didn't see that spanner on the horizon

[taper]

"...the political element only influenced the rate of sign-up"

That's a very big "only".

I'm not at all antipathetic to the idea of the Euro, or indeed the UK being in it (Oliver Kamm of The Times is good on this). It seems bizarre to say, but the thing has been a huge success hitherto. But the strength of the idea has been fatally undermined by allowing in countries who are not up to the discipline it requires.

[silverfox]

?This will be the referendum: The citizen will be called upon to say a big ?yes? or a big ?no? to the new loan arrangement,? Papandreou told Socialist members of parliament.

?This is a supreme act of democracy and of patriotism for the people to make their own decision ... We have a duty to promote the role and the responsibility of the citizen.?

(Quoted in The Times today)

On the one hand I think this is fair enough. It's right that the people should have a say about years of austerity and suffering that will affect them. However, whatever the outcome they will suffer it nonetheless.

The big issue though is what will be the question asked in the referendum? If the gist of it is:

Do you accept the deal to write off 50% of our debt with the conditions attached?

Whether they say yes or no here years of austerity lie ahead and the consequences for the Euro of a no vote are potentially catastrophic.

Should Greece leave the Euro and return to the Drachma?

A yes here could be total withdrawal, or withdrawl from the Euro but remain in the EU. But it will still result in a default and years of austerity ahead for Greece and a melt down of the Euro?

It's all a bit catch22

[Loz]

silverfox Wrote:

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> Oh Oh ... a referendum in Greece is now being

> proposed. I must admit I didn't see that spanner on the horizon

Very interesting - and it's not a proposal, it's going to happen. A 'no' vote will be massive. It could see the Greek economy plunged into chaos for decades and the knock on effect may just bring the Euro down. All those cushy Greek pensions won't be worth a bean, then.

I'd say it would be like turkeys voting for Christmas, but the Greeks have never been fond of Turkey.

[silverfox]

Technically speaking, under Greece?s constitution, a referendum requires approval by parliament before it is officially declared by the country?s president.

Costas Gioulekas, of the conservative New Democracy party, has not said whether his party would back a ?yes? vote.