Euro Area

[Furunculus]

You really don't know what you're talking about, do you?

The problem with the economy isn't the Euro, it's the overborrowing, which worked fine when there was growth.

And you really cannot read, can you?

in part because a common currency comes with a homogenised borrowing rate.

What you don't get however is a homogenised political culture taking direction from a homenginsed society

Ergo, you get overborrowing from weak peripheral countries who spent ten years riding on Germany's ticket, using that 'slack' to give themselves nice social-benefits which their developing economies could not support, thus destroying their productivity*, knackering the export potential, and hollowing out their industries.

The whole idea that problems would be solved if all troubled economies (Greece, Spain, Portugal...) would switch back to their old currencies is completely and utterly idiotic. Yes, they could devalue them and plug the holes in the budget but that just means that their money would be worth less. Furthermore, it would have scared investors and bond buyers cause who wants a bond that's gonna be worth less than the paper it's printed on in 20 years? Nowadays, those who want to buy Spanish bonds worry about whether the government will be able pay the interest, with peseta back they would be worrying that even if the government can pay the interest, is it gonna be much smaller in addition.

No one is saying that escaping the eurozone will be easy or pain-free, what is being said that internal devaluation cannot regain external competitivness without causing revolution, and the only other solution is a perpetual transfer union which france and the netherlands are completely unwilling to entertain.

p.s. no one wants to buy spanish bonds because they just really want to, they buy them because the risk/reward works in their favour vis-a-vis some other contries bonds. at the moment there is very little reward and enormous risk viz the utter scalping of private sector bond holders in greece necessary to preserve the ECB - ergo no one wants spanish bonds.

Even if we agree that disbanding the Euro is the answer (which it isn't) it's a very complex, expensive and time consuming process to switch back to old currencies. Creating chaos across the continent, fear among investors and businesses is hardly a good way to ride through the crisis. Like trying to figure out who's supposed to inherit how much of a house that's on fire. Put the fire out first and deal then cause otherwise you won't have a house to inherit.

And you judge this to be a worse solution to the welfare and wellbeing of the southern periphery than a decade of grinding internal devaluation leading to high unemployment, static growth, and poor services? i question your motives for suggesting this, particularly as a self-proclaimed internationalist..... Surely it is my job as a nasty nationalist right-winger to callously disregard the plight of 'others'?

The Euro isn't the problem. It's just used by the europhobes to "show" why an united Europe is a bad thing. Personally, I'd rather deal with 27 different countries about my economy than having my "independent" economy go bust on its own.

ARE YOU MY FAMILY?

Rinse and repeat until the message has sunk in.

Let me know when rich europe is willing to underwrite the public-services of poor europe.

Until then i am going to uproarously laugh at every person who continues to blindly defend the failed political model the foundations of which are being undermined by the economic model they believe will bolster it.
Each and every time a disaster occurs i will roflmao! not at their misfortune, but at the foolishness of the people who caused it via their blind faith.

Testing: "roflmao!"

Excellent, it's working.



* pages #7 and #9 for the remedial reading class:
http://www.levyinstitute.org/pubs/wp_651.pdf