Euro Area

[gaelic cowboy]

Well then you have to think who buys Dutch goods is it Germany, France etc or is it someone else. If it is Germany and you pull out but they don't you would have to weaken the currency and this would severely affect your banking sector as it likely owed lots by the PIIGS.

If Germany pulled out and you did too you would have to try to ensure the currency was always below Germany but above the Euro. Thats if the euro existed anymore of course, which it would in some kind of form in order to service the debt.

If Netherlands is not exposed to a large amount of PIIGS debt and Germany pulled out then you could pull out take a small hit on debt and then follow the new D-Mark.

edit disclaimer obviously if Germany was not your main trading partner none of the previous thought experiment can happen.

[Fragony]

Thought experiments are cool. We really don't need the EU, so why wouldn't we say kthxbye. German and French industry needs what is shipped here. Good luck building that

[Vladimir]

BBCA has pretty much decided that Europe is falling back into another recession and that America is experiencing an economic resurgence. Has anyone seen anything on the national level to confirm this?

[gaelic cowboy]

The eurostat figures for Irelands export trade into the continent are going down which suggests falling demand in Europe.

If the figures come back soon for increased US/UK/BRIC trade then we can guess your previous assertion is correct.

[Vladimir]

Interesting.

I don't remember what sources the cheerful and enthusiastic business correspondent used but he delivered the bad news in an optimistic tone. He always seems happy and it lessens the impact of the bad news he delivers.

[gaelic cowboy]

One major canary in the coal mine is the continual parking of funds with the ECB overnight by banks, in effect the interbank lending market in the Eurozone has stopped.

Last time we had something like that we got a new breakfast cereal called credit crunch and it killed Lehmans

Banks' deposits at ECB hit another record high

[Vladimir]

One major canary in the coal mine is the continual parking of funds with the ECB overnight by banks, in effect the interbank lending market in the Eurozone has stopped.

Last time we had something like that we got a new breakfast cereal called credit crunch and it killed Lehmans

Banks' deposits at ECB hit another record high

Not to take away from what you said but when I read your post I thought of leprechauns (Lehmans) Lucky Charms.

I'm sorry, that's horrible.

[Vladimir]

So is Germany trying to keep these countries in the Euro to artificially keep the price of their exports down? It seems like their products would get a lot more expensive if the Euro shed the dead weight.

[Furunculus]

So is Germany trying to keep these countries in the Euro to artificially keep the price of their exports down? It seems like their products would get a lot more expensive if the Euro shed the dead weight.

not quite so explicitly as far as the german electorate is concerned, but to paraphrase boris johnson; they are pro cake, and pro eating it!

[Vladimir]

You people are making me sad. I love tasty fish and it's a shame to read that so much is wasted. I can only imagine how bad the situation is in Japan.

[Tellos Athenaios]

Well then you have to think who buys Dutch goods is it Germany, France etc or is it someone else. If it is Germany and you pull out but they don't you would have to weaken the currency and this would severely affect your banking sector as it likely owed lots by the PIIGS.

Which would severely piss off direct Dutch competitors, for much the same reason an artificially cheap Yuan annoys the USA (despite the fact that an artificially cheap Yuan means a lower cost of living in the USA as well) so much. As for our banking sector, the real problem for the ING group was the USA/UK (which is part of what they focus on being insurance/securities kinda company), for the Rabobank no problems (being based on domestic accounts & housing finance mainly in the Netherlands itself), the ABN/Amro/Fortis got taken over by the state and the DSB group went bust.

If Germany pulled out and you did too you would have to try to ensure the currency was always below Germany but above the Euro. Thats if the euro existed anymore of course, which it would in some kind of form in order to service the debt.

That is basically what the case was before the Euro, with a brief spell of guilder > mark during the mid 90's when the Netherlands actually ran a budget surplus owing to a boom. Essentially the Netherlands is every bit as solvent as Germany is (possibly more so) but the Netherlands does not have the sheer economic muscle of 80 odd million Germans with a devoted Turkey & Balkan fanbase to cheer them on.

If Netherlands is not exposed to a large amount of PIIGS debt and Germany pulled out then you could pull out take a small hit on debt and then follow the new D-Mark.

Well a large amount obviously. Would not be surprised if it was mainly Irish debt through ties with the UK, and Spanish debt as well. But it is mostly the French and German banks which bought the PIGS (minus Ireland), and a lot of PIGS amongst each other for instance. (Spain owning Ireland owning Greece that kind of thing.)

edit disclaimer obviously if Germany was not your main trading partner none of the previous thought experiment can happen.

The real reason why the Netherlands cannot pull out has to do with the fact that the Netherlands heavily depends on those free flows of goods, capital and people -- transportation being what the Netherlands has been built around for hundreds of years and what determines the difference between a boom or a slow year, between a slow year or a recession. While in theory the Netherlands can do without the EU, the difference between having an EU and not having an EU (or at least having those treaties which ensure our economy can take full advantage of reduced overhead in dealing with different countries) ends up much, much more severe.