Euro Area

[gaelic cowboy]

Unfortunately, this crisis isn't about the euro and it wouldn't simply disappear even if manage to magically make an instant and perfect transition to old national currencies.

Actually it is about the Euro, just listen to the Europhiles like Trichet et al from a distance "We will defend the Euro" "Contagion must be stopped" and on and on and on.

Let's say Greece reintroduces the drachma, what would happen? Total economic collapse. Greece isn't an exporting nation and cheaper Greek products abroad wouldn't help Greek economy to balance it out. At the same time, rampant inflation would make it impossible to make any long-term plans. Who would invest drachmas in Greek bonds with drachmas losing worth daily? You bought bonds worth a 1000 euros and two weeks later your bonds are worth 200 euros.

It is not a given that inflation is bad for a country just because Germany had a spot of hyperinflation, that episode didn't even keep Germany down in the end did it. Inflation is a favorite of central bankers chiefly due to it's affect on asset values (generally held by other bankers) effectively it is an attempt to ensure your investment s value into the future.

In fact many people believe that obsession with inflation has led to more economic problems not less.

Also, the notion that crisis in the southern Europe wouldn't affect northern Europe if national currencies still existed runs contrary to logic. European economies are so interconnected that slowing down of Italian and Spanish economies would certainly be felt, pesetas and liras or euros.

This ignores the fact that the essential problem was an interbank problem caused by the Euro, sure it would still have happened but the solution to the problem is not doable under the present Euro. (nor the one France and Germany are talking of now)

Another thing thrown around here is that you can not have single currency if you don't have same level of development -> bollox. Do you think that GDP of American states are equal? California 2 trillion and Wyoming 38 billion. GDP per capita varies between around 70.000 (Delaware) and 35.000 (South Carolina), if we discount District of Columbia which has 170.000. Tax levels are also not the same across the United States. By contrast, difference for GDP per capita between EU states is 32.000 (Netherlands) and 11.000 (Romania (which isn't even in the EMU)), if we discount Luxembourg which has 70.000. Not such a big difference compared to US, is it? And if use only EMU countries, the difference is even smaller.

Furunculus has answered this one perfectly

So, Euro is not the problem and it never was. The story is used now by Eurosceptics looking for a cheap argument because it's easier to blame the Euro than to explain what's happening to the electorate. Why should Germans and French spend their money to bail out Greece? Because it is their investment. They hold most of the debt - if Greece defaults, that deficit moves from Greek to their economies.

It is the problem because it is not fit for it's present purpose, hence the championing of Eurobonds, deeper economic governance or talk of Germany seceding.

Of course Germany and France hold the debt and they will continue to champion (secretly of course)any move to bailout Ireland, Portugal and Greece to get there money back.(hoping it frightens Spain and Italy enough)

The problem is bankers are not popular anywhere right now eh, France and Germany will have a tough time convincing people to continue secretly bailing out busted banks.

[Fragony]

@Samartatarian, not talkinig about Greeks returning to the drachme, let the north give up the euro so it will be the next drachme.Right now we let the banks steal their country it's not right, it's plundering

[Sarmatian]

It is not a given that inflation is bad for a country just because Germany had a spot of hyperinflation, that episode didn't even keep Germany down in the end did it. Inflation is a favorite of central bankers chiefly due to it's affect on asset values (generally held by other bankers) effectively it is an attempt to ensure your investment s value into the future.

In fact many people believe that obsession with inflation has led to more economic problems not less.

At the same time, Germany was receiving billions in investments, credits and help, not a good example. Yugoslavian hyperinflation was worse than German one. Receiving your salary every day at three o'clock and having to exchange it for hard currency (usually German mark) by 4h because at 5h isn't worth squat isn't good for the economy, period. Greek inflation would be much more akin to that than 20% a year. Argentinian hyperinflation also wasn't particularly fun. It leads to companies of 10,000 employes being closed overnight.

Yes, inflation is good, if were talking about few percents a year, but that's not the deal here.

This ignores the fact that the essential problem was an interbank problem caused by the Euro, sure it would still have happened but the solution to the problem is not doable under the present Euro. (nor the one France and Germany are talking of now)

It is very much doable. It involves severe measures, like increasing revenues and cutting expenses, financed by the taxpayers of course.

Furunculus has answered this one perfectly

If it would came that Texans had to give up a huge percent of their wealth to keep the revenues of people in Arkansas at the same level, you'd hear the same moaning like in Europe. Unlike in Europe, Americans pay federal tax already, so in a way, that decision isn't left to Texans but to federal government.

It is the problem because it is not fit for it's present purpose, hence the championing of Eurobonds, deeper economic governance or talk of Germany seceding.

Of course Germany and France hold the debt and they will continue to champion (secretly of course)any move to bailout Ireland, Portugal and Greece to get there money back.(hoping it frightens Spain and Italy enough)

The problem is bankers are not popular anywhere right now eh, France and Germany will have a tough time convincing people to continue secretly bailing out busted banks.

Tough time, maybe, but it's gonna happen. Alternatives are too scary to even contemplate. The problem isn't the euro, or the EU, it is the reluctance of the national governments to take hard steps that need to be taken. If anything, all this would be easier if EU was (more) federal.

[Furunculus]

If it would came that Texans had to give up a huge percent of their wealth to keep the revenues of people in Arkansas at the same level, you'd hear the same moaning like in Europe. Unlike in Europe, Americans pay federal tax already, so in a way, that decision isn't left to Texans but to federal government.

your answer is to create a european federal tax?

good luck with that.

[Sarmatian]

your answer is to create a european federal tax?

good luck with that.

It's not gonna happen anytime soon, naturally, but I believe it eventually will.

[Furunculus]

It's not gonna happen anytime soon, naturally, but I believe it eventually will.

it is possible i guess, but don't forget my question: "just how close a sense of familial kinship does Herman Von-Deepockets feel with Miguel Loadzawonga?"

[Adrian II]

it is possible i guess, but don't forget my question: "just how close a sense of familial kinship does Herman Von-Deepockets feel with Miguel Loadzawonga?"

Attachment to kinship caused two world wars, both starting in Europe. Thanks to European integration ze bomps are no longer flying and we can even support third world countries such as Malta and Britain.

AII

[Furunculus]

Attachment to kinship caused two world wars, both starting in Europe. Thanks to European integration ze bomps are no longer flying and we can even support third world countries such as Malta and Britain.
AII

i'm afraid that pretending people do not willingly associate and identify with others they deem compatible, because you deem it inherently evil, will not make it any more likely that old herman will be happy to subsidise Miguel.

if merkel thought she could swing eurobonds past her electorate she would have in a shot, but she can't.

[Sarmatian]

it is possible i guess, but don't forget my question: "just how close a sense of familial kinship does Herman Von-Deepockets feel with Miguel Loadzawonga?"

Ol' Herman was subsidizing signor Miguel well before Wilhelm decided that Tanganyika would be a good place for a sausage factory.

[Beskar]

your answer is to create a european federal tax?

good luck with that.

I have heard it would be cheaper for us to do that then the current system of giving the money to Europe straight from our existing taxes. Plus, if it was a straight tax, there would be far more resistance to it ever increasing, and thus European budget could not especially raise it like they do by demanding more money from the nations (which keeps it between politicians and not the tax payer and Europe).

As for Kinship, I feel more kinship with the Scanians of Sweden then I do with the Londoners in the South. Europe Federal Union is something I would encourage and not oppose.