Euro Area

[Philippus Flavius Homovallumus]

And you as British,how does it concern you at all?So why do we few Irish and British members rambling over and over again about how Euro is a lost case when you havent even experienced it. Maybe Britain should apply as next state of US? As that is how insignificant your economical value is.

gaelic is Irish, and therefore inside the Eurozone.

Britain has worse debt dynamics than France - but because we have a central bank and central debt together we can exert pressure on the markets. Greece has to borrow on it's own, but it shares a currency with Germany - so the Greek Central Bank is hamstrung and the ECB won't stand behind Greece the way Greece needs it to.

There is also the problem of trust, this is what Furunculus means when he says "family" - the Germans don't believe that if they give the Greeks lots of money the Greeks will then cut spend, so the Germans aren't willing to give.

Sarmation has referenced Scotland several times and he has a point - the SNP has managed to erode trust through high-spend policies financed by English taxpayers to the point that now a majority of the English are unhappy with the status quo and increasingly apathetic about Union.

One point worth noting is that the British (read English) taxpayers would probably accept Britain taking on a share of Irish debt (through low-cost loans) if Ireland left the Euro and pegged to the pound. Such a transfer would be necessary because the pound is also a very strong currency, but it would probably fly here - sadly I doubt it would fly in Ireland.

gaelic has it right; fiat currency is worth whatever the market says its worth. Nominally the central bank controls fluctuations, but their power is limited when faced with a real crisis of confidence.

The Euro benefits from "collective defence" in case of a crisis, but really only some of the collective can afford that sort of intervention.

Theoretically, the Euro is backed by 17 countries - but 3 of those are already effectively bankrupt and the remaining 15 are in varying amounts of trouble. The consensus building now is that "collective defence" requires a "collective debt" to be effective, i.e. Eurobonds. The problem with this approach is that, again, there is a lack of trust. Germany is concerned that the debter nations will use lower borrowing rates to halt or reverse austerity - thereby raising the cost of the Bonds further, which Germany will have to bear.