The Euro may not last

[Bobblehead]

Despite core inflation in the euro zone of only 2.4% and a slowing global economy, the Germans insist that the European Central Bank maintain a tight monetary policy. In direct opposition to Germany, the Latin bloc, joined by Ireland, wants the ECB to lower interest rates.

http://www.forbes.com/forbes/2008/0421/034_print.html

So European countries are now chaffing against the loss of monetary control. Latin countries are caught up in a real estate crisis (similar to the US) and want to decrease interest rates (same tactic the US Fed is using) but cannot. The Germanic countries are worried about inflation and don't want to lower interest rates for fear that it may trigger inflation.

It is an interesting situation.

[jammies]

I never understood the allure of a common currency for those countries in the first place - they were yoking dissimilar kinds of economies together for no discernable purpose other than hoping it would counterbalance the influence of the US dollar. You don't NEED a common currency to run an efficient common market, as the Europeans themselves proved over decades before they got the Euro.

That being said, they are rather caught now - any country that leaves will be taking a huge economic hit. They would be better served by sticking with it and pressuring to have more say in economic policy. However, it is easier for politicians to put the blame on faceless bankers in Germany than to preach stringent measures at home.

[Aeneas]

This is good news! I am sitting (not literally Fotze) on 1000's of Italian Lire. I will be rich.

[Bill Bumface]

Originally Posted by jammies

I never understood the allure of a common currency for those countries in the first place - they were yoking dissimilar kinds of economies together for no discernable purpose other than hoping it would counterbalance the influence of the US dollar. You don't NEED a common currency to run an efficient common market, as the Europeans themselves proved over decades before they got the Euro.

That being said, they are rather caught now - any country that leaves will be taking a huge economic hit. They would be better served by sticking with it and pressuring to have more say in economic policy. However, it is easier for politicians to put the blame on faceless bankers in Germany than to preach stringent measures at home.

The US itself has all kinds of dissimilar local economies forced under one currency, and for the most part it works just fine.

Even in Canada, here in Alberta we were worried about inflation while the exact opposite was happening on the Atlantic.

Of course there are many advantages and disadvantages, and the lack of common government greatly complicates the issue, but diverse economies is not a reason alone to make it a bad idea.

[jammies]

Originally Posted by hulkrogan

The US itself has all kinds of dissimilar local economies forced under one currency, and for the most part it works just fine.

In the USA there is easy internal migration of people from a locale with a depressed economy to areas with booming economies. The same is the case in Canada - look at the people moving from the depressed East out to Alberta, for example. In the EU, while in theory this is also possible, I doubt that a lot of the Irish are just going to up and move to Germany, or vice versa, depending on which area is doing better. This is a large mitigating factor that softens the effect of national economic policy, that is simply never going to happen in the EU.

There is a profound difference between different regions inside one nation, and different nation-states inside an economic bloc as far as the effects of economic policy are concerned. In Canada, there is anger in Alberta at other regions of Canada that are seen (not MY opinion, BTW) as perennial losers who are always looking for hand-outs - imagine that scenario, but with nations who historically distrusted each other and have never before been part of the same political structure, as opposed to provinces who are, in the main, culturally homogenous and have shared history (minus Quebec, of course, but that is one huge reason why Quebec is seen as the biggest offender out West as far as always taking and never giving is concerned, whereas the Maritimes are considered much more kindly).

[Bill Bumface]

Originally Posted by jammies

In the USA there is easy internal migration of people from a locale with a depressed economy to areas with booming economies. The same is the case in Canada - look at the people moving from the depressed East out to Alberta, for example. In the EU, while in theory this is also possible, I doubt that a lot of the Irish are just going to up and move to Germany, or vice versa, depending on which area is doing better. This is a large mitigating factor that softens the effect of national economic policy, that is simply never going to happen in the EU.

Good call, I never thought of that. From personal experience I noticed some of the richer Western European countries being quite discriminatory to Eastern Europeans. In Switzerland there was a political party who's entire campaign was to "kick out the black sheep" which pretty much refers to "Yugos" which is applied to anyone from the rough vicinity of the former Yugoslavia.