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What is the future for the eurozone?

Stephanie Flanders | 17:25 UK time, Wednesday, 14 July 2010

Where does the eurozone go from here? That's the question I've been looking at today for Radio 4's PM programme.

Euro symbolSeasoned Europe watchers say there only two ways out of this crisis for the eurozone - it could pull countries closer together, or it could break them apart.

That may be right. But in past European crises, there's usually been a muddle-through option - that's what many eurozone governments are hoping to get away with now.

Crucial to how this turns out will be Germany - where many are furious at the way things have gone. They don't like the idea of bailing out other countries at all.

Bailing out Greece - a country that only qualified for the euro on dodgy budget numbers - is about as bad as it gets.

The German chancellor has told them they have to support the massive new safety net for the eurozone, because the future of the euro is the future of Europe - and of Germany.

But the real reason for Germans to support the single currency is that it has served them very well. As other countries have become less and less competitive - German companies have sailed ahead.

Nearly all the growth the Germany economy has had in the past 10 years has been from exports - most of them within Europe. German exports to Greece have risen by 130% in the past 10 years. Greek exports to Germany have risen by less than 10%.

German and French officials also tend not to mention that it was lending by their domestic banks and investors that helped Greece, Spain and others to live so long beyond their means.

The biggest economies in the eurozone are rallying round the big support package agreed in early May, because they think a default by a European government could be bad for everyone. But it's also because they know it would be particularly bad for the French and German banks who are sitting on a large amount of Greek and other sovereign debt.

Supporters of a closer and deeper union say this is the way that European integration has always gone: the economic ties come first, and eventually, the politics has to follow. But it's difficult to see much public appetite coming out of this crisis for deeper political integration within the Eurozone, or massive budget transfers between states.

Then again, most within the eurozone don't much like the break-up scenarios that some are painting. My personal favourite, appealing to tidy-minded but impractical economists, is the idea of having one euro for the super-competitive Northern Europeans and one for the South. (Imagine the fun that France could have deciding which to join.)

So yes, everyone really wants to find a way to muddle through. But if the eurozone is going to get through this without radical change it's going to have to find a way to grow.

Spain, Greece, Portugal and the rest all now face a long hard slog re-balancing their budgets - and their economies. To make the numbers add up, they need a strong domestic recovery elsewhere. Right now no-one can promise they will get one.

Comments

Page 1 of 5

  • Comment number 1.

    Would multiple-currencies work?

    eg. Italy could have both the euro and Lira as legal tender, France - Euro and French franc's. All salaies are paid in 50-50. Prices can be any mixture.

    No, it would be chaos!

    A temporary 5-year national import tariff within EU?
    Or a tax on currency outflows?

  • Comment number 2.

    The Eurozone countries now realize, I hope, that they are sovereign countries but do not, and cannot control their currency. They are in a straitjacket run by mainstream economists in the ECB. This is an unelected body that will do what it thinks is best without really being answerable directly to the electors anywhere within the eurozone Each county's government will become piggy in the middle - nasty and unpleasant for some.

    We know that their policies will be austerity that populations will, at the very least, resent; they will be unable to exert political pressure directly.

    In my view this is not democratic.

    It will lead to more instability, and uncertainty. So as for Ms Flander's comment about muddling through - Muddle, yes certainly; but I am doubtful about them getting Through.

  • Comment number 3.

    'So yes, everyone really wants to find a way to muddle through. But if the eurozone is going to get through this without radical change it's going to have to find a way to grow.'

    ...and therein lies the real problem - and something of a chicken and egg scenario - most if not all euro economies are waiting for other euro economies to grow in order to drive their own export led recoveries. Clearly not a very promising outlook unless banks lend more and more money to nations...and we've been there before. We really need to look beyond growth as the solution to all our problems - it just isn't a long term sustainable proposition. It's even limited in its usefulness in the short term, especially for the UK with its strong currency against the Euro which reduces the ability to export goods to Europe. No, more radical proposals are needed - long term economic growth for any nation is impossible.

  • Comment number 4.

    Only a few months ago we were being told how much better Eurozone Banks were regulated than ours! Households and businesses in the Eurozones were less indebted - except that their governments were much deeper in debts than ours.
    Spanish banks in particular (we were told) were regulated so that their capital requirements rose automatically in boom times and fell when a slow-down required more money supply. How sublime!
    Moreover, Eurozone states were so much better at bank supervision, they didn't need to prop up their banks as Britain's have needed. Or so we were assured.
    Now it appears that the eurozone banks may have mountains of bad debts, bottomless pits of unfunded pensions and inbalamced trades that make beggars of the southern states.
    Recognising that all things are comparative, is the UK truly in a financial mess, or not?

  • Comment number 5.

    The financial markets are not sentimental and will see muddle as weakness to be exploited. They will exploit it, make their money and move on. So, unemployment in Europe rises, to them its just numbers; to europe's politicians - huge problems insoluble by mainstream economics.

    The sharper people within the eurozone will hopefully realise they need to plan a route out of these problems [to disagree amoungst themselves is not an option, its a form of muddle by another name], to have pre-prepared counters for market responses [ideally responses that will make these money drones think before attacking again].

    If they cannot do that, try muddling through by all means, but prepare plans to dismantle the eurozone and for all to accept that for the next generation at least, european integration has reached its limit.

    To all UK politicians [LibDems in particular] - Just stay out of the euro, FOREVER; its not a healthy place to be for anyone.

  • Comment number 6.

    So German growth is based on exporting to countries while their banks were lending them the money to pay for the goods...? A bubble by any other name.

    Why do the Germans think the situation will change in five, ten or twenty years? The "bad" economies know they can bleed Germany dry for as long as possible, and the the German government tells its people there is no alternative.

    Well there is an alternative, its just the Europhiles don't want to go there.....

  • Comment number 7.

    over the years of debate i have never heard anyone say, what should be blindingly obvious, that a single currency can only work in a single language environment:

    where a person loses their job in one state, they can locate to another state and get an equivalent job there.

  • Comment number 8.

    What is it with the BBC and their aversion to simple straightforward truth.

    Who cares what Germans want or don´t want. Either Germany bails out the PIIGS on an ongoing basis or German and French banks immediately collapse.

    Presumably German policy makers will bail out the PIIGS whilst whining and whinging at every step simply to avoid the ignominious public recognition that their own "too big to fails" are systemically insolvent.

    The price of bailing out the PIIGS will not be borne by German taxpayers but by the populations of the south who will continue to get crushed by the ongoing economic collapse caused by continued euro membership.

    There is no way out. To obtain competitiveness Spain would need either 35% price falls or 35% efficiency improvements. This is impossible to achieve, and any intelligent person knows this regardless of the tidiness or untidiness of their minds.

    The fact that they are not prepared to set out the true gravity of the situation merely demonstrates their overwhelming contempt for the average person in the average southern European street.

  • Comment number 9.

    Hmmm. So German exports to Greece have risen by 130% in ten years. Must be all those lazy Greeks enjoying the highlife by driving around in German cars and buying German consumer durables all financed by reckless borrowing.

    Or not as the case may be. Maybe the Germans have sold the Greeks a whole load of submarines. Maybe part of the deal was that there would be some form of technology transfer so that going forward Greece could build its own submarines. Maybe that deal was thwarted by the German submarine maker buying up the Greek shipyard that was to be the recipient of technology transfer. So maybe thanks to German M&A activity there will be no technology transfer.

    What does Greece want with all these submarines anyway? Are there protesters in Athens demanding that their Government slash wages and pensions just so they can buy more submarines? What is Germany doing selling all these submarines to a country that has no money and very probably requires German taxpayer subsidy? Any subsidy will immediately return to Germany as it enforces payment on contracts for economically useless submarines.

    So, German taxpayers will be subsidising German arms manufacturers and Greece will simply be a conduit for that subsidy.

    Why doesn´t the BBC tell us about this? Where is the outrage?

  • Comment number 10.

    The banks don't favor multiple currencies to convert once stolen...paper trail I would guess. The West has become lost in defining their nations as economies with no other factors to make a statement about who they are as cultures and societies. Big business and banking do not want to be bothered by such matters as they only like money. I was a fan of the art work on French notes and the handfulls of Italian lira that was used in every transaction..the English system was more obscure. Monies are representational, not real, they have little or no value unto themselves. The digital thieves can devalue your worth in a single day, as they have recently done. These are discussions because of the economic malaise. If economies were moving along no one would care about the Euro. Because the banks were given all the money and not the people there is little movement in the economies. Banks loan money, they don't spend it...but they will gamble. Basic economic concepts were left on the raod once the banks committed their crimes and the governments decided to reward them for their efforts. When everything that is being done is bacically counter to what would work, does it really matter if the Euro is or is not. Would it really change any of the economic realities for the countries. Since high debt and higher taxes are the result of the decisions made by governments and the banks hold the money they have created an economic stalemate. The people may figure a way out, because they have to but I doubt any of the governments will as the banks tell them what to do and what is in the interest of the banks is not in the interest of the people or the national economies. The only thing that has been done is the maintenance of the status quo. You will know when things are getting better because politicians will jump out front and take credit. Most of history is governmental blunders saved by dumb luck....the world is littered with civilizations that have died.

  • Comment number 11.

    #1 the idea of multiple currencies has been tried in US just before the civil war and I think gave rise to the economic principle of "bad money drives out good" which is a simple way of explaining that people will spend the bad currency and save the good currency.

    What I believe happens is that the bad currency quickly collapses because people who try and spend the bad currency find no one will accept it. I thinking this is broadly what happened in US where the Confederate south became increasingly resentful of the Yankee dollar dominating all economic matters - however maybe someone with better knowledge of history could explain it better than me

  • Comment number 12.

    There is a simple and logical answer to which way the Euro will go.

    Breaking up the Euro helps only the bankers. Do we want to help the Bankers after what they did to us? I'll be brave enough and answer for the majority in the UK and Europe - a resounding NO.

    So it is ever closer union (or we are all doomed!)

    When will the UK join is the real question we should be asking! All the pre-planning has been done years ago by the Bank of England (I have the books!) it is just the switch that needs to be thrown.

    (Only a Tory government can take this type of decision! The Tories took us in and the Tories agreed to Maastricht so the Tories will take us into the Euro.)

  • Comment number 13.

    The capitalist merry-go-round requires producers, purchasers, and some mechanism to complete the cycle when there is imbalance between the two. Germany being the major manufacturer in Europe (as with America, China, India on a global scale) rely on the purchaser of their goods having the money to pay - otherwise lots of goods and no money. Hence the merry-go-round Germany makes money which it then loans to its prospective customers so they can purchase the German production. Think of it as "third world aid". However, the merry-go-round spins out of control when those lending get increasingly greedy, not the German manufacturers increasing prices, but the banking system demanding ever increasing slices of the Black Forest Gateau.

    The crisis came when the banks hiked debt to such levels the German manufacturers could not produce enough wealth to sustain the increasing banking slice. Hence the quandry within the European Single Currency, and by extension in UK Corp., the banking system has hidden the debt, in Leasonesque fashion they created a debt so enormous they dare not admit ownership. Finally, when the reality of what their greed had created became clear, starting in the foundation of the capitalist system America, the implosion started. Banks dare not lend to anyone, even those who had deposits supposedly safe within their vaults, manufacturers who need capital flows to maintain activity found it gone, the source sitting in a dark place waiting for help. Governments realising the scale of the catastrophe these greedy institutions had created had two choices, return to the "depression of the 1930s" or create a fictitious source of wealth (founded on the earnings of several future generations) to provide firstly cash flow, then guarantee debts once admitted by the banks. A "sword of Damiclese moved from the banks to nations (or us the taxpayers).

    The Euro group is big enough, both in producers and consumers, to ride the bank created storm. However, the banks see profit in stress dealing, forcing runs on currencies for extra profit. Rating agencies who classified bank debts as AAA are now see profit in downgrading national debts. Yet Greece, the weakness brick in the Euro house, has had a recent bond issue oversubscribed threefold (1.2bn euro bonds attracting 3.6bn investment) so where are the rating agencies in all of this - so much for "junk debt", it looks AAA to somebody.

    We in Britain, scared of our own shadow; believers in the misconceptions put down by our betters; shy away from the collective spirit, avoid all economic ties that do not have an "empirial basis". Hence, we gladly join the band-wagon of Euro derision, whilst ignoring its great strength. Yes the German producers are tired of supporting the lesser states, but without the Greeces and Eires taking the excess from their table life would not be any better in Germany. Looking on the bright side, the German towel joke will be laid to rest when they can actually establish ownership of the whole Greek island, not just the sun-lounger. What needs to be controlled is the banking in-between, those who will force prices up in real estate in Greece, Spain, Portugal and Eire, profiteering on the alternative money exchange between producers and purchasers.

    Tax the banks, the bankers and their excessive salaries and bonuses, triple tax their off-shore accounts. Nations will have their debts/deficits reduced, their ratings increased, and all will return to normal until the next time (look-out in 2070). Demonstrate that governments govern not greedy private individuals hungry for an increasing share of produced wealth through gambling on their ability to devalue others efforts.

    About time the BBC's experts started looking closer to home for solutions, than "dooming and glooming" what are the co-operative efforts of our near neighbours. A drive through Germany is a far pleasanter experience than swathes of America, China or parts of the UK. Whilst the productive powerhouse, that is Germany, continues we can take two approaches - we can embrace their industrious nature or we can enviously deride them. The former leads to a liberation of the UK population, from subjects to citizens, the later lead to two major wars and decimated the continent for generations. Be smart, or listen to the Hagues and UKIPs of this country. The Euro is fine, the structural debt of Community is well within its ability to resolve, and in doing so the dispirate nations will draw closer in understanding and interdependance. The alternative is not worth contemplation.

  • Comment number 14.

    Must admit I am becoming a bit weary of all these blogs concerning economic woes both here and abroad. At the end of the day there is a common theme whether we are talking about USA mortgage lending or UK deficit or Eurozone troubles. It is irresponsible lending by Banks coupled with irresponsible borrowing by both the private sector and national Governments. The Banks however must take the lion's share of the blame. Most large Banks are run by people with little banking knowledge whose only aim is to make their Bank bigger than anyone elses. Goodwin was a prime example. He had probably never heard of the following :

    1)Know who you are lending to i.e. have as much info as possible about them

    2)How much do they want to borrow. Is it a reasonable amount compared to their income/asset position

    3)Can they comfortably service the repayments even if rates rise and/or income reduces.

    4)Is the security offered adequate to cover the borrowing with a reasonable margin and is it easily turned into cash if it is necessary to call up the security.


    These principles can be applied to individuals/businesses of any size and Governments. Regrettably they have been largely ignored in the rush by banks to lend more and become "big players" made worse in the USA, here and in Europe by weak regulation. Fortunately some countries have had strong regulation but they are seldom mentioned as our media adhere to our Government's stance of a " Global crisis" as if every country was as badly affected as us.

    I regret to say that I fear it will happen again unless bankers (a) learn the principles of lending and (b) become very strictly regulated . I doubt either of these will happen.

  • Comment number 15.

    It's hard to see eurozone surviving. The core problem is the existence of huge internal balance-of-payments imbalances, which have been financed first by private sector borrowing amid the real estate bubbles and now by the government borrowing. But to correct these you need to lower wages in southern europe by 20-30% relative to Germany. That means practically just as bad deflation and skyrocketing unemployment. Spain for example already has 20% of unemployment, add another 20% and you are at 40%. Major political changes usually start to when unemployment level reaches 30%...

    To avoid breaking up of eurozone, there would have to be structural changes to the eurosystem itself. Many proposals have been put forward, I personally like those by Warren Mosler.

  • Comment number 16.

    Can it really be so that a German worker is intrinsically more "efficient" than his UK, Spanish or Greek couterpart. Having lived in Germany for the last six months I'm not sure I can really believe there can be that big a difference other than salaries are higher and holidays more generous (than UK), but that would mean they would have to be even more impressively efficient. Something doesn't add up.

  • Comment number 17.

    #12 from John_from_Hendon

    Sorry John, but with all respect, and no matter what planning has been done, I have to totally disagree. It is essential for a currency like ours to be issued and controlled by the sovereign government. It ought to be for all the eurozone too. All the while we have a sovereign government in the UK, by controlling/issuing the currency, it maintains its freedom of action and, as a country, we cannot go bust. A nice place to be in at the moment; lots of other nasties may happen to us, inflation and falling exchange rates for example. But going bust – never.

    If we were truly a United States of Europe, an analogue of the US, then we could fall under the spell of a single currency. But for the foreseeable future, say the next 10,000 years, I doubt such a large and disparate group of countries will 'get it together' as a democracy. The EU already has too many non-accountable [to voters, that is] organisations. It hasn't produced an audited accurate set of accounts in years.

    I wish I could find the article, but when the USA became a single currency zone, I seem to remember that some states joined in at the wrong rate, they then became poor and have mostly stayed poor. Not a bright move.

    If you want to join such a financial system as the euro yet more closely …........... Well sorry but I'll vote against you every time

  • Comment number 18.

    When the referendum was held for the Common Market that is what a majority voted for. What we have now is not what we expected. We did not vote for federalism, for single currency,for central government or for corruption (the EU accounts have never been approved by the auditors). I voted yes to the Common Market, probably one of the biggest mistakes of my life. I hope that I live long enough to see both the Euro and the EU disappear into obscurity. It has cost everyone in Europe a lot of hard earned money, a considerable amount of which has gone into the pockets of those who have enviegeled themselves into unelected positions of power. It is high time that our elected representatives at Westminster started to govern this country and tell the rest of Europe to look to their own problems.

  • Comment number 19.

    To all who would like to join the eurozone, please can I suggest you read
    http://bilbo.economicoutlook.net/blog/?p=7909 and all the other blogs associated with the eurozone.

    If you can fault Professor Mitchell's reasoning, please let him and all the rest of us know. I have no real sympathy with the anti-european sentiment of UKIP and all the others, apart from their 'don't join the euro' mantra. I disagree with their voiced reasons, mostly they are poorly argued and appeal to prejudice; but these blogs give reasoned economic argument. They'll take time to read and work through to understand the relevant points. Stick with it, its enlightening and I believe correct.

    Persuade me otherwise with a reasoned point by point rebuttal please

  • Comment number 20.

    In response to NatTheImpaler #16

    Germany was financed to a great extent by American banks prior to the Second World War, enabling the pre-war industrial boom and the armourments industries. Following the destruction of Europe the Americans again financed the national recoveries. The difference is that the UK financed the war from its Empire; borrowed hugely from the Americans (lease/lend - moth-balled military equipment at inflated prices) and following the war again borrowed from America to reconstruct a destroyed nation. In all of this the Americans profiteered leading to extravagant post-war boom; Germany recovered and became the industrial base of Europe (as pre-First World War); the UK finally paid-off its war debt to America in the late 1990s. Our industrial base was destroyed during that war, along with most of Europe, but we as a nation had learnt to rely on our Empire to fund our needs and post-1945 we were losing that an increasing rate. Hence, America rich, Germany productive, UK bumping along in boom and bust for the last 65 years.

    As to the holidays, I blame that on Henry VIII and the introduction of the Protestant work ethic and the British climate. All Catholic countries have a plethera of "saints days" and "revolution celebrations", our Protestant work ethic allows us 4 religious and 4 "bank holidays" - hence the greater fixed holidays on the European continent. Meanwhile, the warmer European climate has necessitated a longer break during the middle of the day (siesta in warmer climes, a reasonable lunch in the cooler northern areas). However, the subjects of the UK, unless corporate managers having 2/3 hour working lunches, have at best an hour, more usually half-an-hour, and increasingly eat at their desks with the advent of office snack deliveries.

    Research shows productivity increases with two variables, 1) a relaxed and appreciated work-force, 2) worker participation in decision making, both of which are exhibited on continental Europe. While the Victorian management of them and us provides longer and more stressful working conditions in the UK. Japan a nation that exhibits 2) above and some of 1) was held as the model for productivity, to such an extent America enthused their industrial practices (though with slightly less worker consultation). Since the "industrial revolution" the UK has slid increasingly into extremes of class - with "landed wealth", "new industrial wealth", the "middle-classes of trade and bureaucracy" and the "working-classes, skilled, semi-skilled and unskilled". The wealth from above is used to manipulate the strata below, whereby the landed gentry subsume the industrial wealth, while the middle-classes aspire to attain wealth and status, the working classes fracture into aspirant skilled workers, semi-skilled attempting to gain skills, and the denegrated unskilled (famously portrayed in That Was The Week that Was). To be an engineer in Germany is seen as an essential role, while to be a classicist/academic in the UK far out shines such mundane things as "making things". Our educational system perpetuates this disparity, where to be vocational is seen as failure, to make things an unnecessary burden. The famous description of the Uk as "a nation of shopkeepers" (much loved by Margaret Thatcher) highlights the disparity between the producers and the sellers, ultimately leading to the dependancy on the financial establishment (where the majority of the CEOs have PPE or Classics backgrounds).

    Time for real change, an overthrow of the classic Platonic model of the worthy leader, greater participation in smaller scale activity by the people for the people. The British were the first to demonstrate the strength inherent in the "will of the people" with the removal of two despotic Stuart monarchs; it was an Englishman (Tom Paine) who layed the philosophical foundation for the American and French revolutions and the notion of citizenship that prevails in Europe. Yet, we the true founders of "peoples' revolutions" remain subjected and abused by the minority (7%) of the population.

  • Comment number 21.

    I feel sorry for Stephanie Flanders. It's clear there is political pressure on her now that is affecting the choice and perhaps content of topic, and it's clear she does not like it.

  • Comment number 22.

    Ms Flanders you wrote : 'Crucial to how this turns out will be Germany - where many are FURIOUS (my caps) at the way things have gone. They don't like the idea of bailing out other countries at all.'

    I returned to the UK from Germany last night. I was away from the UK for many weeks. The word 'furious' seems by a wide margin an inadequate description of the commentary I heard from all quarters.

    There seems to be a smouldering gut-wrenching resentment against the PIGS that may well break into real contempt and total lack of respect...to the POINT where many Germans would quite gladly sue for divorce whatever the consequences. Many want their unfettered independence back: the Euro be DAMNED and with it most of the other 'feckless' countries of the eu-zone.

    Are EU Govts nervous because they are inadequate to the task at hand ? And swathes of the Eurozone electorate can and do smell this fear ?

  • Comment number 23.

    #18
    "When the referendum was held for the Common Market that is what a majority voted for. What we have now is not what we expected. We did not vote for federalism, for single currency,for central government or for corruption (the EU accounts have never been approved by the auditors). "


    Keep up or leave the EU. The EU has evolved like all healthy systems. It needs to evolve at a faster pace to put the current 'storm in a tea cup' behind them.

    Over the past 20 years the UK has played a negative part on the side-lines and allowed others to shape the EU.

    If the UK leaves the EU consider the following scenarios:

    1. The UK becomes another Japan.

    2. The UK becomes another Australia - farming and mining.

    3. The UK becomes a theme park with lots of warm beer and Morris Dancing.

    Both 1 and 2 are laughable. Poor education system and low R&D screws the first. The second is ruled out due to insufficent mineral reserves and small land area.

    That leaves 3...

    Our future is bound to Europe more so than ever. As for those who don't want to join the Euro, don't worry, do you really think France and Germany want Greece 2.

  • Comment number 24.

    It is a basic law of the jungle that the strong will, at best, create a symbiotic relationship with the weak; at worst, chew them up and spit them out.

    The German economy, and to a lesser extent the French economy, have enjoyed a symbiotic relationship with fellow eurozone members; but let us not be decived that this was a relationship of equals, or that it involved tranactions of equal benefit.

    The EU is not the USA, and and its heart, never can be. Competing cultures and economies will see to that - no matter what the fantasists may think.

    A hardnosed view of recent EU economic activity shows the familiar pattern of the strong exploting the weak, with little thought for long term outcomes and consequences. For this the German and the French governments should hold themselves culpable. It's no good German economists saying other Eurozone economies should be run like theirs, 70+ years ago the world was taken to the brink when a madman wanted to impose his vision on all of Europe.

    Either we accept, and respect diversity, or we condemn ourselves to faceless uniformity and grey Mao suits. You can't have both, just as we can't, and I don't accept we ever will, have an homogeneous european economy.

    Trying to impose economic uniformity throughout Europe, without a greater degree of politcal convergence, was always going to be risky. When viewed from the perspective of the debacle over the putative EU constitution, and the subsequent mish-mash that is the Lisbon treaty, should be proof enough that those in Brussels, and beyond, are liviing on different plane to ordinary european citizens. We do not want to merge our political identities into an all consuming whole. The recent financial crisis merely brought this fact into greater relief in the minds of europeans sooner than was expected - or hoped for - by those who take the self-delusional approach that, somehow, we will all muddle through.

    If the larger EU eurozone economies refuse to take their repsonsibilities seriously, then each new economic crisis (and let's not pretend this will be the last) will merely serve to highlight, each and every time, the fundamental structural flaws within the Euro experiment. For my part, the Euro should be consigned to the dustbin of history.

  • Comment number 25.

    #17. SleepyDormouse wrote:

    disagreeing with my #12 (on the Euro)

    There are so many aspects and details of you post #17 which leave out considerable chunks of reality to suit your argument.

    I want fiscal union. You don't. I want it because I want the efficiency of the Euro to benefit all the citizens of the UK and its businesses. I don't know what financial and commercial reason you have for not wanting it. I also want it because I have a strong dislike fro giving bankers extra opportunities to rip me off. You presumable love to see bankers stealing your money.

    And by the way neither I nor you won't get a vote - no matter what the Tories say! We may be asked some irrelevant question in a referendum, but it will not be in or out of Europe or the Euro! (That is what you want isn't it?)

    You also base your argument on "the UK, ... as a country, we cannot go bust" Are you too young to remember going bust when we had to call upon the IMF? You really should think more before you write half truths that give others such an easy opportunity to refute your arguments!

    A currency such as the Euro with enhanced management systems and 600 million people using it is far far more secure than ours with just 50 million using it. Look at exports for example. one of the reasons that the Yuan and the dollar are so formidable is that in fact the majority of their trade is internal and not subjected to the risks of fluctuating currency exchange rates - where as a substantial part of the UK's is exports and we are critically dependent on maintaining medium and short term stability of exchange rates. If we we in the Euro most of our trade would be internal and our manufacturers and holidaymakers would have certain costs and prices - this is a huge advantage to growing trade - what is what we are about isn't it? But again I feel that you are either a banker or a fellow traveller of bankers. Bankers make their money on the variability of financial quantities and exchanging money and it is they would really don't us in the Euro. Really, after all we have seen related to the way that bankers have destroyed our national accounts, but sovereign debt and personal debt can you really be serious that you want to support bankers!

    Please reassess the real benefits of the Euro and forget, if you can, the blandishments of Little England. We need to be part of the Europe and the Euro for the benefit of all of our poeple and all of our businesses (except bankers!) and the jobs of our people.

    By the way I still have all of the Bank of England's practical plans to introduce the Euro in the UK and the detail of the switch over. Most of the stages and practical difficulties had been overcome - the only problem was Gordon Brown - now thankfully he is gone, the Tories will revert to type as they have already shown signs of doing and do exactly the opposite of what they pledged to do, as the always do. Every step towards Europe has been taken by Tories who have resolutely declared they will not do so (that is after Ted Heath - a Tory - joined) and do the exact opposite. You should have noticed this if you are belligerent anti-European and voted Labour!

    Staying out of the Euro will hold back our recovery for years and hurt our people and if that is what you want you really must be a banker!

  • Comment number 26.

    Germany is a creditor to Greece and co just as China is to the UK....China lent Brown billions at low rates, Brown tried to use that cash to buy the election by increasing NHS etc wages and employing millions more on the government payroll....but all paid for by debt....he avoided the sticky question of when that debt would have to be repaid, and by whom...until it all went wrong and he was fiscally embarrassed. Labour's solution to this debt is to borrow yet more money to keep up appearances....but now not only would they have to pay all those extra workers employed on the government payroll but also capital repayments and interest repayments. The interest alone would pay off the defence budget. The Chinese have already downgraded our debt to AA- because of our inability to repay it....is it wise to think that we can save ourselves by taking on more debt?....would you on your credit cards?.....like trying to get airborne by pulling yourself up by your own bootstraps. Clowns.

  • Comment number 27.

    I don't have a objection to the Eurozone or the Euro. I believe it can be made to work. I also believe that it can be a new type of currency system that has not so far existed, and could be viable.

    First, they have to stop trying to make each country behave the same (often because of geography): some will always need to run larger deficts than others - that's unavoidable - no more fiscal austerity - focus on what's needed to improve productivity in each respective economy.

    Second, rather than insist on fixed defict/GDP ratios, each country should focus on parts of their economies that are not large enough (manufacturing, service etc) and have funds available from the ECB to invest in rebalancing their economies. Just as the Regional Development Agencies have been doing in the UK.

    Third, basic government functions (like tax collection) need to be improved across Europe (and especially Greece) to ensure primacy and credibility of individual governments are assured.

    Fourth, when an economy has rebalanced as much as it can, and still needs to borrow more than other eurozone countries, to get by, then the ECB should purchase their debt - then hit the delete key! This will depreciate the Euro, but it is no different from a region of the UK not doing as well as other regions, and the pound devaluing as a result - that's perfectly okay, because the burden is carried (like in the UK) by the whole Eurozone!

    Kind Regards
    Charlie

  • Comment number 28.

    "The Chinese have already downgraded our debt to AA- because of our inability to repay it....is it wise to think that we can save ourselves by taking on more debt?....would you on your credit cards?.....like trying to get airborne by pulling yourself up by your own bootstraps. Clowns." [alstod 26]

    I don't believe you are correct. 80% of our debt is owed to UK pension funds and other UK investors - and they are queueing up to buy more, as UK debt is a safe bet. Much of the rest is owed to the Bank of England - i.e. us! Very little is owed to the Chinese.

    So we can endlessly restructure that debt for a start, and given that we, as a sovereign fiat currency, don't need to issue debt, we can spend anyway (we are the monopoly issuer of our own currency), we can can continue to spend, with or without issuing debt - God save the queen!

    For more information see:
    http://bilbo.economicoutlook.net/blog/?p=10384

    Kind Regards
    Charlie

  • Comment number 29.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 30.

    27 and 28 Charles, you make persuasive arguments it would seem for both the Euro and the Pound. Do you think we should join the Euro?

  • Comment number 31.

    I think there is a great future for the euro. Before we get too smug, we just have to remember the pound has still virtually devalued 20% against the euro. Not bad eh for a currency considered with so much contempt and so maligned by the British!

  • Comment number 32.

    I don't understand!

    You lend me money so that I can buy your products. But if I can't raise the money to pay you back either you lose, or I borrow money from a third person to pay you and then I owe them money. But if all I can manage to pay back is the interest and never the principle they are still the loser. Unless they say that they now own me, but as I am incapble of creating wealth, where is the value in that? But I will still have your goods and anyway you won't force me to go under as then you (or they) wouldn't even get the interst payments. Is this called economic order?

    Next. An export lead recovery. I export to you so wealth flows in to me. You export to me so wealth flows in to you. Now unless each of us are creating wealth internally, this seems more like a picture by Escher than a sensible economic policy.

    I must have got it wrong. Could someone help me please!!!

  • Comment number 33.

    Would the Euro work better if countries had less freedom to act independantly? It would be a little like a well organised family with some agreed joint expenditure and limited freedom for individual expenditure. A family with free for all expenditure is a doomed family. A family with a feckless member in their late teens, should give them a limited number of chances before they are (to put it politely) kicked out. The advantages of the Euro could be great, but what we need is an Office of Euro Budget Responsibility. I think propping up French and German Banks might prove more sensible than propping up a country that has been less than truthful and still can't accept its position. It'll focus the minds of other countries, to their long term benefit.

  • Comment number 34.

    7.
    "over the years of debate i have never heard anyone say, what should be blindingly obvious, that a single currency can only work in a single language environment:"

    Thats just not right. Look at India, China which have dozens of languages. Even rthe USA has extensive Spanish speaking community.

  • Comment number 35.

    30 Ilkeston Tim

    I never thought I would say this but I now do think it is time for the UK to join the Euro and position itself along with France and Germany at the centre of the EU, making the running and not playing catcth up. Blair had this opportunity at the start of the last decade when we were in a much stonger postion (remember the big 3 meetings) but decided to go in with Bush and the US which has ultimately been very damaging for Britain.

    Witness what is going on with BP (Not saying BP should be able to get out of it's obligations to sort out it's own mess - it most certainly should) - the Americans are getting desperate and will sell out anyone to get their hands on the resources and money to support their vast consumption.

    I think now there are as many postivives - if not more - than negatives to joining the Euro.

    In Europe, shaping Europe is the way forward - the 20th century was about nation states. The 21st will be about continental power blocks.

  • Comment number 36.

    The eurozone has a lot of challenges as we go forward Stephanie. But the individual countries have their own problems. Those of Greece have been well documented but some of the other countries less so. For example I discovered this analysis on the notayesmanseconomics web blog about Portugal.
    "She in effect has had her own lost decade of low growth in the 2000s when most other countries were having booms and expanding. Portuguese economic growth crawled along at 1% a year."
    If she could not grow much in the boom times it is hard to see her doing so as she embarks on austerity along with much of Europe. http://notayesmanseconomics.wordpress.com

  • Comment number 37.

    Is the answer to the headline down the toilet?

    The Euro is unsustainable in it's current format, and the sooner this is resolved, the sooner Europe can recover

    Otherwise the pressures on the South Med countries just get worse, and Germany just benefits even further

  • Comment number 38.

    35

    The 21st Century will be about CHina, Russia and India

    Europe is going to diminish as a power base

  • Comment number 39.

    Extremely simplistic article plenty of cliches about North and South European countries. In some comments I even saw the use of the PIIGS acronym, what a shame. Have a look at your own British figures and the last debt findings by Cameron and thank to all the anglosaxon lobby (FT, WSJ, rating agencies and NY and London funds) that you are not part of the pigsty.

  • Comment number 40.

    I entirely agree with the logic underpinning posts 12, 25 and 35 (JohnfromHendon & StartAgain). Unfortunately the political reality is, if the coalition government tried to take us into the Euro, the Conservative Party would split, with the Tory majority accusing the leadership of betrayal and capitulation to the LibDems. There have, in our history, been two major Tory splits - over Corn Law repeal in 1846 and Protection in 1903. The result was that, in each case, the Tory Party was out of power for many years. Mr Cameron knows this, so will avoid action leading to a repeat. So UK euro entry isn't going to happen.

    As far as the current members are concerned, it is clear that, certainly as far as Greece, Spain and Portugal are concerned, their economic policies since 2000 mean that either they impose severe austerity on their populace for the next 5-10 years, or they leave the euro and devalue their debts. Actually, as long as this process of withdrawal, devaluation and partial debt default is managed, it would be very healthy for these economies, dependent heavily as they are on tourism from Northern Europe. If, for example, Greek prices became 20% cheaper vis-a-vis German & Dutch ones, their tourist industry could benefit, which might kickstart some economic growth.

    The banks in Germany & France would have to face up to the losses, so would need new capital injections. There would be another procession to the Middle Eastern sovereign wealth funds. But I am sure that,if the process were managed, it would not be disastrous for financial institutions - although it would be painful.

    I think that it is a moot point whether any other countries might have to follow those three. The Italians have large government debt, but a low current deficit, so, unlike the UK, their position is not deteriorating sharply. The Irish have acted with great determination to deal with their problems. It may be that only the three worst cases would be forced to leave the euro.

    Once the euro had been reduced in size to those countries for whom the common exchange-and interest-rate regime is not an insuperable hindrance, the history of the EU suggests that action will be taken "in the direction of ever closer union", so we may see moves to greater fiscal control by the centre of the EU, with some sort of Eurozone Commission overseeing and directing the national budgets of remaining Eurozone members.

  • Comment number 41.

    39. At 09:31am on 15 Jul 2010, Barcelona2010 wrote:
    Extremely simplistic article plenty of cliches about North and South European countries. In some comments I even saw the use of the PIIGS acronym, what a shame. Have a look at your own British figures and the last debt findings by Cameron and thank to all the anglosaxon lobby (FT, WSJ, rating agencies and NY and London funds) that you are not part of the pigsty.

    If the article is simplistic, then your condemnation of it is even more so

    Tell us your non-simplistic view?

    The Spanish Banking crisis is still to happen, so don't get too carried away.....

  • Comment number 42.

    #25 from John_from_Hendon

    Many thanks for such a full response; a very interesting collection of thoughts and examples that gives me a lot to think about. I had realised that the Tories seem to be the party of Europe, fascinating isn't it.

    No I am not a banker, just and ordinary person trying to understand what on earth is going on and trying to decide if the right policies are being followed. I started serious reading about 3 months ago altough I have always taken an interest. Mainstream economic ideas as currently practiced seem to be detrimental for the many and put money in the pockets of a few. Not a situation I like morally or ethically. 6-7 weeks ago I came across the website of Professor Bill Mitchell. He has a vast resource of economic thoughts and ideas. I commend them to you. He expresses everything far better than I currently can, I'm still learning, and am likely to misrepresent/misinterpret what he has written.

    I have found so far that his ideas make sense in the main, with one exception. That is his thoughts on Job Guarantees; I applaud the objective but I doubt the suggested mechanism will work, so I am reading one of his books about it.

    As far as the euro is concerned please can I suggest you read
    http://bilbo.economicoutlook.net/blog/?p=7909 and all the other blogs associated with the eurozone.

    If you can fault Professor Mitchell's reasoning, please let him and all the rest of us know. I have no real sympathy with the anti-european sentiment of UKIP and all the others, apart from their 'don't join the euro' mantra. I disagree with their voiced reasons, mostly they are poorly argued and appeal to prejudice; but these blogs give reasoned economic argument. They'll take time to read and work through to understand the relevant points. Stick with it, its enlightening and I believe correct.

    Persuade me otherwise with a reasoned point by point rebuttal please.

    I accept that the UKs future really needs to be with Europe more than US. In 50 years, the change in US demographics will mean that they will almost certainly be Asia/Latin America facing; not looking at Europe.

    The type of union you see for Europe would have to be a totally Federal State in which all important affairs are conducted from the centre. I see little sign that Germany and France in particular will be willing to become subservient to a political elite centred in Brussels. Without that, the euro won't work properly, ever.

    I was around in the 70's and yes it was humiliating. At that time we had a fiat currency and there were alternative policy options (those in the euro don't have these), but they chose to go to the IMF. We didn't have to, it was a political choice, fair enough. But I now realise the vast damage done to the UK economy by going that route. Mainstream economic theory in the raw was used against this country's best interests.

    I would like to persuade you to to look at the home page of this website above and click on the 'one page archive' tab at the top. Go down to the bit headed '101' and read the papers on deficits and fiscal sustainability. You may feel its total rubbish, in which case, please let me know here. If you agree, again, I would like to know. At the very least it may give you pause for thought and further reading. I would caution that the ideas seemed wrong and counter intuitive when I first found the site. I didn't 'get it' at first. (My first reaction was they are advocating printing money, when you read enough, I believe you will see that it is not, it is different and more than that).

    Its a new outlook for me, and the only one that does produce a different way forward economically. We need something different - quickly.

  • Comment number 43.

    #7. markkw wrote:

    "over the years of debate i have never heard anyone say, what should be blindingly obvious, that a single currency can only work in a single language environment..."

    The Swiss franc works exceedingly well in a multi-lingual environment.

  • Comment number 44.

    32. At 07:24am on 15 Jul 2010, Boilerbill wrote:

    ...

    Next. An export lead recovery. I export to you so wealth flows in to me. You export to me so wealth flows in to you. Now unless each of us are creating wealth internally, this seems more like a picture by Escher than a sensible economic policy.

    I must have got it wrong. Could someone help me please!!!
    =====================
    This mushroom began to puzzle over these same questions some years ago, and was greatly helped by reading "The Age of Uncertainty" by one Professor Galbraith. (Written in the 70's as the companion volume to a BBC series.) Recommended reading.

    However, subsequent to that, and with a bit more reading, I think there are two fundamental errors in common economic understanding which do not seem to be addressed.

    The first error is that profit does not equal net growth, but we are taught that it does.

    This answers your question. You are right that two countries exporting to each other cannot both profit. If there is to be profit, then someone has to win, and someone else has to lose. However, two countries whose populations (or machines) are working hard to provide goods and services that people on both sides of the border need or want (and can afford) then both nations are likely to increase their standard of living and personal "wealth". "Export" is no different to "exchange".

    The second error is like unto the first (to coin a phrase). That is, that increasing the velocity of money (e.g. by re-investing savings) does not create "growth".

    Growth, defined as an increase in net wealth, depends what the money is being spent on. Spending your money rather than hiding it under the bed, MIGHT enable growth, but might be simply dissipative.

    By putting these two errors together in the public mind, we (as a society) have been sold a fallacious system in which debt-fuelled consumer spending = growth in "wealth". (Take a look at the equation for GDP).

    Actually, we mushrooms are gradually coming to the realisation that accelerating the velocity of money through debt-fuelled consumer spending results in inflation of asset prices beyond affordability, decreasing availability of the world's resources, increasing volumes of landfill, enslavement of whole populations of mushrooms and massive profits accruing to the creators and purveyors of debt.

    Physical war used to be used to rapidly increase the wealth of the victors at the losers' expense (see 'British Empire' aka "armed robbery"). But nowadays all war does is destroy the things that local people have worked so hard to build. If you bomb a bridge, wealth is destroyed. There are no winners.

    In today's society, economic warfare is the quick-profit tool of choice. If you can set prices, interest and exhange rates such that individuals and governments are forced to borrow from you simply to survive, and make sure that whatever they spend the loans on doesn't allow them to create lasting wealth, then you have a steady stream of profit from an enslaved society.

    In the case of individuals, try getting to work without a car, or buying a car without a loan, or paying off the loan faster than the car depreciates. Can't be done.

    In the case of Governments in the Eurozone, try keeping up with the ever burgeoning EU legislation and balancing the budget without borrowing from the ECB. Can't be done.

    See the pattern?

    Which is why the policy makers in the EU need a kicking, and all banking activity ( not just the speculatory sort) needs to be regulated for the good of the whole eurozone society, not just for the profit of the fortunate few.

    imo, political union is the only way forward for the eurozone, but it will probably come at the price of a (slightly) fairer redistribution of the wealth from the profiteers to the serfs. Tough on Germany and France, but some might say they have been milking the system for long enough. Anyone else remember Butter Mountains, Wine Lakes, the CAP, foreign farmer's lorries being burnt on the streets while French police watched etc. etc.?

    If there is to be a compromise, I doubt it will make a significant difference to the balance of power. Shylock will find a way to get his pound of flesh.

  • Comment number 45.

    Europe is now trying to act as if all is now OK. However there are still clouds on the horizon. Greece as an issue has not yet gone away, as a member of the IMF team in Athens was reported as saying "either the problem was not as big as was first thought or the Greek parliament have performed a miracle. We know that the first point is not true and we don't believe in the second so what is left?" The group of PIIGS is still an issue that will not go away. Portugal is struggling with it's debt and it's economy is in the doldrums. Ireland has so much national debt that it is estimated that it will take at least 20 years to regain it's lost ground and even then it will not regain it's tiger status which was achieved from dining off the EU table and not through it's own endeavors. Italy is is just an enigma and will always be the same. Finally we have Spain. a country in free fall with 20% unemployment and it's national debt under great scrutiny. With all this on it's plate what do the EU do. Get the house in order, No, they plan to expand the Euro. As the ECB have said themselves that unless there is central control the Euro will not succeed. So unless there is going to be the creation of a United States of Europe with all nations handing over it's sovereignty to Brussels the Euro at best is doomed to bumble along from crisis to crisis. And at some stage the pressure will be too much. Or you may well be one of the few who believe that all the nations will hand over their sovereignty. For this to be a success all would need an equal voice, so you can just see Germany being prepared to hand over control of it's finances to an unelected central body who's policies often differ from that of it's own. If this is to work what is needed is a clean sheet approach. For what is there at present is not fit for purpose. The chances of the bureaucrats in Brussels want now to give up their cushy unregulated seats of goverment is quite slim, or should I say non existent. As if you think Greece was bad the EU is even worse as they can't get their accounts signed off and have not been able to for too many years now. What is needed if this going to work is government by the people for the people with total transparency. What we have currently is goverment by the unelected few with no transparency.

    Just as a foot note it is interesting to see that the majority of Germans feel that their goverment should not have bailed out Greece and that they are refusing to accept the Greek Euros. So much for unity....

  • Comment number 46.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 47.

    This shows that there is little common ground between the mediterranean countries and the northern european ones. While focused on finance, this is the same in all ares of government. If the euro falls, the EU must surely follow.

  • Comment number 48.

    SleepyDormouse wrote:
    "This is an unelected body that will do what it thinks is best without really being answerable directly to the electors anywhere within the eurozone "

    I don't know where you from but perhaps in your country the central bank is elected. I know of none, though.

  • Comment number 49.

    42. At 09:58am on 15 Jul 2010, SleepyDormouse wrote:

    Sam Mantra different tack.

    This will not work as it requires completely open borders and acceptance of a different type of currency however it will still be a currency and at some stage will be traded and if so if there is no set amount to fix its value. Hence the currency will always be undervalued and put the users under untold pressure. If you trade in coconuts they have an intrinsic value. If you trade in Euro it is only as good as the issuer and the number of Euros in circulation. If you just print more then the value will decrease. Soon no one will want your currency, tokens Etc. That is why for so many years people wanted dollars rather than their own currency. They new that that they were more stable.

  • Comment number 50.

    The Europe watchers are wrong.
    Europe has just one way forward.
    One European Nations one government and all members states should be know as region of Europe sooner this happening is better.
    John

  • Comment number 51.

    "Spain, Greece, Portugal and the rest all now face a long hard slog re-balancing their budgets - and their economies. To make the numbers add up, they need a strong domestic recovery elsewhere. Right now no-one can promise they will get one. "

    This is the meat of the sandwich - they all need recovery, for which they all need growth - but their main export markets are each other!

    That means this road is blocked - their only other hope is cutting public services so their expenditure is less than their income. However we all know this is going to create further unemployment and actually reduce growth - exasperating the problem.

    This is why I have been saying for a long time now - it doesn't really matter what the politicians or Economists say - they can no longer affect the outcome. It's just a case of waiting for the end game now.

    The 'great hope' touted was that China will become a new consumption market and create the demand to bring the world out of it's current mess - but the latest growth figures from China don't support that optimism.

  • Comment number 52.

    To Markkw and all the other sad monoglots: why a single-language community? Learn another couple. Babies do it all the time. Almost everyone in Brussels (apart from Cathy Ashton) speaks at least two languages. I am British and can manage in four. It's not rocket science and those who speak only one language have only themselves to blame. Many of them don't even manage the one very well. Out deputy prime minister (unlike our foreign secretary) shows the way. David Beckham has basic Spanish and now decent Italian. Hasta la vista, baby. Auf wiedersehen, pet, You can do it. And if you can't don't assume others can't.

  • Comment number 53.

    #45 PuzzledMushroom

    I'd be interested in your views on #42 that I wrote to John.

    Are you advocating Modern Monetary Theory or something else?
    Have you seen and are you influenced by the views expressed at
    http://bilbo.economicoutlook.net/blog/

    Should the UK be involved in such a political union as you have described?

  • Comment number 54.

    43. At 10:03am on 15 Jul 2010, rbs_temp wrote:

    "The Swiss franc works exceedingly well in a multi-lingual environment."

    The 3 latin based languages of Switzerland (German, French, Italian) are hardly comparable to the spread of languages across the EU.

    ...and nor are they comparable to the spanish speaking areas of the US as someone else mentioned, the vast majority of the US speak American and those who speak Spanish have American as a second language - I somehow doubt that many Greeks speak French or Spanish, or Portuguese.

    ...and India was a set of seperate countries - forced together by colonialism - just another reason why their progress has been hampered and why their economy never gets off the ground.

    Anymore examples that multi-language single currencies work effectively?

  • Comment number 55.

    47. At 10:29am on 15 Jul 2010, Peter Johnston wrote:
    This shows that there is little common ground between the mediterranean countries and the northern european ones. While focused on finance, this is the same in all ares of government. If the euro falls, the EU must surely follow.


    I take the opposite view. The restructuring of the Euro could help the EU if done properly

  • Comment number 56.

    "27 and 28 Charles, you make persuasive arguments it would seem for both the Euro and the Pound. Do you think we should join the Euro?" [Ilkeston-Tim 30]

    Tim,
    I don't think we should join the Euro until they fix their system of currency, and even then I don't see any actual benefits to doing it. I think on balance we are better off outside the Eurozone, but inside Europe.

    Kind Regards
    Charlie

  • Comment number 57.

    "Business leaders keep euro faith

    Pro-European British business leaders tell the BBC they still think the UK should join the euro in the future."

    ...in other news....

    "White Star Line tell the BBC that they still think the Titanic is unsinkable and perfectly safe for travel, the sinking was merely teething problems which can be ironed out with some regulation"

  • Comment number 58.

    Maybe a world currency would be the answer. Flat line all the currencies and start again.
    I have always believed people only truly respect money and violence, if the money was the same we could at least do away with the violence.

  • Comment number 59.

    The future of the Eurozone is that Sterling will turn into confetti, and the UK will become a member of it to save its own neck.

  • Comment number 60.

    "This is why I have been saying for a long time now - it doesn't really matter what the politicians or Economists say - they can no longer affect the outcome. It's just a case of waiting for the end game now."
    at last stephanie is getting the picture or accepting it. How long now before the rumour that the Germans are warming the printing presses for the Deuchmark will come true, and the euro drops off a cliff.

  • Comment number 61.

    In response to honestgeraldinho #20.

    You make the point that a worker in the UK is not treated properly and hence this leads to a lack of productivity. Does the same apply to Spanish, Greek and other Southern European workers (who have nice holidays too)? I'm not so sure.

    Also the claim that a German worker is more productive does not add up when you go the shops or car show room. Everybody knows that a SEAT or a SKODA is cheaper than the equivalent VW, yet the perceived better quality of the VW means that the German worker can charge more for his or her labours.

    In reality then it is not a matter of productivity but that people would prefer to buy German goods which gives then feeds their entire economy. The only problem is that nobody else will have the economic strength to buy the same goods unless they continue to borrow from the self same German banks.

    As for transferring more econmic power to the workers, I think that has been tried. I have also worked in such a company but the behaviours are the same in that one group wants to take advantage of another, even fellow workers.

  • Comment number 62.

    Proponents of the Euro should look at the history of common currencies – specifically the US dollar or even Sterling. In the long run they lead to isolated pockets of economic activity surrounded by wastelands. Indeed, take away Federal spending in the US (particularly on the military); and primary industry, the location of which is often pinned geographically; and the underlying economic position of large parts of the US would appear even more perilous. The same trend can be traced in the UK, with the London conurbation sucking in both people and jobs inexorably.

    The problems in Europe are similar with the Germans stubbornly persisting in exporting unemployment – they even see it as a virtue. The only solution is to expel Germany from the Euro, or wait until the currency collapses altogether.

  • Comment number 63.

    Dear Cyclop2010, have a look at the Debt/GDP an tell me how many of the super competitive north European Countries are above the spanish %. [Unsuitable/Broken URL removed by Moderator]
    The famous inflexible Spanish labour market? With 20% unemployment can you call it inflexible? C'mon Cyclop2010, in Germany companies explecetely gurantee jobs for the rest of your life, in most north European countries is almost impossible to fire anyone and if you finally do it the cost is outrageous... is that what you call competitive?
    Banks, most small savings banks are over the brim in Sapin, sure the mortage burden is huge, but none big banks like Santander, BBVA, La Caixa, has had any problem as Fortis, RBS and so on. In fact they are still the best in class as you can see in the Euroepan stress reports.
    Of course Spain is in big trouble, no doubt about it, but as UK, France, Belgium, Italy and so on. In fact what has happened here is very particular and related to our own Real state crunch which has constrained the economy and affected basically the nonqualified construction workers, specially new inmigrants.
    However Bmoney is rising all over the country, which is not good of course, but the spanish living standard is not that affected as you can expect looking at the official statistics.
    What Zapatero did, wrong in my opinion, is what everybody else was doing at that moment and even the States are still defending it: fiscal policy. Now, the Germans always very cautious with the Public Deficit (don't forget is in their constitution) are forcing all these cuts.
    In my opinion some of the last events are explain by speculators which are using cheap money from central banks. Looking at the fundamentals the Spanish situation isn't it bettet or worse than the others.

  • Comment number 64.

    #53. At 11:07am on 15 Jul 2010, SleepyDormouse wrote:

    #45 PuzzledMushroom

    I'd be interested in your views on #42 that I wrote to John.

    Are you advocating Modern Monetary Theory or something else?
    Have you seen and are you influenced by the views expressed at
    http://bilbo.economicoutlook.net/blog/
    ====================
    A. I haven't read that blog, or notayesman, or the FT, so "no comment" as the saying goes :)
    I have a lot of catching up to do...and fear being swamped by the arguments of each new "voice of reason" tht I come across. Will get to bilbo soon. But my gut feeling, as I have said before, is that a fiat currency is only as good as the amount of imports you can buy with it.
    ###################
    Should the UK be involved in such a political union as you have described?
    ================
    A. We were never given a great deal of choice in the matter. The GB government(s) is/are now in thrall to EU diktats. (Such as cabs on all tractors, use of metric scales in shops, working time directives, WEEE directives, ad infinitum.) And if you believe, like I do, that real politics (as divorced from using a power-base to support profiteering) is the imposing of ideological values on a population through the enforcement of statutes, then by submitting to EU statutes, we have fallen into a political union with the EU by default.

    Moreover, political maps in the classroom usually have national boundaries drawn on them. Are there any national boundaries around these shores to stop the eastern EU population from flooding the construction industry with cheap imported labour, or swamping the social services of Peterborough (as was famously reported earlier this year)? Sorry, rhetorical question...answer is of course NO.

    Whether or not that is a good thing for Good Old Blighty? For me, the answer lies in the balance of payments...have we got out of Europe as much value as we put in?

    What good keeping our fiat currency to pay the serfs in the castle, if we allow all and sundry to raid the coffers and carry it away to faraway land?

  • Comment number 65.

    I read with great interest all these previous comments. But we are missing something so I made a few calculations based upon GDP (IMF 2007 data) as an indicator. The total GDP of Germany, France, Italy, Spain and the Netherlands (the main powers in the Euro zone) was $10 188 billion. That for USA, Japan and China (the main powers not in the Euro zone) was $21 476 billion. Interestingly, in the same year, Russia, India, Brazil and Canada totaled another $ 5 044 billion.

    This brings me to two of my points: Does anybody economist really think that Portugal, Ireland and Greece, with a combined economy of a measly $851 billion, will make any difference on the global scale if they all collapsed and went on social security paid by Germany and France for the next 10 years? And using comparable UK data of a meager GDP of $2 772 billion, will it make any difference to the world economy if we have our own currency or whether we join the Euro?

    The PIG issue is a side-line. They are in trouble yes, more from corrupt practices than economic, but not really on the doom and gloom radar. The tax-paying factory worker in the Ruhr doing a 10-hour shift probably needs more help than the coffee-drinking sunbather on the Portimao or Corfu beaches. As for Germany and France, they must be so happy that perfidious Albion is out of the Euro. Look at the streets of London. When was the last time you saw a commodity that originated from a UK company. Cars, computers, mobiles, shoes, bacon, potatoes? Anything?

    Which brings me to my third point. Money is a commodity. We use it (debt), make it (print) or sell it (export). Nothing more. Like oil, we are however, dependent on it. But it only has value when you use it. Getting into mountains of debt is not so bad. Because, as we all know, owing $1 then I have a problem. But owing $1 billion then the lender has. This is the way of the global economy of debt and risk. China and Russia are our friends because we owe them so much. Germany and France also. Stop this nonsense nationalist talk masked as economics. The guy in the street is no better off no matter which currency they pay the debt in. And we don’t have the traditional option anymore of ‘going to war’ to solve our trade imbalances. Which Arch-Duke are you going to shoot? Even the 1984 scenario of continual warfare is no solution any more. We cannot blame our enemies for our mess we are in.

    In any case, I hope we don’t read so much cynicism and doubt. And looking at the GDP figures, then the despair by some commentators is out of proportion. They are misreading the data. Think globally and think of the next 50 years and not next weeks’ news.

  • Comment number 66.

    #54 I suppose Canada technically qualifies as a multi-lingual single currency area as Quebec speaks French

  • Comment number 67.

    No help in sight.

    Even world famous North Korea's free health care system is in trouble.

  • Comment number 68.

    writingsonthewall wrote:

    "The 3 latin based languages of Switzerland (German, French, Italian) are hardly comparable to the spread of languages across the EU."

    Such ignorance... Unlike French and Italian, German is NOT a latin based language...It belongs to one of the three main European language trees, Latin, Germanic, Slavic (there are more but these are the main ones..)

  • Comment number 69.

    44. At 10:18am on 15 Jul 2010, PuzzledMushroom wrote:

    "Actually, we mushrooms are gradually coming to the realisation that accelerating the velocity of money through debt-fuelled consumer spending results in inflation of asset prices beyond affordability, decreasing availability of the world's resources, increasing volumes of landfill, enslavement of whole populations of mushrooms and massive profits accruing to the creators and purveyors of debt"

    Brilliantly put.

  • Comment number 70.

    #48. At 10:33am on 15 Jul 2010, Gheryando

    Ooops, in trying to be brief, I have given the wrong impression. In name, the UK central bank is independent; so the government says. However, it would soon become obvious if the CB and the government were pulling in opposite directions. This would be unsustainable once visible to all in the outside world. Differences of opinion of any significance are, in my view, likely to remain under wraps. Government and the CB should be treated as one, take no notice of the much vaunted independence. Change the Government and get a totally different set of economic policies and the CB will need to change the way it runs its bit, but we haven't really seen this happen yet. The major parties are so scared of upsetting the city boys, they now say 'we will continue the economic policies of the last government' in the run up to the general election. So, government and the CB pursue policies directed to producing the same outcome. The electorate will therefore get a consistent package of fiscal measures. They can be changed when the electorate changes the flavour of the government. Also, consider that those in the Bank of England probably like being there, and when push comes to shove, the government has a whip hand. So I would suggest that the CB employees will alter their output to suit the requirements of the government.

    In the eurozone, things are different for most countries, [Germany and France excepted], counties like Portugal can find the ECB taking actions directly contrary to their best interests and there nothing the Portuguese voters or politicians can do if there are too few other countries to support them.

    I agree no CB is elected, but there are significant differences between UK outside the euro and those inside. It is, in my view, signifcant and should not be ignored.

  • Comment number 71.

    I read with great interest all these previous comments. But we are missing something so I made a few calculations based upon GDP (IMF 2007 data) as an indicator. The total GDP of Germany, France, Italy, Spain and the Netherlands (the main powers in the Euro zone) was $10 188 billion. That for USA, Japan and China (the main powers not in the Euro zone) was $21 476 billion. Interestingly, in the same year, Russia, India, Brazil and Canada totaled another $ 5 044 billion.
    ------------------------------------------------------------------------
    I'm pretty sure the combined GDP of those euro countries is more that 10 billion, considering Frances GDP is over 2 trillion, I assume you meant for trillion to be the unit?

  • Comment number 72.

    #64 PuzzledMushroom

    You will find that the Pound, US dollar, Australian dollar and many others are now fiat currencies and have been for many years and this has the potential to make a difference to policy options open to each country. These countries are all buying from everywhere world wide. The strain is taken in the floating exchange rate. We effectively became a fiat currency in 1971! Yup 40 years ago.

    Good luck with reading bilbo; I'm afraid you'll have to work at it to follow and understand the full significance of the approach. Its not just printing money [which is a common reaction] there's far more to it than that once you've read yourself in.

    Suggest you start on the blog in the one page archive - find the area called 101 - read about deficits [3 papers] and fiscal sustainability - first and then take it from there

  • Comment number 73.

    68. At 1:37pm on 15 Jul 2010, Gheryando wrote:

    "Such ignorance... Unlike French and Italian, German is NOT a latin based language...It belongs to one of the three main European language trees, Latin, Germanic, Slavic (there are more but these are the main ones..)"

    Oh well - 2 mistakes in 2 years - nobody's perfect (I bet you're relieved) - now maybe you'd like to get back to "criminalising women in the veil" please and not bring your linguistics knowledge to a Economics blog. I presumed German was latin based as I found it so easy to learn after learning French and Latin at school.

    The statement I made still stands - the 3 official languages of switzerland are not comparable to the spread of languages in the EU - latin based or not.

  • Comment number 74.

    Stephanie and Sleepy Dormouse,
    I hope Europe fixes its currency system, but more than that I hope they ignore the UK's austerity obsession, as where we are going (high unemployment and continued recession) is just unnecessary. Why can't we outsource or economic thinking to Professor William Mitchell. See his latest blog about how we need to increase government spending to increase growth:

    http://bilbo.economicoutlook.net/blog/?p=10704

    Kind Regards
    Charlie

  • Comment number 75.

    #74 Charlie

    Keep spreading the word about Bill's blog; but its difficult to know if anyone is reading it and what effect it is having; unless someone is prepared to admit to changing their mind. But we must keep trying. I want a better future for my kids and the way we are going is just going to produce misery.

    Its amazing how many still equate government finance to that of the household and companies. I haven't found a way of explaining it before eyes glaze over. Why won't people think or at least consider a different idea?

    Best of luck

  • Comment number 76.

    60. At 12:18pm on 15 Jul 2010, Averagejoe wrote:
    How long now before the rumour that the Germans are warming the printing presses for the Deuchmark will come true, and the euro drops off a cliff.
    -------------------------------------------------------------------------
    I can't say I have heard of the Deutschmark being reintroduced just yet. But I have heard and read in the German press calls for a smaller Euro zone. Just one small step for Germany by one great collapse for the Euro.

  • Comment number 77.

    73. At 3:01pm on 15 Jul 2010, writingsonthewall wrote:
    68. At 1:37pm on 15 Jul 2010, Gheryando wrote:

    "Such ignorance... Unlike French and Italian, German is NOT a latin based language...It belongs to one of the three main European language trees, Latin, Germanic, Slavic (there are more but these are the main ones..)"

    Oh well - 2 mistakes in 2 years - nobody's perfect (I bet you're relieved) - now maybe you'd like to get back to "criminalising women in the veil" please and not bring your linguistics knowledge to a Economics blog. I presumed German was latin based as I found it so easy to learn after learning French and Latin at school.

    I take it you did not learn Latin at your local comprehensive. I had a feeling you were a 'rebel with a safety net' a lot of bright young things are. Still we are all equal in the eyes of the Lord, even if you were raised in the slums of Hampstead.

  • Comment number 78.

    #54. writingsonthewall wrote:

    "The 3 latin based languages of Switzerland (German, French, Italian) are hardly comparable to the spread of languages across the EU."

    Straw man.

    I was challenging markkw's blanket assertion that a single currency can only work in a single-language environment.

  • Comment number 79.

    #63 Barcelona2010. The Spanish economic situation is catastrophic. Seeking to compare Spain with other economic basket cases does not change the position within Spain.

    Sure Spanish debt/GDP ratios don´t look too out of line - but look at private debt, and look at how much debt is hidden.

    The Cajas are systemically insolvent - and are only being propped up by covert Bank of Spain subsidy and a range of dodgy accounting tricks. The only hope for the Cajas is for property prices to start rising - but with around 1.6 million empty houses how likely is that?

    Banco Santander remains the big shoe to drop - and when it drops it will be game over for Spain.

    Zapatero just does what he is told to do by the EU. How did he manage to go from PlanE to austerity otherwise?

    So far the structure of Spanish society has afforded protection to the Spanish people - but the true pain has yet to begin. Spain either needs price falls of 35% or productivity gains of 35% in order to regain competitiveness - but either is impossible to achieve.

    The only hope for Spain is to exit the euro. The only way this will happen is if the Spanish people wise up and demand it. They are unlikely to do so as in general there is a view that the EU somehow protects them from their past. The problem is that it is possible for the future to be worse than the past.

  • Comment number 80.

    If the southern European countries in crisis mend their ways and pay back the money Germany et al have lent them then all will be fine.

    Back in the real world in a few months (or years if they are lucky) time their austerity plans will come off the rails (after the current governments have been turfed out) and they will come begging for another bailout.

    At that point the German public will start demanding the Deutschmark back.

  • Comment number 81.

    I'd like to suggest another solution. Keep the single Euro currency, but impose export tarriffs on countries like Germany and the Netherlands who are exporting more than they are importing.

    It might sound strange, but it seems to me to be a lot easier to implement than the other solutions suggested and has much the same affect as allowing the Southern European countries to go back to their old currencies and then devalue - ie it makes the Germans less competative and the Greeks more competative such that in the future imports and exports between the two could balance.

    The German's could even keep the proceeeds of the tariffs - and use them to bail out their own banks.

  • Comment number 82.

    77. At 4:12pm on 15 Jul 2010, AudenGrey wrote:

    "I take it you did not learn Latin at your local comprehensive. I had a feeling you were a 'rebel with a safety net' a lot of bright young things are. Still we are all equal in the eyes of the Lord, even if you were raised in the slums of Hampstead."

    Yeah, lets not get too presumptious - I learnt Latin from a book not at my local comp (which I did attend) - it was just while I was attending school - at the time I had dreams of being a linguist - but then I found that the language of 'the machine' was much more rewarding - and then the language of the shylock had genuine "earnings without labour"

    Hence me having holes in my language history - my school only offered French and German - not even Spanish was on the curriculum. Only if you paid for your schooling would you get Latin.

    I guess that's what they mean by "everyone getting the same start in life".

  • Comment number 83.

    Just as a foot note it is interesting to see that the majority of Germans feel that their goverment should not have bailed out Greece and that they are refusing to accept the Greek Euros. So much for unity....

    The majority of Germans worry about most things.

    The Euro is backed by some successful economies.

    Sterling is underpinned by one rather weak economy

    The Euro phobes might have an argument if Greece was the size of Germany and vice versa.

  • Comment number 84.

    We should move the debate away from phrases that incite finger pointing such as “irresponsible lending by banks”, etc. and rather focus on the fundamental economic policies and tools we employ.

    We only have two very blunt instruments, both in fiscal and monetary policy. We try our best to manage these two areas of the economy prudently, (now austerely) yet these are not sophisticated (enough) tools and there are no instant feedback mechanisms to help measure and inform judgment as to whether a policy decision has had a good or bad outcome.

    As far as the suggestion for the two tier currency system is concerned, there is a model for this in South Africa of the 1980s.

    There the government and monetary authorities successfully managed a two tier currency system, called the Rand and the Financial Rand. All domestic transactions were carried out in the Rand, yet any foreign exchange purchases had to go through the Financial Rand with mechanisms in place to monitor and control the demands and flows of FX in and out of the country. The driver behind this though was sanctions as the government had to very carefully monitor and control its FX reserves and assets.

    We probably do not face the specific same circumstances for Europe or the ECB (European Central Bank)to adopt this type of model, yet a two tier Euro could help alleviate pressures on the FX (Asset) Euro currency. One of the side effects of such a policy might be to accept higher general inflation levels in the generally used Euro currency areas and adjust the value of the Financial (FX) Euro from time to time, if is was not to be a free floating currency.

  • Comment number 85.

    Each of the states comprising the USA is a "sovereign" entity which has its own tax regime (apart from the Federal taxes) and issues debt in its own name. Many municipalities also issue debt under their own names. Should a state default on its debt (and some "munies" have), there is no obligation of the US Federal Government to intervene, nor would it be likely to do so. There seems to be some smoke being generated from both the pro- and anti-euro sides that there exists in the structure of any single currency an obligation to intervene when a member fails or the currency must collapse. It is the member who fails, not the currency. The only thing a single currency does, is remove the deflation tool from the hands of the defaulting entity. As you have pointed out, any decision to intervene or not is a political rather than economic issue.

  • Comment number 86.

    John from Hendon and others.

    A supreme feat of the ability to defy logic. You seem to be saying that the euro is crumbling therefore we should join as this would help our financial stability.

    If we had listened to those proposing we join five years ago we would now be bankrupt, not like Greece, we would have done it in our own way but would be hamstrung by the inability for our currency to be devalued by the markets which makes our goods cheaper and produces an increase in exports, to Europe and elsewhere.

    The thing the PIIGS got from joining the euro was the ability for the government and some large companies to borrow at lower rates. The downside was extortionate price led inflation at the point of switching and the setting of standard economic modelling across a non-standard group of countries, in effect losing a major part of their sovereign ability to help themselves if they got into trouble.

    If you believe that losing the ability to help to keep your own countries workers employed, which is just one effect of this, is being a Little Englander, well good luck to you, I suspect though that your view is held by only a tiny minority of the British people.

  • Comment number 87.

    "...
    So yes, everyone really wants to find a way to muddle through. But if the eurozone is going to get through this without radical change it's going to have to find a way to grow.
    ..."

    Really Steph? grow? ...GROW? !!! 3 words for you. Economy, Energy and Environment. How much more growing can these systems endure?

    Like a chatty doll. Someone pulls your string and the same keynesian verbiage trundles forth.

    Is common sense so outside the box?

    Penn & Teller where are you?. An episode on Economists is long overdue.

  • Comment number 88.

    Having read these blogs and responses regularly, I have to say that I am as lost as lost can be. Take this blog today, persons wanting to join the Euro are as equally persuasive as those wishing to keep sterling.
    Logic though tells me that you cannot have a single currency unless you have a single entity (ECB or similar) pulling the economic levers for all member states. This would require all states to hand over taxation, all government spending (you can't spend what you aint got), banking regulation, government bond market plus a host of other economic instruments.
    Further logic tells me that if we did hand over these instruments whom would decide how much we can spend and when confronted by a crisis such as the Euro is facing now would we as a nation be happy to bail out other nations or would they bail us out.
    At the risk of sounding old fashioned or living in the past, we should have stuck it out properly with the Commonwealth, we bailed out by joining the EEC (NOT the EU). Had we stayed the course in the Commonwealth and looked after our immigrant population better we would have a domestic population of well educated, hard working and bilingual peoples who now would really have come into their own with the rise of the Asian & African continents. Further, we almost certainly would have helped first world countries by technology transfer and zero tariffs rather than the trade barriers they currently face.
    You can call me old fashioned but I would always prefer to be master of my own destiny with my small vote with 60 million in the same boat, rather than 1 vote in 600 million all in 27 different boats.
    There is 60+ million of us clinging to a rock in the middle of the North Sea, if we can't get along and sort our selves out, what hope have we got when a faceless EU bureaucrat is shoving us along to their own agenda

  • Comment number 89.

    85. At 6:29pm on 15 Jul 2010, RW GIBBONS wrote:
    Each of the states comprising the USA is a "sovereign" entity which has its own tax regime (apart from the Federal taxes) and issues debt in its own name. Many municipalities also issue debt under their own names. Should a state default on its debt (and some "munies" have), there is no obligation of the US Federal Government to intervene, nor would it be likely to do so.
    -------------------------------------------------------------------------

    Good point, however they all consider themselves American first. In Europe we have a different model and most would declare themselves German, Spanish Etc first and some would then say European. This small difference is a major issue and will eventually eat away like a cancer at the Euro.

  • Comment number 90.

    The Eurozone is a failure.
    The initial concept of a European Market was sound enough in its principles but the creation of the Euro has been founded on business only.
    Countries who have chosen to join the Euro have not only lost their national identity but have also allowed countries such as Germany and France to dictate their economic direction.
    As a business man I know what the attitude is in places like Spain and France - they want their own currencies back.
    The sooner this happens the better it will be for Europe.

  • Comment number 91.

    You loaned your neighbor 100 euros and he is charging YOU interest to pay you back. You need to cut back on things at home to meet the interest payments. That is the deal the governments made with the banks.
    Only economist can understand such things and only politicians can say it is in your interest. The neighbor borrowed the money because he had lost the previous money you loaned him gambling.

  • Comment number 92.

    At the risk of being facetious, if Greece is liable to crumble under the debt it owes to German and French banks, why don't Germany and France just... buy Greece from their banks? If it's a failed state, why not just annex it by the legitimacy of financial purchase?

    Surely a Europe where Greece is in the hands of the Germans is a much stronger financial institution than it being in the hands of Greeks?

  • Comment number 93.

    PaulR,
    As I understand it, the ECB is doing just that "buying Greece". They're doing it by buying Greek debt in exchange for having the power to insist on austerity measures. The ECB is unelected however! The ECB could just hit the delete key on this debt, with no austerity required, but instead it wants the power to enforce austerity. Maybe i'm wrong.

    Kind Regards
    Charlie

  • Comment number 94.

    Re SleepyDormouse comments. I think a fair judgment on the UK's position is that it is comparable with the worst of the Euro states. In other words it could hardly have done worse if it had joined the Eurozone. German and French banks may end up with problems if a euro country defaults. There is no longer any 'may' about it when it comes to UK banks.

    Forever is a long time. Perhaps it would be wiser for the UK to consider joining the Euro when and if its to the UK's economic advantage. Although I acknowledge this argument may not persuade nationalists.



  • Comment number 95.

    @38

    "The 21st Century will be about CHina, Russia and India"

    Common view these days, but quite possibly rubbish. 20 years ago it was all about how Japan would run the world and that's gone very quiet lately. 1.3 billion Chinese don't want to spend their lives working in factories making cheap crap for the West to buy. Democracy will arrive and with it, the economic miracle will stall. Likewise, the better part of 1 million Indians die each year from the effects of contaminated water and air. Millions live in utter squalor. Eventually, they will expect the government to distribute wealth more widely. Russia may yet just collapse into a lawless state with private armies fighting for control of natural resources. The next few years may be good for all 3 countries, but the whole of the 21st century? It may be a little premature for that - nations come and nations go.

    "Europe is going to diminish as a power base"

    Here however I think you have a point.

  • Comment number 96.

    Economics can't save us.

    The future is about technical innovation.

    All these topics above are beside the point.

  • Comment number 97.

    Can anyone explain to my why the US$ has lost 2 cents against the Euro on the day ?

    Mike, Barcelona, Spain

  • Comment number 98.

    The future of the Eurozone?

    In my opinion very good - and for Spain - excellent.

    In fact I fully expect that within 5 to 10 years the Spanish economy to be larger than that of Britain.

    Mike, Barcelona, Spain

  • Comment number 99.

    thing i donot understand about this resession is our postion compared to europes.i mean sterling colapsed against the euro but thier inflation has skyrockted compared to ours.i know pound came back a bit but we as a net importer should by all ecconomic logic have raging inflation.add all that money printed into the eqation then in all honesty we should have the baliffs in.please could someone enlighten me tell me why a tv from japan is now cheeper than before the down turn or has logic been put on hold as well

  • Comment number 100.

    #18. Caprimulgus

    Like you I voted for the UK staying in the EEC I also voted for the Heath government that took us in to the EEC in 1973. However, unlike you I do not regret this and have to say it was clear at that time the vision that Jean Monet and others had for Europe was to create a Europe that was economically as powerful as the US...as we could see that that the home market advantage that American firms had over European companies meant in the long run European companies would loose out in global markets. At that time it was clear that we needed , free movement of goods and labour across borders and that both a common currency and European government would be inevitable. If anything I am surprised that it has taken so long to get this far. Those who say we should stay out of the Euro and resist further harmonisation of tax and financial policies and think we would be better off outside the EU I would recommend that you go and live in Germany France Belgium and having done so ask yourself. Do they have a lower standard of living than we do ?ans no. Do they work harder than we do ? ans no. Are they more efficient than us? ans yes in many cases. Are they perfect countries ans no Do they have their own problems ans yes Do they feel any less German French or Belgium for being in the Euro ans no
    I would think that anyone that that has worked internationally would recognise that American multinationals see themselves in an economic war to dominate global markets and they will use whatever means at their disposal to achieve their goals they use influence in the white house senate and the IMF whenever they can. Do you think it is coincidence that after the US approves Exxon to make a bid for BP some senators begin calling for BP to be investigated over the their Libyan drilling licenses. Our future is with Europe its not perfect but we need to see how the real world works. BTW i do think pro Europeans that claim that the EU has help maintain peace in Europe are talking rot as clearly this is what NATO did achieve However, if we do need to cut back on government expenditure lets consider a European nuclear defence that all countries contribute to rather than just France and the UK paying for it.

 

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