Collapse of the euro

[John S]

I am curious to hear from EBT members on their feelings about the increased mood in the media that there is a strong desire in some countries to abandon the euro. The anti-Europe British media has been active in spreading negative press about the euro even to the point of a euro collapse.

As Europeans, what is the mood of the people you encounter concerning the future of the euro?

http://www.timesonline.co.uk/article/0, ... 17,00.html

[androl]

the Northern League, a right-wing member of the government coalition, declared that it would fight next year’s election on a platform of bringing back the lira.

That will make Italy the first eurozone country where a promise to ditch the single currency has become the subject of an election

didn't Le Pen also want to bring back the Franc in France in 2002?

Don't worry, the extreme right-winged parties often talk about such nonsense. As long as they are not elected, the euro will stay.

[Fjon]

I am not surprised at the article - it's from a British newspaper. They are just trying to look for anti-EU allies.
Having had a look at one of the most respected Italian papers, La Repubblica all I could find were articles on how ridiculous it would be to return to the Lira. It's not going to happen any time soon.
I wonder do Sweden and Denmark publish similar stories about how the Euro is going to collapse and that they made th correct decision in deciding not to adopt it? My guess would be no. The British people just need some sort of reassurance that they are doing the correct thing by sticking to Sterling...

[ART]

In Italy all the parties except north league are contrary to return to the Lira. It's a propagandistic maneuver of the league, than in regional elections it's remained minority in all the north (from 3 to 10%, more in little zones only) in order to attract the attention on TV and papers. The league has begun a disinformation campaign telling many lies on Europe and the euro, an example that the change euro-domestic currencies has been established being based on the gross domestic product of the states, and other similar idiocies.

[ART]

The presidet of the republic it's contrary too.

[helloggs]

I share fjon's oppinion, this is a very onesided article. The Euro is not the reason for the problems of the economy in Germany and elsewhere, and the abscence of it in the UK is not the reason for the prosperity they experience there at the moment.

If a country should really ever leave the Eurozone (which IMHO is never going to happen) it would certainly harm the country more than it would harm the Euro

[Tiverius]

In Greece,people at the moment,are against the Euro,because the price risen too much.(e.g a sunday newspaper's worth was 400 drachmas (1,17 euros) in 2001,now it's price is 2 to 3 euros.)And now that the goverment decide to rise vat rate to 19% from 18% things are even worse for us.

[Fjon]

The Euro really shouldn't really be used as an excuse for the higher prices. It did at first cause some increases during the changeover, where "opportunistic" people in each one of the 12 countries decided to jack up the price of just about everything. 3 years later how can people still be blaming this? It's just scape-goating. Sure things were cheaper before the Euro, but if we looked back in 2002 things were cheaper in the 20th century too.

[John S]

I am not surprised at the article - it's from a British newspaper. They are just trying to look for anti-EU allies.
Having had a look at one of the most respected Italian papers, La Repubblica all I could find were articles on how ridiculous it would be to return to the Lira. It's not going to happen any time soon.
I wonder do Sweden and Denmark publish similar stories about how the Euro is going to collapse and that they made th correct decision in deciding not to adopt it? My guess would be no. The British people just need some sort of reassurance that they are doing the correct thing by sticking to Sterling...

I agree that much of the hype from the British press is the UK looking for reasons to be anti-EU. Let's face facts. The UK was once a big empire that ruled over much of the world. That is long gone and they are nothing compared to who they once were. Those who are anti-EU and anti-euro are upset that the EU will someday rule over the UK instead of the other way around.

Go to: http://finance.yahoo.com/currency

and you will notice that the three major world currencies are the US dollar, the euro and the Yen. The pound, Canadian dollar, australian dollar, Swiss France etc., are minor currencies. Wishful thinking on part of the British that if the euro collapses the pound will take its place and Britiain will become significant again.

[John S]

I share fjon's oppinion, this is a very onesided article. The Euro is not the reason for the problems of the economy in Germany and elsewhere, and the abscence of it in the UK is not the reason for the prosperity they experience there at the moment.

If a country should really ever leave the Eurozone (which IMHO is never going to happen) it would certainly harm the country more than it would harm the Euro

British prosperity is a myth. Look at the reality the British media fails to report. British interest rates are one of the highest in the world at about 5 %. This is needed to attract investment into the UK to offset huge deficits. If the euro did not exist the UK would be able to attract investments with a lower interest rate. High interest rates attract investors.

The Maastrict treaty limits the amount of deficit spending each nation in the eurozone is allowed to have. The UK is outside the zone and is not bound to the treaty so they can deficit spend to produce high growth figures. The bad thing about deficit spending is what happens when it is time to pay the debt back. High British interest rates keep the deficits funded but at the expense of creating an even greater debt burden.

UK unemployment is low because like the US British jobs offer lower wages with fewer perks. Thus the cost to industry for labour is lower and business can afford to hire more. Ronald Reagan and Margaret Thatcher worked together in the '80s to break the power of the unions and create in both countries cheap dead-end service jobs. With high prices and interest rates, UK citizens, like their US counterparts rely heavily on credit cards to close the gap, placing everyone just a few paycheques away from bankruptcy. Yet, these facts are never published.

Attempts to liberalize the economies to create more of these jobs in Europe have failed. Not because of government policy but because the people, unlike those in the US and UK, refuse to accept these type of jobs. The Europeans have been unable to weaken the unions as the Americans and British have, thus the high cost of labour persists and thus high unemployment.

The people in power know the real cause and that it is not the euro. Returning to the old currencies would actually make things worse for the common folks. The rich and wealthy and those who would not want to deal with the old currencies would sell their currencies for dollars, leaving the masses to suffer even greater hardship due to the value of the local currencies collapsing on the world market and hyperinflation taking hold.

It is a shame there isn't better media coverage of the real problems so people would stop blaming the euro.

[John S]

In Greece,people at the moment,are against the Euro,because the price risen too much.(e.g a sunday newspaper's worth was 400 drachmas (1,17 euros) in 2001,now it's price is 2 to 3 euros.)And now that the goverment decide to rise vat rate to 19% from 18% things are even worse for us.

There are many reasons for price rises. If people think the shops are raising prices without reason, then they should boycott those stores. Lack of business forces many businesses to lower prices.

One of the main reasons for the problems Europeans face are international in origin. Something the old currencies would never be able to deal with. The main issue being China. China produces goods using very cheap labour that no European can compete with. Governments lose tax revenue when goods are imported compared to made inside the country, thus the need to increase the tax. The tax is applied to the sale price of goods and is seen by the consumer, instead of being applied at the point of importation in the form of a tariff.

Who did the Greeks blame for high prices before the euro? I'm sure that rising prices didn't start with the euro.

[androl]

In Greece,people at the moment,are against the Euro,because the price risen too much.(e.g a sunday newspaper's worth was 400 drachmas (1,17 euros) in 2001,now it's price is 2 to 3 euros.)

I'm pretty sure even in Greece the inflation was not 14.34% to 26.54% per year. Those are single examples (if they are even true), but you will find as many examples of prices same or lower than in 2001.

[Gauss]

The EU is living from exports to other countries. In many such transactions it is unpleasant to have a strong Euro, as compared to the US dollar. It is therefore - to some extent - in the interest of the EU to aim at a slightly lower exchange rate to the dollar. On the other hand, the US government has an interest in a weak dollar, particularly as the country imports more than it exports.

A discussion like that one is suitable to weaken the Euro. It sounds absurd but it may be partly for that purpose why that (absurd) discussion has been kept alive.

[John S]

The EU is living from exports to other countries. In many such transactions it is unpleasant to have a strong Euro, as compared to the US dollar. It is therefore - to some extent - in the interest of the EU to aim at a slightly lower exchange rate to the dollar. On the other hand, the US government has an interest in a weak dollar, particularly as the country imports more than it exports.

A discussion like that one is suitable to weaken the Euro. It sounds absurd but it may be partly for that purpose why that (absurd) discussion has been kept alive.

In 2004, Germany, despite the high value of the euro had the largest amount of exports. Even the exports for April 2005 increased over a year ago. Germany has no problem with exports.

http://english.people.com.cn/200506/10/ ... 89504.html


The US isn't interested in exporting, other then its manufacturing base. Work done in China and India is counted as part of US production. The US is only interested in maintaining dollar hegemony so it can get as many goods and services for free. The euro threatens this plan and thus the US works hard to destabilize the euro and sows the seeds of negativity in Europe and around the world.

[tabbs]

The Maastrict treaty limits the amount of deficit spending each nation in the eurozone is allowed to have. The UK is outside the zone and is not bound to the treaty so they can deficit spend to produce high growth figures.

Just a side note - the UK is not part of Euroland but still part of the European Union. And while it opted out of the currency union, the budgetary surveillance and its criteria apply to the UK as well.
http://europa.eu.int/rapid/pressRelease ... anguage=en

"This exceeded the reference value in the Maastricht Treaty's Excessive Deficit Procedure, which sets deficit and debt targets of 3 per cent and 60 per cent respectively for all EU countries."
http://www.statistics.gov.uk/CCI/nugget.asp?ID=277

The latter quote may be a little misleading since the UK did meet the budget targets AFAIK. But the text shows that the British economic policy is not entirely independent from EUrope

Christian