'Why The Euro Must Be Defended'

[trefoil]

Quote from Debaser82:

I keep thinking if the Euro really is so much worse then the USD or Sterling.

What parameters in the US or UK economy and society are so much better then the Eurozone's that warrants the notion of the Euro being inferior to the other two.

I just can't find them.

Simple: the smaller (within limits of course) and more uniform - to cover the US - the currency area, the better it works. The EU also lacks, as we now know, a smooth fiscal transfer process. The US is a massive transfer union, and by now everyone knows there are some states that chronically contribute more than they get back, while others chronically get more than they contribute. No one gets all exercised about it (this probably has a lot to do with the fact the conservative-leaning ones are mostly the recipients, too, which keeps the usual nutjobs quiet. Over there, the conservative ones are also the chronic contributors, which makes the politics of it a lot touchier).
Finally, why everyone suddenly got the idea that Greek debt could trade for a tiny spread over German, which it did just a few years ago, is beyond me. Over here, different states routinely pay higher or lower rates based on their ratings. That's a big one.

 

[Debaser82]

But for instance Greece has always been a country with troubles in a currency union or not and the same goes for other periferal Eurozone countries.

Greeks, Italians, the Irish....

They have spread all over the world for decades if not centuries often escaping poverty or dictatorship at home.

So now what, a return to their domestic currency is supposed to be the magic formula to bring prosperity back?

Or a return to their previous currency would magically kickstart their economy and tourist income?

Spain never had as many tourists visiting as this summer.

But but but dont Norway and Switserland prove a small country dictating it's own currency is the way to go?

Yeah sure let's forget they have vast oil reserves and manage 1/3 of the world's hidden money.

Why not ask Romania or Ukrain how they are doing these last few years....

Sure 'Brussels' probably is full with egomaniacs only looking to reinforce an undemocratic regime but it's not as if the anti Euro lobby both from the outside as within are always on the mark with their solutions.

Pragmatism is a virtue I would say.

 

[dtan1e]

u can't cure a shopaholic, Greece and the other problem eu countries are spenders, they are addicts, very much doubt throwing cash at them is going to cure

 

[Debaser82]

Quote from dtan1e:

u can't cure a shopaholic, Greece and the other problem eu countries are spenders, they are addicts, very much doubt throwing cash at them is going to cure

The Eurozone has +300 million citizens. There will always be poverty or disfunctionality somewhere.

Please spare us from US like wars on terrorism or drugs to 'cure' the PIGS.

 

[zdreg]

Quote from Debaser82:

The Eurozone has +300 million citizens. There will always be poverty or disfunctionality somewhere.

Please spare us from US like wars on terrorism or drugs to 'cure' the PIGS.

you have a point on drugs. because the US,with its unlimited appetite for drugs, has forced mexico into a war on drugs 35,000 mexicans have died. mexico is now a narco state and is treading a thin line of becoming a "failed state."

 

[trefoil]

Quote from Debaser82:

But for instance Greece has always been a country with troubles in a currency union or not and the same goes for other periferal Eurozone countries.

Greeks, Italians, the Irish....

They have spread all over the world for decades if not centuries often escaping poverty or dictatorship at home.

So now what, a return to their domestic currency is supposed to be the magic formula to bring prosperity back?

Or a return to their previous currency would magically kickstart their economy and tourist income?

Spain never had as many tourists visiting as this summer.

But but but dont Norway and Switserland prove a small country dictating it's own currency is the way to go?

Yeah sure let's forget they have vast oil reserves and manage 1/3 of the world's hidden money.

Why not ask Romania or Ukrain how they are doing these last few years....

Sure 'Brussels' probably is full with egomaniacs only looking to reinforce an undemocratic regime but it's not as if the anti Euro lobby both from the outside as within are always on the mark with their solutions.

Pragmatism is a virtue I would say.

A little disjointed, but just for the point about currencies: having your own is a big advantage. Ceding sovereignty over it is, well, odd. Somewhere in one of the other threads I linked to a paper by a couple of economists who pointed out that Spain's debt level is lower than the UK's, and they would not be getting put through the ringer if they had control over their own currency. It made the point that as the debt is not denominated in a currency that the government has control over, it amounts to the same kind of debt that Argentina had, which was USD debt, rather than the advantage the UK has, issuing debt in its own currency. So once default becomes a threat, domestic banks suddenly start to totter if they committed the sin of buying their own gov't's debt - note that this is treated as risk-free or nearly so under Basel. No UK bank is being punished for holding UK debt.

Add to that the usual stuff about being able to devalue, control the supply, and all that. In short, sovereignty.
Inflation and devaluation are not nearly as awful a threat to payback, within limits of course, as outright default.

 

[Debaser82]

Quote from trefoil:

A little disjointed, but just for the point about currencies: having your own is a big advantage. Ceding sovereignty over it is, well, odd. Somewhere in one of the other threads I linked to a paper by a couple of economists who pointed out that Spain's debt level is lower than the UK's, and they would not be getting put through the ringer if they had control over their own currency. It made the point that as the debt is not denominated in a currency that the government has control over, it amounts to the same kind of debt that Argentina had, which was USD debt, rather than the advantage the UK has, issuing debt in its own currency. So once default becomes a threat, domestic banks suddenly start to totter if they committed the sin of buying their own gov't's debt - note that this is treated as risk-free or nearly so under Basel. No UK bank is being punished for holding UK debt.

Add to that the usual stuff about being able to devalue, control the supply, and all that. In short, sovereignty.
Inflation and devaluation are not nearly as awful a threat to payback, within limits of course, as outright default.

Why not turn the discussion around.

If there are only advantages of being in control of ones own currency why does for instance Spain not only has lower debt but also a lower deficit then the UK?

Where is their edge? Is it in the banking stability then as you say? But then why did US and UK banks crater just as much in 08? Or is it in government bonds that the edge lays? That I accept and why not sure in that way I see how having control of your own currency allows a country to buy more time to adjust where needed. If it is possible politicaly ofcourse which is tricky basically everywhere.

 

[trefoil]

Quote from Debaser82:

Why not turn the discussion around.

If there are only advantages of being in control of ones own currency why does for instance Spain not only has lower debt but also a lower deficit then the UK?

Where is their edge? Is it in the banking stability then as you say? But then why did US and UK banks crater just as much in 08? Or is it in government bonds that the edge lays? That I accept and why not sure in that way I see how having control of your own currency allows a country to buy more time to adjust where needed. If it is possible politicaly ofcourse which is tricky basically everywhere.

US and UK bank problems weren't related to sovereign debt. On top of the problems from '08, now we have banks being punished all over the eurozone for holding sovereign debt including, in some cases, domestic banks of the exact same country as where the debt was issued. That's what I'm talking about. A completely different problem from '08's debacle. Once again, "the edge" is that if it's debt in your own currency in your home country, default isn't really an issue: inflation (domestic devaluation) is. For foreigners, devaluation is the issue. It's a different order of magnitude in terms of seriousness.

 

[zdreg]

Quote from Debaser82:

Why not turn the discussion around.

If there are only advantages of being in control of ones own currency why does for instance Spain not only has lower debt but also a lower deficit then the UK?

Where is their edge? Is it in the banking stability then as you say? But then why did US and UK banks crater just as much in 08? Or is it in government bonds that the edge lays? That I accept and why not sure in that way I see how having control of your own currency allows a country to buy more time to adjust where needed. If it is possible politicaly ofcourse which is tricky basically everywhere.

adjustments of currencies should come from the market not from governments. all central bankers debase the currency as a result of political pressure.
the only currency worth holding is one backed by gold.

 

[Debaser82]

Quote from trefoil:

US and UK bank problems weren't related to sovereign debt. On top of the problems from '08, now we have banks being punished all over the eurozone for holding sovereign debt including, in some cases, domestic banks of the exact same country as where the debt was issued. That's what I'm talking about. A completely different problem from '08's debacle. Once again, "the edge" is that if it's debt in your own currency in your home country, default isn't really an issue: inflation (domestic devaluation) is. For foreigners, devaluation is the issue. It's a different order of magnitude in terms of seriousness.

I think I understand you, but still I feel the importance of being in charge of ones own printing press is overblown.

If it wasnt for North sea oil the UK would have a worse deficit then Greece, having an independent currency or not.

To me that says it all really.

It's an element, as there are many others.