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| Europe |
| a scenario for the single currency's (Euro) collapse |
| 2005-06-02 |
| The German Finance Ministry declined to comment on a magazine report that discussions took place last week between Finance Minister Hans Eichel, Bundesbank President Axel Weber and economists on a possible failure of European Monetary Union. Stern magazine said in a pre-released article today that the group discussed a scenario for the single currency's collapse as differences in inflation and growth rates within the union grow. An internal ministry document formed the basis of discussions, Stern said. The Finance Ministry ``doesn't comment on internal papers or meetings,'' said spokeswoman Sandra Hildebrandt in a telephone interview today. ``The euro is a success story.'' - |
| Posted by:3dc |
| #12 . While interests are currently low, Germany finances the low interest rates in Italy or Greece, which traditionally have had much higher interests due to a weaker currency. And there you have it. The Bundebankers Ants get to finance the Grasshoppers. |
| Posted by: Shipman 2005-06-02 19:27 |
| #11 You are not, Barbara. The euro was a political decision, not an economical one. It was invented by France to kill the Bundesbank and feared German dominance after the reunification. Lots of French politicians secretly gloated that they won the war against Germany. After the French referendum a German politician was overheard saying: Germany just won the war against France without firing a shot. |
| Posted by: True German Ally 2005-06-02 18:07 |
| #10 TGA - am I an old fogey for missing the Deutschemark? ;-p |
| Posted by: Barbara Skolaut 2005-06-02 17:28 |
| #9 True German Ally: You always have these incredibly insightful and reasonable comments to make. Stop it man! You’re bumming my high! |
| Posted by: Secret Master 2005-06-02 17:18 |
| #8 thibaud, actually no. The Euro has not crushed Germany's exports which have never been better. Most exports go into the Eurozone, that means no currency risks (and no strong Mark that makes exports more expensive to France or Italy). The Euro has been a problem for interior consumption, has caused permanent price hikes. And it has been bad for interest rates. While interests are currently low, Germany finances the low interest rates in Italy or Greece, which traditionally have had much higher interests due to a weaker currency. The Euro will not collapse, but it may not always have the same countries as now. Greece should never have joined, and Portugal and Italy neither. Trichet's statement that California or Texas won't leave the Dollar either is stupid. The US (apart from being one nation), has a completely free market, people are very mobile when it comes to work and there is a federal budget etc. Prices vary quite a bit in Europe. One Euro in Germany is only worth 0,89 Euro in France. Could we leave the Euro. It has always been said that we can't but that's nonsense. If the basis (the Maastricht criteria) is permanely violated countries can leave. Leaving would be less complicated than joining. You would just replace Euro by Mark (as 1:1) and then let the Mark float. |
| Posted by: True German Ally 2005-06-02 16:55 |
| #7 I think that the devaluing of the Euro would probably be good for most European countries. Afterall, what's the point of having a museum if nobody visits it? |
| Posted by: Secret Master 2005-06-02 13:28 |
| #6 Ironically, a collapse of the euro is the best possible way to boost growth immediately in Germany especially, France and Italy to a lesser extent. The strong euro has absolutely crushed Germany's export sector, which accounts for an extremely high % of German GDP. The No voters will have achieved what the incompetent European Central Bank could not: a more rational monetary policy for Europe. |
| Posted by: thibaud (aka lex) 2005-06-02 12:12 |
| #5 Anonymoose, I could be wrong but I think you're painting Socialism with a pretty big brush. It is possible for a Socialist economy to tax the people and all goods (and not the companies or exports) to support the heavy welfare state. The trade off is standard of living of course but it'd stil be socialism and it would still be competitive. I don't think any have done so, but I'd still say that would qualify and eventually the Europeans may figure that out and go against their knee-jerk corporations bad leftism. |
| Posted by: rjschwarz 2005-06-02 11:13 |
| #4 Socialist economics can only survive when there is someone outside the system willing to pump ever increasing amounts of money into it. It cannot stand competition with a capitalist system, either within a given country, or between countries. Therefore, whatever European country is least socialist will benefit most from the Euro, unless they have their economy artificially supressed by the others. The flip side of this argument is that the most socialist and least responsible country will also benefit, by being the biggest parasite on the system. The end result is that labor and capital will flee to the least socialist country, and all the human parasites will flee to the parasitical country. |
| Posted by: Anonymoose 2005-06-02 10:15 |
| #3 The 'dollar' make a good common currency. Eat that Chirac :P |
| Posted by: Throluth Clush3562 2005-06-02 08:54 |
| #2 I would rate a 'collapse' of the Euro as distinctly possible. A couple of countries, notably italy, are experiencing problems due to their ECU membership. Italy has historically devalued its currency as a way to maintain export competitiveness as social policies cause inflation. As a member of the Euro, it can not longer do this, but seems unable to reform the social policies, as a result its exports have been falling, a situation that will only worsen resulting in higher unemployment and ironically higher costs for social programs accelerating the spiral (downwards). |
| Posted by: phil_b 2005-06-02 04:13 |
| #1 It's part of their job to worry about even the remotest scenarios, just like the guys that make all the contingency plans in the files of our Defence Dept. I'd be more concerned if they didn't think about such things. |
| Posted by: trailing wife 2005-06-02 02:44 |