1. We have added a Gift Upgrades feature that allows you to gift an account upgrade to another member, just in time for the holiday season. You can see the gift option when going to the Account Upgrades screen, or on any user profile screen.
    Dismiss Notice

Goodbye to the Euro ? and the EU ?

Discussion in 'Off-Topic' started by otago, Mar 5, 2012.

  1. Harvin87

    Harvin87 The Youth

    Joined:
    Jun 12, 2009
    Messages:
    1,045
    Location:
    Berlin, DE
    No, its an overseas account.

    That's true... the purchasing power would be 0... but on the other part everyone would be wanting some american bucks right?
     
  2. Leoreth

    Leoreth 心の怪盗団 Moderator

    Joined:
    Aug 23, 2009
    Messages:
    34,407
    Gender:
    Male
    Location:
    Leblanc
    Considering the multiple drawbacks a Euro collapse has to a German resident, I certainly wouldn't pray for it.
     
  3. Riffraff

    Riffraff Deity

    Joined:
    Jan 2, 2006
    Messages:
    2,059
    Location:
    Munich
    If the Euro were about to collapse, wouldn't be seeing a massive decline in the value of the Euro?

    Looking at it here it doesnt look like it.
     
  4. Monsterzuma

    Monsterzuma the sly one

    Joined:
    Jun 1, 2008
    Messages:
    2,984
    According to a flowchart posted on Barry Ritholtz' blog that I can't find back it worked roughly like this:

    Weak nations dropping out of the Euro: stronger Euro (i.e. less need for monetary easing)
    Strong nations dropping out of the Euro: weaker Euro (i.e. more leeway for monetary easing)

    (strong and weak relating mostly to employment levels and GDP output gap)

    edit: that's what the flowchart said. I actually find myself questioning it. Depressed economies are a deflationary influence on the currency, i.e. prices want to fall to get rid of the capacity underutilization. When you just remove the depressed areas, there should be some counteractive inflationary effect... anyway this is probably just a complicated issue to which there are no shorthanded answers. I just wouldn't expect the only possible effect to be inflationary. Its not that simple.
     
  5. Part_Time_Civer

    Part_Time_Civer Warlord

    Joined:
    May 30, 2007
    Messages:
    263
    Location:
    Amsterdam
    Well, in the short run, currency prices are mostly influenced by expectations, as opposed to actual events. So if the risk of a Greek default rises, traders think the ECB will be more likely to print more money, which would cause inflation and a devaluation compared to the dollar in the long run. These expectations would therefore cause an immediate drop in the exchange rate.

    For Harvin to make a profit, traders' expectations need to change. Then he should swap his dollars for euros, and expectations should change once more. Unfortunately, the bank exchange margin would be to high to allow for him to make any substantial profits.
     
  6. Quintillus

    Quintillus Archiving Civ3 Content Supporter

    Joined:
    Mar 17, 2007
    Messages:
    6,387
    Location:
    Ohio
    It's the UK, Denmark, and Sweden who could have joined the Euro but have decided not to. For the time being, they've sidestepped an ugly mess.

    In light of the fact that Finland is the only northern European country to use the Euro (Norway being outside the E.U.), no, a Northern European monetary union is not going to happen anytime soon.

    I somewhat doubt the Euro will collapse, but Greece might leave the Eurozone, and the Eurozone might stop expanding. However, a breakup of the Eurozone isn't impossible; that is what happened to the Latin Monetary Union, after all.
     
  7. Part_Time_Civer

    Part_Time_Civer Warlord

    Joined:
    May 30, 2007
    Messages:
    263
    Location:
    Amsterdam
    I believe a separation of Greece is the most probable scenario. Nobody will want that, but in the end there's not much options for them. Italy will be saved, despite their corruption level, by a (somewhat) strengthening world economy.

    We could save them if we helped (forced) stringent anti-corruption laws on them. But that would require some kind of European constitution, which is politically not feasable.

    ps when people talk about a Northern eurozone, they don't mean Scandinavian countries per se, Netherland+Germany count as Northern Europe as well.
     
  8. Winner

    Winner Diverse in Unity

    Joined:
    Sep 24, 2004
    Messages:
    27,947
    Location:
    Brno -> Czech rep. >>European Union
    And who would enforce these laws?

    Greece's problem is that the society is broken as well as the economy. It's will require a profound re-making of the anti-state culture to make it function again. You can't have a nation made of anarchists.

    Fortunately, Greece is about the worst there is in Europe in terms of dysfunctionality. Other countries can be fixed far more easily.
     
  9. Leoreth

    Leoreth 心の怪盗団 Moderator

    Joined:
    Aug 23, 2009
    Messages:
    34,407
    Gender:
    Male
    Location:
    Leblanc
    Just FYI, the Danish Crown is already pegged to the Euro, too. Not sure about Sweden.

    In this context, Northern Europe usually means everything north of the Alps and Pyrenees.

    Greek president Papoulias said last month that the Greeks have to "refound their nation". I thought that hit the nail on its head.
     
  10. Part_Time_Civer

    Part_Time_Civer Warlord

    Joined:
    May 30, 2007
    Messages:
    263
    Location:
    Amsterdam

    Fair point. What you're saying is that the Greeks should, just like the Germans after WW2, shed of their old ways. Like the Germans, they will only do that if they realize their old ways are destructive. So should we maybe let them suffer?
     
  11. Winner

    Winner Diverse in Unity

    Joined:
    Sep 24, 2004
    Messages:
    27,947
    Location:
    Brno -> Czech rep. >>European Union
    A little bit, yes.
     
  12. Part_Time_Civer

    Part_Time_Civer Warlord

    Joined:
    May 30, 2007
    Messages:
    263
    Location:
    Amsterdam
    The issue is, in Germany, everybody suffered at the end of WW2 (barring some war criminals who fled to Argentina). In Greece, only the poor suffer.
     
  13. Leoreth

    Leoreth 心の怪盗団 Moderator

    Joined:
    Aug 23, 2009
    Messages:
    34,407
    Gender:
    Male
    Location:
    Leblanc
    I think comparing Greece to post war Germany is a little off the mark in a number of ways.

    But yes, if there's something that shakes up the belief that the current system can be perpetuated, it would certainly be helpful. Another argument for bankruptcy.
     
  14. Part_Time_Civer

    Part_Time_Civer Warlord

    Joined:
    May 30, 2007
    Messages:
    263
    Location:
    Amsterdam
    Well, yeah, of course you can't compare post WW2 Germany with Greece in many ways. What I'm saying is that in order for people to be willing to change their situation, they need to perceive it as unfavorable. Hence the comparison.

    The question is, how can you make rich Greeks, who pay little or no tax, perceive their situation as unfavorable?
     
  15. Leoreth

    Leoreth 心の怪盗団 Moderator

    Joined:
    Aug 23, 2009
    Messages:
    34,407
    Gender:
    Male
    Location:
    Leblanc
    Not at all, because their situation isn't unfavourable. That's the problem.
     
  16. kochman

    kochman Deity

    Joined:
    Jun 8, 2009
    Messages:
    10,818
    I've seen a couple of posts about some currencies (swiss franc, dane krone, etc) being pegged to the Euro.
    Isn't that kind of a "so what"? Can't they, rather painlessly, unpeg?

    Just guessing here... can someone who knows explain to me the reality?
     
  17. innonimatu

    innonimatu Deity

    Joined:
    Dec 4, 2006
    Messages:
    12,442
    That is also my view. France will be the state to decide the end of the Euro. The other southern states are delaying for as long as possible, perhaps out of pure folly or fear, but I'm getting the idea that there is a growing expectation of a "southern Euro" as a fix.

    I wouldn't thing of that for Germany. But I am expecting it to happen in the countries leaving the Euro in order to devalue its currency. The situation of Germany is, for the time being, the opposite.

    There is absolutely no way it can be contained to Greece. There are two separate problems, each of which is enough to cause the collapse of the Euro, and they affect multiple counties. One is the continuous very negative current accounts balances of certain countries, which can only be fixed without serous political turmoil through devaluation of a national currency. The other, more serious and widespread (though easier to fix if there was the will to do it) is the huge interest-bearing national debts. Fixing that second problem is done by suspending payment of interest (or continuing to pay it but letting banks accumulate more public debt by financing the banks) through borrowing from a central bank at (near) zero interest. This too the EU has officially forbidden. It's nevertheless allowing the financing of banks from the ECB so they can retain bought debt, and launching increasing (and increasingly politically troublesome) loans to finance new debt. But the interest rates continue to be unsustainable. And this is not just a Greek problem. Many countries are facing it.

    They can, but it'll cause severe problems to their exporters. Which in turn causes rising unemployment, more state expenses against less revenue, and possibly budget problems. Some (like the swiss) have ample margin to absorb that but still fear the scale of what may happen, other not so much.

    And when I say ample margin I must admit I'm not very clear on the actual power of the swiss central government and the Swiss National Bank, which (afaik) is private. It may turn out to be an illusory "heaven" for all those moving money there from southern Europe, as supposedly has been happening. The swiss too would probably have to change their institutional arrangements to weather a financial crisis.
     
  18. del62

    del62 Deity

    Joined:
    Jun 1, 2008
    Messages:
    2,078
    Location:
    Northern England
    There are probably only about 3 countries that should have been allowed to join the euro, it has been the worse thing for europe, the eu is in itself a good idea bringing countries closer together but the euro has been found to be a disaster not allowing different countries to set their own economic policies, unfortunately for certain EU states to say this publicily would be to lose face so they go on denying realiry, I am glad the UK stayed out.
     
  19. Whomp

    Whomp Keep Calm and Carry On Retired Moderator

    Joined:
    Dec 17, 2004
    Messages:
    18,200
    Location:
    Chicago
    I see the economic union and EMU as two distinct variables. What I would ask is under which system will the well being of the citizens be maximized as the ultimate policy goal of governments?

    I can make a strong case for #1 but using economic theory developed by one of your own, Jan Tinbergen, I can't for #2. His work "macro-controllability" suggests that instruments must be greater than targets. If targets are inflation, employment and trade balances and instruments are money growth, interest rates, fiscal policy and currency value then you're -2 under the EMU versus +1 when not. It doesn't help that economic correlation is only .58 for these respective countries so goose/gander doesn't allow for that kind of integration.

    Ultimately, we have to ask is not will the euro survive but whether it should? Pyrrhic victory at best and mistake at worst.

    I know it is probably frustrating for Americans to offer easy solutions to complicated problems but all you need to remind us of is it took well over a century for economic integration, even with political unification, to develop from the late 18th century till the early 20th century. Not assured even if we assume political unity.
     

Share This Page