Posted on 06/08/2005 6:52:33 PM PDT by quidnunc
Nobody should be surprised that Europe’s politicians are in denial after their referendum defeats. Politicians are usually slow to understand truly historic events, especially when they involve economics. Remember John Major after Black Wednesday: Britain had not been ejected but “temporarily suspended” from the ERM? Politicians often behave like bad actors who find it impossibly difficult to deviate from their prepared and rehearsed scripts, even when the theatre is on fire.
Anyway, why should we care what Europe’s leaders are thinking? After all, Gerhard Schröder and Jacques Chirac are finished and so, presumably, is their concept of Europe. This may be true, but there is one important leader who still has a decent chance of re-election and who, significantly, has found a new catch-phrase: “It’s the euro, stupid.”
The idea that the euro is mainly responsible for the breakdown of Europe has recently been floated by so many Italian politicians allied to Silvio Berlusconi that it is losing what Richard Nixon used to call “deniability”. The anti-euro claims are partly designed to shift blame for Italy’s problems on to Romano Prodi, the former Commission President who is now Berlusconi’s main political opponent. But more importantly, the anti-euro rhetoric is weakening the euro on the foreign exchanges and may well force a change in policy regime at the European Central Bank. These are exactly the right objectives for Europe’s politicians — and they bring me back to the comparison between Britain after Black Wednesday and Europe today.
The first lesson of White Wednesday (as I have always perversely called this day of national salvation) was that a country that gives up its currency loses control of its economic destiny. The second lesson was that interest rates, used boldly, are a uniquely powerful tool for stimulating job creation and growth.
-snip-
(Excerpt) Read more at timesonline.co.uk ...
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
The sooner the rest of Europe restores its national currencies, the better off every European country will be.
Think you're on to something here. When the euro came in, I couldn't imagine so many countries going along with it, but when it got so strong, I was surprized. Many of the countries profited from it at first, but guess it's time for a rethink.
he he
So keep it. I can live without.
Your-a-peon under socialism bump!
Workers are free to move from job to job regardless of what state they're in here (one of many possible examples). In Europe there are many barriers to moving where the jobs are, one being language.
We just don't think of it that way. Hypothetically, a State dependent on exporting goods would like a weak dollar, while a State serving domestic markets, or heavily dependent on financial and banking industires, might benefit from a strong dollar. If each had its own "dollar" they each could benefit, instead of one prospering while the other struggled.
Europe will only be unified through force and dictatorship...period.
I refuse to do it. I like it where I am.
The US has a broad and unifying set of laws and principles.
See my post#52 for a quote from the article that is pertinent to your question.
In Europe, there is an enormous gap between the different nations, both in those, and in their social "safety nets". Some of them have created a major deficit problem for themselves between that, and their union giveaways, and government pension plans, and such. I heard that Germany has pledged something like 46% of all it's income to retirement plans, for example (Caution: my numbers could be quite off there).
If, for example, Germany did this when their currency was floating, they would suffer major inflation of their currency, and though that wouldn't have much effect on internal trade, their international purchasing power would be lower. That is the price they would pay. When the currency is fixed with respect to a stronger economy, say, Ireland, that means Ireland ends up paying for Germany's deficits by their implicit supporting the currency.
With the US, our states' differences are not as vast, and yet there is still problems with people objecting, and leaving. For example: welfarers move to NY, because the welfare benefits are better than in Arkansas. Meanwhile, producers in NY move to TX, taking away NY's income source. This encourages more uniformity in their benefits - but not complete. Erie County's (and NYs) financial problems stem in large part from this - despite the very long time that this mechanism has been in place in the US. Fiscal discipline is forced on the states by these types of mechanisms. It is a rather tenuous mechanism, in my mind, but it does allow some "laboratory experimentation" with the costs and benefits of different types of law and social structure.
Europe's thinkers realize that they need much more similar laws/benefits in order for the Euro to work. That is what the EUConstitiution was supposed to provide. They realize that the various nations must commit to balancing their budgets, but France, Germany and others have now decided they aren't going to honor that agreement. They have promised far mor than they can now deliver. Any of the stronger countries should really fear unifying with them because now all they would be pledging is to involuntarily bail them out.
I believe that they went about this "Greater European" business totally backasswards - that they ought to FIRST gotten together for "national defense", THEN created an overarching set of laws/social/economic, THEN when there was some similarity --- the euro and done their "no borders"/full immigration stuff.
I further believe that those who imposed the euro on them had sufficient macroeconomic understanding that they realized that it would never work unless there was a much more unified Europe - and they were hiding that from the people because of the nationalistic instincts they feared the populace would use to veto such a sweeping move.
I DON'T understand MacroEconomics that much despite the study I've done, so this is just a take from a rube.
I agree with much of your theory here. I imagine some of the countries will strongly consider returning to their original currency over time. France, as usual, is the cog in the wheel and won't be willing to cooperate. That's OK with me though. I was beginning to think the euro was going to give the dollar a serious run for being the world currency.
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