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How the Euro Became Europe's Greatest Threat
spiegel.de ^ | June 20 2011 | By SPIEGEL Staff

Posted on 06/20/2011 8:40:03 PM PDT by NoLibZone

he euro is becoming an ever greater threat to Europe's common future. The currency union chains together economies that are simply incompatible. Politicians approve one bailout package after the other and, in doing so, have set down a dangerous path that could burden Europeans for generations to come and set the EU back by decades. By SPIEGEL Staff

In the past 14 months, politicians in the euro-zone nations have adopted one bailout package after the next, convening for hectic summit meetings, wrangling over lazy compromises and building up risks of gigantic dimensions.

For just as long, they have been avoiding an important conclusion, namely that things cannot continue this way. The old euro no longer exists in its intended form, and the European Monetary Union isn't working. We need a Plan B.

Instead, those in responsible positions are getting bogged down in crisis management, as they seek to placate the public and sugarcoat the problems. They say that there is only a government debt crisis in a few euro countries but no euro crisis, citing as evidence the fact that the value of the European common currency has remained relatively stable against other currencies like the dollar.

But if it wasn't for the euro, Greece's debt crisis would be an isolated problem -- one that was tough for the country, but easy for Europe to bear. It is only because Greece is part of the euro zone that Athens' debts are a problem for all of its partners -- and pose a threat to the common currency.

(Excerpt) Read more at spiegel.de ...


TOPICS: Extended News; Foreign Affairs
KEYWORDS: eu; euro; europeanunion

1 posted on 06/20/2011 8:40:08 PM PDT by NoLibZone
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To: NoLibZone
But it will come under threat in the next few years as the cost of successive rounds of bailouts mount – meaning that it was ‘almost certain’ that the eurozone will break up by 2016 and ‘probably’ by 2013.

Read more: http://www.dailymail.co.uk/news/article-2005499/Greek-debt-crisis-Let-Greece-default-leave-euro-says-Boris-Johnson.html#ixzz1PsTYeH5H

2 posted on 06/20/2011 8:42:37 PM PDT by NoLibZone (Impeach Obama for among other things , violating the War Powers Act.)
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To: SAJ

Ping.


3 posted on 06/20/2011 8:46:23 PM PDT by Army Air Corps (Four fried chickens and a coke)
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To: NoLibZone

So, its just like any socialist system. The hard workers have to pay for the few who are irresponsible until the whole collapses. Whether it be individuals, towns, nations or “Unions” of nations; socialism ruins all for the benefit of a few.

It’s really too bad that people cannot get this through their heads once and for all.


4 posted on 06/20/2011 9:08:39 PM PDT by Horusra (The Democrat party is now the National Socialist party (nationalize the banks, socialize healthcare))
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To: NoLibZone
This about the only guy I read that really gets it, the whys and wherefores Link. "...the Prime Minister said he would reshuffle his Cabinet and seek a vote of confidence for his new government after coalition talks with opposition parties failed. There is simply no way out. This is the price they had to pay to be part of the Euro. Greece surrendered its ability to naturally offset its debt by allowing the currency to depreciate. That is how ALL government get out of their debts – inflate their way out! The US is no exception. In 1980, the national debt was $1 trillion. Today, that is less than the annual budget. A trillion isn’t what it used to be any more. With Greece unable to inflate its way out, it is forced to now pay in Euros, as the economy declines, the REAL debt rises making the austerity measures even harsher. The Euro is a complete failure because there was no national identity in Europe. That was the key to making the Euro work. Absent that – sorry; it was a nice dream while it lasted. It has been a brief shining moment of bravado. But it’s over now and it’s time to wake up or else the dream will transform into an economic nightmare and tear down the European monetary system brick by brick..."
5 posted on 06/20/2011 9:46:35 PM PDT by Razzz42
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To: NoLibZone

bump


6 posted on 06/20/2011 9:51:52 PM PDT by AuH2ORepublican (If a politician won't protect innocent babies, what makes you think that he'll protect your rights?)
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To: Horusra
It’s really too bad that people cannot get this through their heads once and for all.

The lure of "stuff for free" is irresistible, and freeloaders are in the majority.

How can you fix that in a democracy? Education doesn't work because people don't want to learn. You might be better off teaching tensor analysis to a gangbanger. In other words,

"It is difficult to get a man to understand something when his salary depends upon his not understanding it."
-- Upton Sinclair

The cause is actually common between socialism and pyramid schemes - people want to get rich on labor of "someone else," and they make sure that "someone else" is not them. The hard working people don't have a say in this decision; often they are ridiculed for their effort. Citizens of USSR at least had a chance of escaping to Israel or the USA; but can a European today escape into the USA, and is it even worth it, as things are?

7 posted on 06/20/2011 10:06:17 PM PDT by Greysard
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To: NoLibZone
Hey Germany, miss me now?


8 posted on 06/20/2011 10:09:46 PM PDT by antiRepublicrat
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To: NoLibZone

So how is Greece any differant thah General motors or Chrysler or any other outfit that had to be rescued from their high spending managements? Let them file for chapter 11 and then sort out the mess and start from scratc. Yea, I know, the humanitarian cost to the people, especially the older ones, but they have lived like kinge on borrowed money for a long time now, perhaps they could sell of some of their realestate, those ilands they have must be wort quite a bit, a good auctioneer should be able to get top $ or uros as it were, after all, if it was you or I, we would have to dispose of some of our assets if we couldent pay our bills, so why is a little country any differant?


9 posted on 06/20/2011 10:16:58 PM PDT by munin
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To: NoLibZone

The ties that bind...


10 posted on 06/20/2011 10:22:39 PM PDT by Chad_the_Impaler
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To: Razzz42
Further from that Link. "...Without continued funding from the rescue loans, Greece will default on its massive debts. Greece will have to choose between its people and the bankers. This system is deeply flawed and it is just unsalvageable. We have so many brilliant people out there. But nobody wants to get involved. The SINGLE CURRENCY has turned into a nightmare, not a blessing. The plan for the Euro stopped shy of what was necessary to create a real SINGLE CURRENCY – absorption of all debt..." "will have to choose between its people and the bankers." That is the real question when it comes to this debt problem.
11 posted on 06/20/2011 10:23:08 PM PDT by Razzz42
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To: munin

When countries joined Euroland, their current debt was converted to Euros and the Euro has been gaining value making the converted debt more expensive day by day plus paying interest to bankers including new bailout loans with new interest to pay.

They have to payback in Euro.

So far rich-uncle Germany (citizens) are the bulk of the ones who can afford to loan Euros for bailouts. The banks just sit back and collect interest.


12 posted on 06/20/2011 10:34:06 PM PDT by Razzz42
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To: NoLibZone
The only thing that restrains a government's fiscal largesse is its currency. They only thing that restrains a currency is competition with other currencies. Hence to internationalize a currency is to decouple accountability for fiscal sanity from a government.

I remember well in the mid 90s Milton Friedman explaining in The Economist how the Euro would produce national unemployment instead of national inflation using the differences between fiscally sane and insane States in the US as a model. The assumption that the Euro would instill any kind of discipline was therefore illusory from the beginning, and its backers knew it. There had to be another reason for the "European monetary union."

The real goal was to replace the US dollar as the world's reserve currency, because that allows the issuing entity to produce excess currency that doesn't go into domestic circulation. It is inflating somebody else's assets without the apparent cost. If the Euro replaced the dollar as the world's reserve currency, those dollars would then come home and the US would experience massive inflation almost immediately. That is why the international reserve currency status the dollar has enjoyed is both a blessing and a peril. Essentially, the Euro coupled with Democrat fiscal policy, has put an inherently unstable world financial system on the path to total catastrophe.

13 posted on 06/20/2011 10:42:56 PM PDT by Carry_Okie (GunWalker: Arming "a civilian national security force that's just as powerful, just as well funded")
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To: NoLibZone

Gee, funny how no one saw that one coming. (/sarc)


14 posted on 06/20/2011 11:45:53 PM PDT by fhayek
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To: Horusra
The funny thing about too big to fail is....it guarantees failure..on a huge scale...

I cant wait for 1 world government and finance..../s

15 posted on 06/21/2011 2:34:32 AM PDT by M-cubed
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To: NoLibZone

Any eurozone bailout is an outrageous breach of contract. Bailouts were specifically forbidden when the euro was adopted.

Never trust a politician. Never.


16 posted on 06/21/2011 3:36:20 AM PDT by Moltke (Always retaliate first.)
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To: NoLibZone

All the EU pricks are having an epiphany about the dead Euro, from the mushy EU Left like SPIEGEL to the mushy Brit Lib/Lab/Tories....their big dreams of another Roman Empire of Europe just may be at an end. Beware though that the dying EUSSR will be a dangerous enemy of freedom everywhere.


17 posted on 06/21/2011 5:25:48 AM PDT by iopscusa (El Vaquero. (SC Lowcountry Cowboy))
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To: Razzz42

-———inflate their way out! ——

That process is well under way here......... now


18 posted on 06/21/2011 5:31:18 AM PDT by bert (K.E. N.P. N.C. D.E. +12 ....( History is a process, not an event ))
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To: munin

-——so why is a little country any differant?———

You noted corporations. The most glaring American comparison is California. California is Greece. It completely lacks the will and the means to recover.


19 posted on 06/21/2011 5:34:11 AM PDT by bert (K.E. N.P. N.C. D.E. +12 ....( History is a process, not an event ))
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To: Army Air Corps
Well, Friedman had it spot on in the late 1990s; there is no mechanism in the Maastricht treaty (or Nice, or Lisbon) for EMU to deal with a serious financial crisis.

And the response from Europe's political class is exactly as expected (and as I've written some dozens of times since 1999). They will attempt to "muddle through", as the article puts it -- delay, evade and unlawfully fund bailouts for as long as they're allowed to do.

There is something in the mental makeup of politicos and would-be politicos that simply will not permit them to admit failure and start again. As a result, the financial situation in Wonderland (my term for the Eurozone) will steadily become worse over time, as the political class cling to guaranteed-to-fail "solutions". The blowup will come when the Germans -- the citizenry, not the pols -- quits this idiotic game. When is that? Good question. I'll have a guess at 2017, sooner if the socialists get back into power.

Not that the US is in anything other than terrible shape financially, of course. However, the US' financial problems are, generally, a result of greed, both political and financial. Wonderland's problems are based on more or less equal parts of greed, Fantasyland-style idealism and outright stupidity.

As the maxim goes: you can't fix stupid.

FReegards!

20 posted on 06/21/2011 5:42:16 AM PDT by SAJ (Zerobama -- a phony and a prick, therefore a dildo)
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