The Euro six months after.

"Actually if there's a thing that unites Europe's people, this is the Euro."

Along with their shared socialistic worldview.

I've recieved two 50 Euro notes as a payment from a guy in the Netherlands.
I certainly hope they stay good until my next overseas trip so I can redeem
them for real money without paying a fee to my bank here.

Most people in Ireland are not happy with the Euro. Prices have gone through the roof, inflation is up, and everyone calls it 'monopoly money'. This 'rose tinted' view of the Euro being a wonderful success is not accurate.

It seems to me that a person's view of the Euro depends on which country they are from. If you are from Italy, the Euro is a welcome replacement to their old, unstable currency. I am not so sure that the Germans like the switch.

I am sure that it makes their life a little easier

But what happens if the economy in a few country tanks .. can the economy from the remaining countries still support the Euro

I guess in time we will find out just how great the Euro is

"Actually if there's a thing that unites Europe's people"

There is only one sure thing that will happen with a united Europe...WAR!

"I am not so sure that the Germans like the switch."

Price increases (in Germany) came with the Euro. (Something the government promised wouldn't happen.)

I know my way of thinking on this goes against the grain here but it's about time that Europe adopted a single currency. Imagine if the 50 states here in the USA maintained there own currencies? Well that's how it was over there. The average European country is smaller than many our our states. From Germany, for example, you are within a day's drive of about a half dozen other countries. Imagine living in Connecticut and having to convert your currency everytime you wanted to have dinner in Manhattan or go to the beaches in Rhode Island or visit Cape Cod in Massachusetts or go skiing in New Hampshire. Well, now you begin to understand what the Europeans have been going through all these years.

Well the European countries have a right to form a union if they wish, just as the original thirteen colonies here in America decided to form a union some 225 years ago.

I actually think that the tide of socialism in Europe may well be reversed by this move and capitalism has a real chance to flourish over there with a common unit of currency breaking down all the old barriers.

There is a lot more that has to happen of course before there is ever a "United States of Europe", this is just the very beginning. It may well take another generation or so for this thing to play out.

The single physical currency will make life easier there, yes.

But the accompanying single monetary policy for widely different economies is already creating enormous problems, from inflation in Ireland to unemployment in France and Germany.

I'm living in The Netherlands and can tell you all that since the Euro the average Dutchman is upset about prices jumpint 25-50% on numerous items. The Dutch Govt is now compiling a list of over 2200 businesses that have illegally raised prices. If something used to cost one guilder (about 46 cents; it now cost one euro - about 91 cents). Not all products but enough. A candy bar used to cost about 45 cents at the Gas Station and now it costs about 58 cents with the conversion....

The Euro has made it easier for US military in Belgium, especially when calculating conversion rates. The old 40 BF to the dollar was impossible to calculate in your head quickly. You can try if you'd like: 2999 BF = ??? dollars (round to the nearest 5.) (Note - the actual exchange rate was about 43 or 44, which is even more fun.)

The exchange rate for Euros is about 1 euro = 90 cents. Plus we don't haveto exchange money to go to any of the countries around us. (France, Germany, Luxembourg, Netherlands.) I don't really care if the Euro benefits the countries who switched. It was a decision made by a bunch of socialists; I'd say the long-term prognosis isn't great. It helps us, though.

I actually think that the tide of socialism in Europe may well be reversed by this move

I think the larger the scale, the less socialism there is. Basically, if you are a dutchman, it's easier to pay for welfare for a neighboring dutchman that it is to pay welfare for an italian.

I am not so sure that the Germans like the switch.

Well, it seems so: http://www.spiegel.de/wirtschaft/0,1518,196835,00.html

Imagine if the 50 states here in the USA maintained there own currencies?

I'll take those shapes! But then I believe in antiquated concepts like "states' rights" as well...

Why the Euro will Fail

Nominally, the Euro is being offered as (1) a way to achieve greater economic prosperity, (2) an alternative to the U.S. dollar, and (3) a means by which inter-country tensions can be reduced. It will fail on all those counts.

A nifty thing about a common currency is that it forces a common monetary discipline on the participants. If the participants share a common monetary philosophy, internal stresses are minimized. The problem in Euroland is that the countries involved have wildly different monetary histories (and presumably different expectations) due to their markedly different monetary philosophies. For example, the Germans are (were) rightly proud of their Deutschmark, due, in no small part, to their monetary discipline. The Italians, on the other hand, have a history of monetizing their national debt, producing severe inflationary pressures.

A country's monetary philosophy has many policy implications, which manifest themselves in many ways, such as government debt, size of the public sector, inflationary forces, expectations of the governed, etc. Try to imagine the Italians living under the austere discipline of a Prussian monetary policy. There would be riots in the street. (And in fact there were riots, when tight money policies were attempted in the 70's and 80's).

If Euroland component countries have wildly different expectations, why has there been relatively quiet acceptance of the Euro transition? One great advantage for the Euro-dreamers has been that the Euro was implemented during a time of great economic prosperity. The 90's were the time of the great, speculation-driven, Clinton Bubble. Public coffers were overflowing. Now that the Bubble has burst, expect growing economic problems and rising unemployment with resulting pressures on political and monetary policies. Even in these relatively good times, the Euro has been under pressure. Its value, relative to the US dollar, has fallen some 25% since its introduction 3 years ago.

The Euro's first major hurdle will occur when the economies of Euroland experience dissimilar conditions. This will force some hard choices. Should any of Euroland's weaker players slip into recession, expect the pressure on the Euro to inrease dramatically as political compromise steps in. The hoped-for formulation would be for the weaker countires to engage in significant fiscal discipline. However, local politics wil prevent that from happening.

The second major problem with the Euro is the resulting creation of the bureaucratic superstructure. A federalized layer of bureaucrats is being put in place in Euroland. Here the problems will be legion. Checks and balances are limited, so expect the size of this layer to grow inexorably.

It has been suggested that this new political entity will be equivalent to the US federal government's role, but this mischaracterizes the nature of the beast. The countries involved all have sovereign government bureaucracies in place already; think ministries of defense, judiciary, security, welfare, etc. None of the exisiting layers are to be eliminated (that would be "unfair"). So new layers are to be added to coordinate and implemement new Euroland laws, edicts, and policies among the various countries.

While it could be argued that a more efficient economic engine can easily absorb this additional cost, it is important to remember that Euroland is not noted for its efficiency and innovation. Take sluggish, socialist-leaning countries, tie them together with a new layer of bureaucrats and what is the result? An economic powerhouse, or something that more closely resembles the old USSR -- a socialist, centralized, supra-national bureaucratic backwater? Internal stresses will grow as additional socialist laws and programs are put in place to accommodate various "unfair" economic and political dislocations. One nation's economic advantage becomes another's political problem. The Eurocrats will be asked to step in and "fix" things.

Euroland officials are already admitting privately that decision-making by the current European Council is already close to unworkable. And they fear it could be paralysed when up to 10 extra nations from southern and eastern Europe join in 2004. Their solution? Add a new management layer, an "EU super council" comprised of predominate Euroland countries. And so it grows.

The US has been relatively quiet on this whole issue. In part, it is because the issue is somewhat arcane. After all, to most people, economics is boring. Plus, the whole issue came to fruition during the time of Clinton. He and his ilk share in the vision of a political superstate, even at America's expense. Many on the left are watching in hopeful anticipation of the Euro's success. Conservatives, on the other hand, should realize that this will inevitably knock the Europeans for a loop. A set of major economic competitors (and problematic world allies) are in for a bumpy ride. Best to keep quiet while they shoot themselves in the foot.

The Euro will fail in its ostensible economic goals, but it will succeed in its true hidden ones, the promotion of a 'new European Soviet,' as Mikhail Gorbachev put it during a recent visit.

If the participants share a common monetary philosophy, internal stresses are minimized. The problem in Euroland is that the countries involved have wildly different monetary histories (and presumably different expectations) due to their markedly different monetary...

You forget that there are things like the ECB that decides the monetary policy, a sort of decisional center, if not yet a government, that give the hints of all the economic (and not only) politics, massive economic interchanges, harmonized laws, a common level of income/ education/ social benefits...

Moreover ,the integration process is somothing taken for granted by most of the population, and it is going to keep on.

For example, the Germans are (were) rightly proud of their Deutschmark, due, in no small part, to their monetary discipline. The Italians, on the other hand, have a history of monetizing their national debt, producing severe inflationary pressures.

A country's monetary philosophy has many policy implications, which manifest themselves in many ways, such as government debt, size of the public sector, inflationary forces, expectations of the governed, etc. Try to imagine the Italians living under the austere discipline of a Prussian monetary policy. There would be riots in the street. (And in fact there were riots, when tight money policies were attempted in the 70's and 80's).

My personal conclusion is that you have never been neither in Germany nor in Italy in the last ten years. If you read international newspapers, apart from comic books, you should know that in a meeting held in 1993 between the major authorities of Germany and Italy, they decided that Italy needed infact a "Prussian" fiscal discipline, to avoid an Argentina-like end that at the time seemed unavoidable. Of course the support of the Bundesbank was necessary,and the present conclusions are two: 1)After the big scare, now Italians dislike (personal and public) debt like hell and see the hawkish policy of Wim Duisemberg as a guarantee against lavish expenditures by corrupt politicians and the erosion of their wealth. 2)As i said berfore, Northen Italy's macroeconomic data mirrors that of Western Germany, and this situation is not going to change since those areas are integrated (almost) like New York and New Jeresy.

If Euroland component countries have wildly different expectations, why has there been relatively quiet acceptance of the Euro transition?

Frankly, this sentence is quite meaningless.

Even in these relatively good times, the Euro has been under pressure. Its value, relative to the US dollar, has fallen some 25% since its introduction 3 years ago.

Currencies fluctuate. The Euro has got some problems, because Euroland's economy got problems. Anyway, it appreciated 6% since october.

I know the EU institutions are inefficient. But that's the European way: slow adjustments. I'm not worried about the future of Europe (and the world ,consequently), because all the people i know have, more or less, democratic beliefs and behaviours (i.e. nothing to do with the soviets), and the idea of Europe they are developing ( a variegate puzzle of friendly nations) is opening their minds to a more wide vision of the world.

The future of Europe is questionable, but saing that the Euro is a joke is the same to say the Earth is flat.

You forget that there are things like the ECB that decides the monetary policy, a sort of decisional center, if not yet a government...

Not at all. Re-read my post. The growing centralization process around newly-formed centers will cause problems.

My personal conclusion is that you have never been neither in Germany nor in Italy in the last ten years. If you read international newspapers, apart from comic books...

Unable to refute my point, so you attack me? My, my, my. Wrong again.

the major authorities of Germany and Italy ... decided that Italy needed infact a "Prussian" fiscal discipline, to avoid an Argentina-like end that at the time seemed unavoidable.

And I agree whole-heartedly that that's needed.

Italians dislike (personal and public) debt like hell and see the hawkish policy of Wim Duisemberg as a guarantee against lavish expenditures by corrupt politicians and the erosion of their wealth.

And the pre-dominant commies and other assorted Italian lefties, not known for their concern about other people's money, are included in your characterization??

this sentence is quite meaningless.

That's because it's a question. Please reread it in context. If you need help understanding use of the rhetorical, I'll be happy to explain.

Currencies fluctuate.

Talk about meaningless sentences (hehehe).

The Euro has got some problems, because Euroland's economy got problems.

As I indicated in my post, the Euro has faltered significantly in relatively good economic times. When times get tough, the fit will hit the shan.

Anyway, it appreciated 6% since october.

Hmmmmm, what might have happened last fall to cause people to abandon the dollar and go to the Euro temporarily...what could it be, what could it be?

all the people i know have, more or less, democratic beliefs and behaviours (i.e. nothing to do with the soviets), and the idea of Europe they are developing ( a variegate puzzle of friendly nations) is opening their minds to a more wide vision of the world.

(i want to teach the world to sing, to live in perfect harmony...hehehe)

The future of Europe is questionable, but saing that the Euro is a joke is the same to say the Earth is flat.

Oops, you're mischaracterizing what I said again. The Euro will help insure that "the future of Europe is questionable".

Northen Italy's macroeconomic data mirrors that of Western Germany, and this situation is not going to change since those areas are integrated (almost) like New York and New Jeresy.

A Freeper article yesterday indicated that the EU is pushing Croatia to give greater autonomy to Istria. If so, will this precedent also apply to Northern Italy, and facilitate the goals of the Lombard League? Or, for that matter, the re-establishment of an independent Venice?

Are there any Italians calling for re-establishment of a Germanic state roughly encompassing the historic bounds of the Holy Roman Empire -- say, running down to the Apennines and Ravenna (I realize that the Empire was in Genoa long after it had left Ravenna).

From Margaret Thatcher's latest book, Statecraft:

What we should grasp, however, from the lessons of European history is that, first, there is nothing necessarily benevolent about programmes of European integration; second,the desire to achieve grand utopian plans often poses a grave threat to freedom;and third, European unity has been tried before, and the outcome was far from happy.

I believe that:

The European single currency is bound to fail, economically, politically and indeed socially, thought the timing, occasion and full consequences are all necessarily still unclear.

It therefore follows that countries which have not already joined the project would be well-advised to keep out.

This failure cannot be rectified by American or other international attempts to rescue the euro, because the fundamentals are irremediably unsound.

The most important priority for the non-Europeans is to see that European policies do as little harm as possible now or later to the world economy.