Europe and the Euro

[beet1e]

An old chestnut... I am fascinated to learn more about how countries which adopted the Euro have been getting along with it. I sort of wish Britain had gone ahead with it too - would make everything so much easier for frequent travellers - and then I read a news story about the dilemma facing Germany.

On holiday in Yorkshire the week before last, I was discussing this with my brother, who has a degree (BSc) in Economics. Germany has a bit of a problem. It is in recession, and has unemployment of about 10%. The European mandated interest rate for countries with the Euro is 3½%. In order to stimulate the economy, Germany needs an interest rate cut of 3% taking it down to ½%. But!!! - And this is the part I didn't fully appreciate till Big Bro explained it - when joining the single currency, the individual countries surrender all control of interest rates to the central European bank. Hence, Germany is stuck with that 3½% rate, and is in the brown and smellies as a result.

WE were in the B&S in 1989, again when Germany (the largest European economy) was in recession and we were booming. The then chancellor, Nigel Lawson, cut interest rates in an attempt to shadow what Germany was doing. The result: An explosion in the money supply, and a borrowing binge which fuelled house prices etc. Everything was being bought with borrowed money. It all ended in tears - recession, house price tumble, negative equity for many homeowners, Big German boot up the jacksie for Britain as we made our ignominious departure from the ERM, devaluation, Black/White Wednesday, failed businesses that had been crucified by Norman Lamont's interest rate rises to prop up the pound, je ne regrette rien.....

If Britain were to join the Euro single currency, how would we avoid a repeat, with interest rate regulation being removed from our control? Does anyone here share my brother's somewhat cynical (though probably correct) view that the single currency is a time bomb to create just such a crisis, which forces us into a United States of Europe? America has 50 states and a single currency, despite such disparate economies as Mississippi and California - arguably because of a system of federal taxes and federal grants. Not sure whether interest rates can be set locally...

The U. S. of E. I don't think many people want that, but is it inevitable?

[funkedup]

Y'all are screwed.  We are accepting applicants for the 51st state.  Sign up for annexation NOW.

[GRUNHERZ]

No USE, you guys are too different and too nationalistic plus no one entity, like lets say a strong president like a lincoln or a roosevelt, will ever have enough power to independantly force you to make tough decisions. And frankly the history of european monetary union programs in the past has been a disaster with countries joining, leaving, not following rules, rules being meaningles and so on and so on.

[Dowding]

That sounds like an obvious problem, Beetle. I don't know the ins and outs of the issue to an extent to comment, but I find it hard to believe these things haven't been taken into account.

Perhaps we'll just have to keep the conservatives out of power (or rather let them keep themselves out of power) and avoid the cock-ups of the past.

No USE, you guys are too different and too nationalistic plus no one entity, like lets say a strong president like a lincoln or a roosevelt, will ever have enough power to independantly force you to make tough decisions. And frankly the history of european monetary union programs in the past has been a disaster with countries joining, leaving, not following rules, rules being meaningles and so on and so on.

It's going to be a difficult road. Some people aren't afraid of difficult choices.

The economic union has been very successful in many areas. Monetry union is the next level.

Over my dead body Funked. You can keep your crappy national sports which I'm sure are a pre-requisite of membership.

[GRUNHERZ]

Originally posted by Dowding
That sounds like an obvious problem, Beetle. I don't know the ins and outs of the issue to an extent to comment, but I find it hard to believe these things haven't been taken into account.

Perhaps we'll just have to keep the conservatives out of power (or rather let them keep themselves out of power) and avoid the cock-ups of the past.

It's going to be a difficult road. Some people aren't afraid of difficult choices.

The economic union has been very successful in many areas. Monetry union is the next level.

Thatcher saved that country of yours from the commu err. I mean socialists... Of course you being from one of those 19th century coal mining union towns she destroyed I understand how you will not accept that fact - it was one of those tough choices and she wasnt afraid to make it.

And thats exactly what the problem with a USE will be - the people ready willing and able to make such tough choices will not be allowed to act because they will not be given credible authority to do so. Now maybe I'm wrong but the history of european integration has largely shown that to be true.

[Dowding]

You haven't a clue about Thatcher. The problem wasn't what she did, but what she didn't do. She made a whole region unemployed and put working families on the dole with NO provision for new jobs in any other industry. And she could do it because she knew she wouldn't be voted for in the region either way. Not exactly a tough choice was it? It's a shame there were no coal-fields in Kent or Sussex - that would have been a laugh.

What do you mean by 'European integration'? The economic union has been a success.

[Nashwan]

America has 50 states and a single currency, despite such disparate economies as Mississippi and California - arguably because of a system of federal taxes and federal grants.

It also has a common language, which makes it far easier for a company to relocate from a booming area to a poorer area with lower costs, and for an individual to move from an area of high unemployment to a more prosperous area.

Europe lacks that flexibility.

Perhaps we'll just have to keep the conservatives out of power (or rather let them keep themselves out of power) and avoid the cock-ups of the past

The mistake they made was to try to shadow the DM, especially after joining the ERM. Britain's economy was not in sync with Europe's (we entered recession before them, and recovered before them), so under the ERM our interest rates were high because the rest of Europe was still trying to keep growth in check, whilst Britain had already entered reccession.

Once we came out of the ERM, and set rates the British economy needed, Britain began a recovery.

[beet1e]

Originally posted by Dowding
It's a shame there were no coal-fields in Kent or Sussex - that would have been a laugh.

Dowding - in the 1970s, there WERE some coal mines in Kent!

[GRUNHERZ]

Originally posted by Dowding
You haven't a clue about Thatcher. The problem wasn't what she did, but what she didn't do. She made a whole region unemployed and put working families on the dole with NO provision for new jobs in any other industry. And she could do it because she knew she wouldn't be voted for in the region either way. Not exactly a tough choice was it? It's a shame there were no coal-fields in Kent or Sussex - that would have been a laugh.

What do you mean by 'European integration'? The economic union has been a success.

Who said she had to provide the new jobs? Of course I know she did not, thats not her role, she was a PM not a comrade commissar. What do you want communism where the government tells you waht to do and provides 100% continous employement for people with outdated unmarketable skills? I dont think thats what you want even though you are asking for such polices. Tell me this dowding if these coal fields were still allowed to go on would you have your cushy office job today? Coal sucks and coal mining is 19th century stuff - tough luck those guys had 19th century skills in a 20th century setting. Sorry to be harsh about this dowding but these economic transiions declialways leave some people behind, look what happened to farmers at start of industrial revolution - farming nd from almost 100% of poulation to only about 5% or less these days IIRC. So in the short term yes some ppl are screwed but in the long them they, like you did, find other usually better paying jobs with higher standard of living.

As for european intergraetion just look at how the UK and the scandinavian countries have been acting with reagds to the money sytem. Look at the breakdown of fixed exchange rate schemes within the EMS. Then rememvber how  hard the french tried to keep the UK out of the old EC back in the day. Then look at all the loopholes of the founding monetary systems where nobody followed the rules. Just from my experience these trends will not allow Europe to become a USE type of thing but you will achieve a pretty high level of integration nonetheless.

[GRUNHERZ]

Originally posted by Nashwan
It also has a common language, which makes it far easier for a company to relocate from a booming area to a poorer area with lower costs, and for an individual to move from an area of high unemployment to a more prosperous area.

Europe lacks that flexibility.


The mistake they made was to try to shadow the DM, especially after joining the ERM. Britain's economy was not in sync with Europe's (we entered recession before them, and recovered before them), so under the ERM our interest rates were high because the rest of Europe was still trying to keep growth in check, whilst Britain had already entered reccession.

Once we came out of the ERM, and set rates the British economy needed, Britain began a recovery.

The common langunage thing isnt a big deal. Really there are tons of people working very hard in the USA who cant speak english.  And even in europe this isnt such a big deal - look at how germany had to import tons and tons of guest workers after ww2.

The real problem in europe was inability for labor and capital to freely go to the most efficient areas - and now this is much less of a problem with the EU intergration with its free flow of workers and capital across member states. Of course this means that low skill standardized production will move from high labor cost areas to low labor cost areas and likewise that these areas will experience a "brain drain" to the wealthier regions all acoompanied by the usual political whining. The question is will the EU govt setup be robust enogh to deflect such partisan  pressures and move forward.

[straffo]

Thatcher is still the ultimate morronic prime minister the brit have ever had.

And btw I believe she was a cross-dresser.

[GRUNHERZ]

Originally posted by straffo
Thatcher is still the ultimate morronic prime minister the brit have ever had.

And btw I believe she was a cross-dresser.

Yes straffo anyone who attacks unions and socialism must be evil - you are french and I understand that so I'm not gonna care too much.  Whats the last time you been on strike, isn't it time again?  

[straffo]

Never been on strike.

And it won't change the fact that Thatcher is an morronic abomination.

[Dowding]

That's right Grunherz, the role of a government is not to provide any kind of re-training opportunities, boost re-education for adults or invest in alternative industries in the area. That provides for a prosperous society? When you wipe out a whole means of employment for community after community in the same area within such a short space of time the social problems are immense. House repossesions, general debt went through the roof, as did crime, particularly drug abuse.

As for me - my father was an experienced fitter at a coking plant. Lots of people whose parents working within and around the industry went to university (the fact it was unlikely I was going to go down the pit aside). Mining and the ancillary industries pay very, very well. They were affluent people. The problems were greater because suddenly that was taken away and only very low paid jobs existed - jobs that wouldn't pay the mortgage.

And Grunherz, if this had been anywhere near London on the same scale you better believe there would have been more provision for getting people into new forms of work. Does that mean they are more socialist down there?

[straffo]

up to you to translate (should be pretty difficult ):

Femme du monde ou bien putain
Qui bien souvent êtes les mêmes
Femme normale, star ou boudin,
Femelles en tout genre je vous aime
Même à la dernière des connes,
Je veux dédier ces quelques vers
Issus de mon dégoût des hommes
Et de leur morale guerrière
Car aucune femme sur la planète
N' s'ra jamais plus con que son frère
Ni plus fière, ni plus malhonnête
A part peut-être Madame Thatcher

Femme je t'aime parce que
Lorsque le sport devient la guerre
Y a pas de gonzesse ou si peu
Dans les hordes de supporters
Ces fanatiques, fous-furieux
Abreuvés de haines et de bières
Déifiant les crétins en bleu,
Insultant les salauds en vert
Y a pas de gonzesse hooligan,
Imbécile et meurtrière
Y'en a pas même en grande Bretagne
A part bien sûr Madame Thatcher

Femme je t'aime parce que
Une bagnole entre les pognes
Tu n' deviens pas aussi con que
Ces pauvres tarés qui se cognent
Pour un phare un peu amoché
Ou pour un doigt tendu bien haut
Y'en a qui vont jusqu'à flinguer
Pour sauver leur autoradio
Le bras d'honneur de ces cons-là
Aucune femme n'est assez vulgaire
Pour l'employer à tour de bras
A part peut être Madame Thatcher

Femme je t'aime parce que
Tu vas pas mourir à la guerre
Parc' que la vue d'une arme à feu
Fait pas frissonner tes ovaires
Parc' que dans les rangs des chasseurs
Qui dégomment la tourterelle
Et occasionnellement les Beurs,
J'ai jamais vu une femelle
Pas une femme n'est assez minable
Pour astiquer un revolver
Et se sentir invulnérable
A part bien sûr Madame Thatcher

C'est pas d'un cerveau féminin
Qu'est sortie la bombe atomique
Et pas une femme n'a sur les mains
Le sang des indiens d'Amérique
Palestiniens et arméniens
Témoignent du fond de leurs tombeaux
Qu'un génocide c'est masculin
Comme un SS, un torero
Dans cette putain d'humanité
Les assassins sont tous des frères
Pas une femme pour rivaliser
A part peut être Madame Thatcher

Femme je t'aime surtout enfin
Pour ta faiblesse et pour tes yeux
Quand la force de l'homme ne tient
Que dans son flingue ou dans sa queue
Et quand viendra l'heure dernière,
L'enfer s'ra peuplé de crétins
Jouant au foot ou à la guerre,
A celui qui pisse le plus loin
Moi je me changerai en chien si je peux rester sur la Terre
Et comme réverbère quotidien
Je m'offrirai Madame Thatcher