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Declining economy, unsustainable booms and false hopes that the € will save everything. Especially regarding those countries relying heavily on tourism. The € didn't destroy Greece, it was destroyed by decades of corrupt politicians. The € didn't put Spain or Ireland down, but the global market bursting the construction bubble.
None of that really contradicts seixal's points about currency devaluation, though some of the others might be hyperbole. Nor about the benefits to German lenders.
Using the US analogy, Florida had a huge housing bubble as well but government funding levels didn't decline much due to transfer payments.
Depends, Italian economy was stagnant before and after but I think we benefitted from the Euros as we are a manufacturing country who focuses mostly on exports that the creation of the Eurozone allowed us to increase exports within Europe
The creation of the Eurozone meant Italian exports were expensive for most importer of Italian goods because the Euro was generally a higher valued currency.. So it's worse for manufacturating, at the same time it would make imports and borrowing money easier.
My German mates dislike the euro, they call it teuro (teuer is expensive in German) because all the prices rised.
Oh yes, I also know fellow Germans that thinks this way. They compared for example the prices of cucumbers in the summer in DM with the prices of cucumbers in the winter in Euro. 0.99 DM in the summer but 0.99 Euro in the winter. Ohh they have doubled the prices The stupidity of the population is unlimited. Better try to avoid to get in contact with such people.
Last edited by lukas1973; 02-10-2016 at 04:50 AM..
That's wrong. It's correct that the Eurozone has a positive current account balance. But almost all Eurozone members have now a current account surplus.
A trade surplus is not necessarily a positive thing. It means that you spare the consumption and investments of the exported goods domestically. And it's not clear whether countries with a huge export surplus will ever seen a service in return. What if countries like the U.S. and the UK will be unable to produce the service in return in the future? I don't see a big problem with the U.S. But how will the UK ever pay for all those annual trade deficits? Will they pay with tea? We don't drink that much tea and we produce our own tea, anyway.
The UK and also the U.S. can boost their economies by importing huge amounts of foreign made goods. Especially the UK would fall into the deepest recession ever if they had to achieve a balanced current account. So far I don't see that especially the UK undertakes any efforts to pay for all those imports. They should half the wages or they should start working 60 hours a week.
The huge trade deficts brings the U.S. and the UK in a very comfortable position. They can consume much more than they are able or willing to produce. Either they have to reduce their consumption massively or they have to work much longer hours.
I would suggest that we "export" huge amounts of German retirees to the U.S. They can spend their pensions in the U.S. then Americans have to work for them. That would be a good way to get the servie in return for all our trade surplusses. But that doesn't work with the UK, because of the terrible weather there
The thing with the current account balances is a little bit more complicated than most people believe.
The creation of the Eurozone meant Italian exports were expensive for most importer of Italian goods because the Euro was generally a higher valued currency.. So it's worse for manufacturating, at the same time it would make imports and borrowing money easier.
A stronger currency is mostly a good thing. Especially if you have already a trade surplus like Italy. It makes imports cheaper. That means that you have to work fewer hours to be able to buy foreign made goods. And you can create a lot of jobs in the retail sector by selling imported goods. The wealth in the UK depends largely on the sale of foreign made goods. A stronger Pound will boost their economy. Yes those countries are highly indepted. But when it's getting worst, they will say, ohh sorry, we can't pay back our debt. That means that countries with a trade surplus like Germany have delivered all the products for free.
mmh ok. Having a declining economy is problem, and having a declining economy coupled with not being able to act on your own currency is a problem on steroids. Many countries in the world were affected by the 2008 sub-prime, especially the US, however they were able to deal with the debt lowering the dollar. It has its pros and its cons but its certainly much better than the austerity.
Certainly there were corrupt politicians, but who corrupted them to ensure their countries would take out unsustainable loans on behalf of their fellow country men?
If you're still not convinced, let me ask a reverse question. What benefits has the EU or the Euro currency brought?
For a country like Germany with a huge current account surplus, austerity is not difficult to achieve. Of course austerity would be positive in the U.S. but it would mean that the U.S. would fall into a deep recession.
A stronger currency is mostly a good thing. Especially if you have already a trade surplus like Italy. It makes imports cheaper. That means that you have to work fewer hours to be able to buy foreign made goods. And you can create a lot of jobs in the retail sector by selling imported goods. The wealth in the UK depends largely on the sale of foreign made goods. A stronger Pound will boost their economy. Yes those countries are highly indepted. But when it's getting worst, they will say, ohh sorry, we can't pay back our debt. That means that countries with a trade surplus like Germany have delivered all the products for free.
I agree that a stronger currency is mostly a good thing, but not sure I understand all of your reasons.
In the long run, a strong currency over time is more an effect than a cause, reflecting that an economy has a strong and sustained internationally competitive position in some combination of manufacturing and services, such as Germany in manufactured goods, for example, and the UK in, say, financial services.
In the short run, a currency devaluation/depreciation can help with the sale of goods in inventory, for example, providing a temporary boost to the economy, but only temporary if the economy is not internationally competitive in, say, quality of goods and/or production costs.
Introduction of the euro was originally meant, among other things, to give some of the less competitive economies, mainly of southern and central Europe, a temporary boost, and on the back of that boost they were supposed to become more competitive internationally.
In the event, in many cases they simply spent that boost on the usual consumption, like they had done cyclically in decades past.
Hence, despite a change in currency regime, relative competitiveness did not significantly change.
That's wrong. It's correct that the Eurozone has a positive current account balance. But almost all Eurozone members have now a current account surplus.
A trade surplus is not necessarily a positive thing. It means that you spare the consumption and investments of the exported goods domestically. And it's not clear whether countries with a huge export surplus will ever seen a service in return. What if countries like the U.S. and the UK will be unable to produce the service in return in the future? I don't see a big problem with the U.S. But how will the UK ever pay for all those annual trade deficits? Will they pay with tea? We don't drink that much tea and we produce our own tea, anyway.
The UK and also the U.S. can boost their economies by importing huge amounts of foreign made goods. Especially the UK would fall into the deepest recession ever if they had to achieve a balanced current account. So far I don't see that especially the UK undertakes any efforts to pay for all those imports. They should half the wages or they should start working 60 hours a week.
The huge trade deficts brings the U.S. and the UK in a very comfortable position. They can consume much more than they are able or willing to produce. Either they have to reduce their consumption massively or they have to work much longer hours.
I would suggest that we "export" huge amounts of German retirees to the U.S. They can spend their pensions in the U.S. then Americans have to work for them. That would be a good way to get the servie in return for all our trade surplusses. But that doesn't work with the UK, because of the terrible weather there
The thing with the current account balances is a little bit more complicated than most people believe.
What!! The weather in the UK is 10 times better than the weather in Germany!!!!!
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The stupidity of the population is unlimited. Better try to avoid to get in contact with such people.
