The Euro (currency) (insurance, to buy, wages)

[Amazonas]

Originally Posted by Travelling fella

imho the people who don't like the EU are just envious

That's quite a silly statement. Lots of people are feeling uneasy about the possibility of a North American currency, yet the idea still remains as a conspiracy theory. People don't like change period. Since the creation of the Euro, there are lots of economic factors that has negativately impacted the average worker. In my opinion, the Euro is highly overvalued. Even though all other currencies are fiat, at least they are backed by the local government. I'm afraid that the Euro doesn't even have a constitution to back its currency. Netheless to say, the value of all currencies are inherently emotional.

[Jaggy001]

Originally Posted by Amazonas

That's quite a silly statement. Lots of people are feeling uneasy about the possibility of a North American currency, yet the idea still remains as a conspiracy theory. People don't like change period. Since the creation of the Euro, there are lots of economic factors that has negativately impacted the average worker. In my opinion, the Euro is highly overvalued. Even though all other currencies are fiat, at least they are backed by the local government. I'm afraid that the Euro doesn't even have a constitution to back its currency. Netheless to say, the value of all currencies are inherently emotional.

Highly overvalued against which currency? If you mean the US dollar, then that is more to do with the weakness of the dollar than it is about the strength of the Euro.

Like the ECU before it, the Euro is actually backed by a "basket" of economies which should render it more stable than a currency backed by a single one.

Incidentally, not all currencies are backed by a constitution. The UK, for example, has never had a constitution.

[jja100]

Originally Posted by albion

I'm sorry jja100 but you seem to have a huge chip on your shoulder when it comes to the EU. It seems like you want the EU to fail, why?

I know I come off that way but it is just my fervent belief in the preservation of the nation-state. I don't mind the Euro itself and the independent ECB but there was no reason to couple the EU with a political agenda to open borders, strip sovereignty, and enhance trade regulations.

[Amazonas]

Originally Posted by Jaggy001

Highly overvalued against which currency? If you mean the US dollar, then that is more to do with the weakness of the dollar than it is about the strength of the Euro.

Overvalued agaisnt most leading currencies. Also, overvalued because the ECB is keeping prime rates artificially high, which in returns affects the overall economy. Specially during a recession economy and to those who actually engage in the manufacturing industry. Do I believe this is mere accident?....Of course not, but fundamentally is not reflecting its real value.

Originally Posted by Jaggy001

Like the ECU before it, the Euro is actually backed by a "basket" of economies which should render it more stable than a currency backed by a single one.

A basket of economies that have different policies, size, and that are also structured differently. You can't deny that the introduction of the Euro has created more headaches than solutions. The different economies in Europe are not in synch. In my honest opinion, I see as positive the fact that countries such as the Norway, Sweden, and the U.K. have kept some sort of economic and political sovereignty. In addition, every country will lead an economic path that only serves their interest. The best current example is the refusal of the German authorities to bail out the Eastern Europeans countries. Also, and as I often hear from Europeans themselves; a German or French citizen would ask himself why do I have to pay for the other Europeans **** ups? Obviously, as much as the rethoric of the European nation is beign pushed, implied cultural and national identity always plays a big role in how each economy will look for their best interest.

Originally Posted by Jaggy001

Incidentally, not all currencies are backed by a constitution. The UK, for example, has never had a constitution.

Certainly, the U.K. does not have an official or single document called Constitution. However, the British Constitution exist in form of statues, court judments, and treaties. Netheless to say, it also has other sources that includes the royal prerogatives and parliamentary constitutional conventions based on the Magna Carta, which the EU does not have as of today. In addition, the British currency has a long history of economic medium of exchange that the Euro does not have. Not to mention that the British pound was at one point in history the world currency of reserve before the Breton Woods Agreement in 1941.

[bale002]

Originally Posted by Amazonas

Overvalued against most leading currencies. Also, overvalued because the ECB is keeping prime rates artificially high, which in returns affects the overall economy. Especially during a recession economy and to those who actually engage in the manufacturing industry.

In my experience, competitive manufacturing needs the hurdle of relatively high interest rates to remain competitive and the economy overall to have an incentive for saving and so internal investment: throughout this recession, I continue to do steady work for some very solid European companies.

Too low interest rates for too long is one of the main reasons why the US economy is in a shambles right now.

The European economy has its problems, but the level of interest rates is not one of them, I think the ECB has it about right and in any case interest rates are only one policy tool.

If anything, banking regulation was lax as too many European banks took on the reckless aspects of the Anglo-American model, buying into toxic assets; it would have been better to maintain gearing toward traditional deposit-taking and lending from and to productive economic participants, maybe not too exciting but it works, just as I am still working at a steady pace during these past several quarters and into the foreseeable future.

[Jaggy001]

Originally Posted by Amazonas

Overvalued agaisnt most leading currencies. Also, overvalued because the ECB is keeping prime rates artificially high, which in returns affects the overall economy. Specially during a recession economy and to those who actually engage in the manufacturing industry. Do I believe this is mere accident?....Of course not, but fundamentally is not reflecting its real value.

You still haven't specified which currencies. Euro rates reflect the reality of a mainly manufacturing economy and seems to be working quite well for the Euro zone. Of course, for years, rates in the Eurozone were below the UK and USA (including before the Euro when most western European economies were shadowing the Deutschmark) and that didn't damage their exchange rates either. It is far more plausible to argue that the weakness of the dollar, pound and yen (to name but 3) are due to the structural weakness of their economies rather than any artificial strength of the Euro.

Originally Posted by Amazonas

A basket of economies that have different policies, size, and that are also structured differently. You can't deny that the introduction of the Euro has created more headaches than solutions. The different economies in Europe are not in synch.

That is simply not the case. They have been in synch for many years. Even pre-Euro, the Bundesbank set fiscal policy for most of western Europe. Introducing a single currency merely recognised reality. Even Switzerland - which still has its own currency - pegs it against the Euro just as they pegged it against the Deutschmark before the Euro.

Originally Posted by Amazonas

I see as positive the fact that countries such as the Norway, Sweden, and the U.K. have kept some sort of economic and political sovereignty.

But have they? Were they immune from the recent global financial Tsunami. Of course not. Events in the US almost blew away London as a global financial centre. Swedish manufacturing industry is very dependent on the economic health of the EU and even prudent Norway remains fairly dependent on global oil prices and, hence, the dollar. Iceland, of course, is pretty much bankrupt. There are plenty more examples where that came from.

Originally Posted by Amazonas

Certainly, the U.K. does not have an official or single document called Constitution. However, the British Constitution exist in form of statues, court judments, and treaties. Netheless to say, it also has other sources that includes the royal prerogatives and parliamentary constitutional conventions based on the Magna Carta, which the EU does not have as of today. In addition, the British currency has a long history of economic medium of exchange that the Euro does not have. Not to mention that the British pound was at one point in history the world currency of reserve before the Breton Woods Agreement in 1941.

I think, therefore, that you are agreeing that a constitution is not a necessary prerequisite to a currency.

[Jaggy001]

Originally Posted by jja100

I know I come off that way but it is just my fervent belief in the preservation of the nation-state. I don't mind the Euro itself and the independent ECB but there was no reason to couple the EU with a political agenda to open borders, strip sovereignty, and enhance trade regulations.

That is a political argument against the Euro but not an economic one.

[jja100]

Originally Posted by Jaggy001

That is a political argument against the Euro but not an economic one.

Somewhat, except for the way the two are intertwined. Because of this, the Euro's fate rests upon its political salvation.

[Amazonas]

Originally Posted by Jaggy001

You still haven't specified which currencies. Euro rates reflect the reality of a mainly manufacturing economy and seems to be working quite well for the Euro zone. Of course, for years, rates in the Eurozone were below the UK and USA (including before the Euro when most western European economies were shadowing the Deutschmark) and that didn't damage their exchange rates either. It is far more plausible to argue that the weakness of the dollar, pound and yen (to name but 3) are due to the structural weakness of their economies rather than any artificial strength of the Euro.

You gotta be kidding me right? When I said leading currencies, obviously, I'm was not talking about the Venezuelan Bolivar, the Indian Rupee, or the Mexican peso. So, think harder. ECB monetary policies do not necesseraly follow economic trends. I will saying it again in case you missed it. The Euro, just like any other fiat currency is overvalued. It is inherently emotional and has not tangible backing. This is also based on a fractional reserve system that I'm sure the ECB also practice. The banking cartel that comforms the ECB does not give a flying cucumber how well or not, the manufacturing sector might be performing....get it? There's no instrument that allows an accurate empirical measurement of money supply, that includes the MO, 1,2, and M3.

Originally Posted by Jaggy001

That is simply not the case. They have been in synch for many years. Even pre-Euro, the Bundesbank set fiscal policy for most of western Europe. Introducing a single currency merely recognised reality. Even Switzerland - which still has its own currency - pegs it against the Euro just as they pegged it against the Deutschmark before the Euro.

Your statement in regards of European economies being in synch is symply preposterous. Fiscal and monetary policies in different European economies were and continue to be all over the place. There's a fracture of interests that affects the community. Pegging a currency to another currency does not imply uniformity. Ecuador has pegged their currency to the U.S. dollar, China has also pegged their currency to the U.S. dollar yet they are not the same. The economies of Italy, Spain, Portugal are nowhere near the same as the economies of the Netherlands, Germany, or France for that matter. But if you want to believe they are then please suit yourself.

Originally Posted by Jaggy001

But have they? Were they immune from the recent global financial Tsunami. Of course not. Events in the US almost blew away London as a global financial centre. Swedish manufacturing industry is very dependent on the economic health of the EU and even prudent Norway remains fairly dependent on global oil prices and, hence, the dollar. Iceland, of course, is pretty much bankrupt. There are plenty more examples where that came from.

They were not immune, but they can manipute their fiscal and monetary policies at will, which can not be said from the rest of the member countries. Swedish banks, the same ones extending credits to their industry are in financial trouble. Sweden has a nightmare going on with Latvia, Slovenia, and the rest of the balkan countries racking up billions of Euros. Norway's is not willing to share their wealth with the rest of the Euro Zone. My point is this, there's no economic block, let that be North American, European, or Asian Union that will benefit the average person...that is, you and me. Since we live in a credit based economy, we are indeed living in a pseudo indentured servitude. This overly hyped Euro phenomena has no inherent value or benefit to you or me.

Originally Posted by Jaggy001

I think, therefore, that you are agreeing that a constitution is not a necessary prerequisite to a currency.

Oh lord...please re-read my post. Although the U.K. has no official Constitution, they have elements that work as such ( read post above). Therefore, it is backed by the faith in the British Government. In addition, the British pound HAS A HISTORY of beign a medium of exchange, which led the currency to be the world currency of reserve prior the Breton Woods Agreement.

Final note: If the Euro was backed by an underlaying tangible asset then its value would be justifiable. However, economic readings such as GDP, and other economic indicators mean absolutely feces when it comes to assign a value to a currency. Why.... because we all have crooks as government leaders.

[Amazonas]

Originally Posted by Jaggy001

That is a political argument against the Euro but not an economic one.

Jaja100 has a good point. Most people tend to disregard the fact that there's a thinline between politics and economics, especially in today's global agenda. I often called them twin sisters.