The Euro (currency)

[Amazonas]

Originally Posted by bale002

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.

I totally agree with you, in that either directions....that is, low or high rates yields negative economic repercussions. Maybe my post was taking out of context. I never said it was a good thing to keep rates low.



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.[/quote]

Again, I agree with your statement in the first paragraph. However, it is not the only tool they have to adjust their economic troubles.

This blame game about who's responsability for the current financial crisis is just smoke and mirrors. Most people forget that when the EU became official in the late 90's, U.S. banks panicked. They thought that they would not be able to compete with Euro banks because of the 1930's Glass-Steagall Act. This is how they repealed the Glass-Steagall Act during Clinton's administration in when 1999.... Coincidence? So commercial, invesment banking, and insurance businesses could be had without any regulations whatsoever. Before U.S. banks enganged in exotic financial instruments, Europeans were already creating portfolios of derivatives like there was no tomorrow. This is not an American or European issue.....although they love to vulcanize people to avoid accountability. This is a parasitic banking system issue, and I tend to stress this because lots of people get too caught up in the " my country is better than yours little game" not that you implies or said anything like this. A previous post stated that those who bad mouth the Euro currency are just envious.

[bale002]

Originally Posted by Amazonas

This is a parasitic banking system issue, and I tend to stress this because lots of people get too caught up in the " my country is better than yours little game" ...

I think we are starting to understand each other better.

However, that would be a topic for another thread, probably and in the business and economics forum, maybe politics.

As for the topic of this thread, my point would be, from a purely domestic eurozone perspective, that the euro has helped to render the eurozone financial system at least a little more efficient (perhaps better an efficient parasite than an inefficient one) and that the alternatives in any case, at least right now and into the foreseeable future, are probably worse, with a few exceptions like Switzerland and Norway, while Sweden, Denmark and the UK will still wait to see which way the wind blows.

[Jaggy001]

Originally Posted by Amazonas (post#34

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.

Originally Posted by Amazonas

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.

So which one is it?

I have read your response to my post. Needless to say I disagree with you. I'm sure that we could both throw facts and figures around that would back both arguments but would not actually get us anywhere. So, I will summarise my overall view .....

1. The Euro is not overvalued. Its value against the dollar, pound and yen is more a function of their weakness.

2. The Euro has, generally, been a success since its introduction. One reason for that is most European economies were intrinsically linked to each other well before its introduction.

3. Having your own currency does not equate to any meaningful fiscal sovereignty over the economy.

4. The Euro is not going to disappear. It is here for the foreseeable future.

[jja100]

[quote=Jaggy001;10143372]So which one is it?

I have read your response to my post. Needless to say I disagree with you. I'm sure that we could both throw facts and figures around that would back both arguments but would not actually get us anywhere. So, I will summarise my overall view .....

I rather you throw the facts and figures around because opinions don't reveal the truth about anything.

[quote=Jaggy001;10143372]1. The Euro is not overvalued. Its value against the dollar, pound and yen is more a function of their weakness.

I believe you are measuring currency strength inaccurately. Instead of comparing it to the "weak" dollar or the "stronger" pound. Compare it within your own economy. How many euro does it cost for a hamburger or a tube of toothpaste and how many dollars or pounds does it take to buy the same goods and services. If it takes one Euro to buy a tube of toothpaste and it takes one dollar to buy the same tube of toothpaste than the Euro buying power would be weaker than the US and vice versa. A "strong" currency relative to other currency chases capital away, further damaging the economy.

[quote=Jaggy001;10143372]2. The Euro has, generally, been a success since its introduction. One reason for that is most European economies were intrinsically linked to each other well before its introduction.

The countries were linked through trade but not currency. The advantage of one currency is saving money by not having to exchange between currencies. The disadvantage is that wages remain the same between old and new currencies but since interest rates need to remain the same between all 27 EU nations it drives up the costs of goods and services in the weaker countries to match that of the strongest. In effect, this creates more economic disparity.

[quote=Jaggy001;10143372]3. Having your own currency does not equate to any meaningful fiscal sovereignty over the economy.

While this may be true, the fact that the Euro is tied with a political union makes fiscal and social sovereignty extinct. Every European country cannot adjust its own interest rates for inflation. This means that there isn't fiscal sovereignty.

Originally Posted by Jaggy001

4. The Euro is not going to disappear. It is here for the foreseeable future.

Every well know economist has predicted the Euro's collapse. The ECB is treating European interest rates in a non-logical manor. In fact, while every non-Euro country was lowering interest rates during the global recession, European countries were raising them. The bond makets are 4-10x more in Greece than they are Germany.

[caseras]

Originally Posted by jja100

I believe you are measuring currency strength inaccurately. Instead of comparing it to the "weak" dollar or the "stronger" pound. Compare it within your own economy. How many euro does it cost for a hamburger or a tube of toothpaste and how many dollars or pounds does it take to buy the same goods and services. If it takes one Euro to buy a tube of toothpaste and it takes one dollar to buy the same tube of toothpaste than the Euro buying power would be weaker than the US and vice versa. A "strong" currency relative to other currency chases capital away, further damaging the economy.

I don't know why you decided to give this answer, but I can tell you, you're wrong here. First, it is not important to know how many € £ or $ you need to buy one thing to learn anything about one currency... actually there are too many reasons to change a price, reasons whose are not linked with the currency itself (tax, margin, logistic, etc).

Originally Posted by Jaggy001

The countries were linked through trade but not currency. The advantage of one currency is saving money by not having to exchange between currencies. The disadvantage is that wages remain the same between old and new currencies but since interest rates need to remain the same between all 27 EU nations it drives up the costs of goods and services in the weaker countries to match that of the strongest. In effect, this creates more economic disparity.

Could you go further, because for the moment, it doesn't mean anything. You say when poor countries like........... ? could you give me one country who is very poor in the eurozone ?
Anyway Could you tell me what it changes in everyday life for common people ? maybe one example ?

Originally Posted by Jaggy001

While this may be true, the fact that the Euro is tied with a political union makes fiscal and social sovereignty extinct. Every European country cannot adjust its own interest rates for inflation. This means that there isn't fiscal sovereignty.

So give me a lesson please, coz it's very hard for me to understand what you meant here. AFA I know monetary policy as it used to be in europe after WWI is not linked with fiscal policy

Every well know economist has predicted the Euro's collapse.

Could you give me names please ?

The ECB is treating European interest rates in a non-logical manor. In fact, while every non-Euro country was lowering interest rates during the global recession, European countries were raising them. The bond makets are 4-10x more in Greece than they are Germany.

No, ECB took times before lowering the interest rate, but ECB didn't rise it.

The bond market what ???? I don't know if this information is true, but could you explain to me why you are talking about that ?

[Jaggy001]

FYI Caseras ... the quotes attributed to me came from jja100 and not me. The reason they show like that are due to his/her poor use of the quote function.