What will happen to the Euro?

[myp]

I've probably asked this before, but it has been a while and a lot has changed. What do you think will happen to the Euro moving forward? Is the end near or will it be saved? If it is the latter, how so- greater union or a major bailout?

Any predictions near or long-term are welcome.

As for me, I am really not sure at this point. Merkel and the ECB are still holding strong despite sentiments from pretty much everyone else. It looks like the pro-bailout coalition in Greece might win in the election, so they might be up to complying more. Even then, the problems don't go away though.

The Euro might just leave Greece before Greece leaves the monetary union.

 

[whocky]

I have to say that its probably near the end now. To me the euro was a waste of time but who am i to say anything.

Im just glad the UK didn't go in with the euro.

 

[myp]

I have to say that its probably near the end now. To me the euro was a waste of time but who am i to say anything.

Im just glad the UK didn't go in with the euro.

I agree. How do you feel the general sentiment is in the UK amongst the people about the Euro? I lived with an exchange student this past year from the UK, he was a great guy, but he was adamant in his support of the Euro and insisted it would not break up.

 

[ThirdTerm]

I have to say that its probably near the end now. To me the euro was a waste of time but who am i to say anything.

The euro itself will survive for some time to come but some southern European states are likely to leave the currency union to make their economies more competitive and shrink their debts. But the EU is working hard to make a possible Greek exit from the euro as orderly as possible to contain ripple effects which would damage the eurozone as a whole. The euro is as strong as the US dollar as a currency and the one-size-fits-all approach of the monetary union was especially damaging for Greece and Greece should be allowed to return to the drachma without losing the current benefits of EU membership just like the UK does.

 

[David]

The Euro won't collapse, the EU will simply establish a fiscal union and a central bank and establish a system like we have here. Southern Europe will abandon it I think but the currency itself will survive.

 

[myp]

The euro itself will survive for some time to come but some southern European states are likely to leave the currency union to make their economies more competitive and shrink their debts. But the EU is working hard to make a possible Greek exit from the euro as orderly as possible to contain ripple effects which would damage the eurozone as a whole. The euro is as strong as the US dollar as a currency and the one-size-fits-all approach of the monetary union was especially damaging for Greece and Greece should be allowed to return to the drachma without losing the current benefits of EU membership just like the UK does.

If some of the periphery leaves, how can you say with confidence the Euro survives? You say it is as strong as the USD (not in terms of reserve status though but in exchange rate it is still worth more) but the problem if Greece, etc. leave will be that it is too strong! Germany wants a weaker currency relative to their trading partners including in Europe to support their export market. The periphery leaving does not accomplish that. Furthermore, is a Euro without the periphery still a Euro or do the core nations eventually opt for their own monetary policies and the Euro ends?

Also, you are probably one of the few people who think they are doing a good job preparing for an exit. I see it as more of a deer staring into the headlights as they still want the Eurozone to stay together, yet they don't want to pay for the bailouts/aid.

The Euro won't collapse, the EU will simply establish a fiscal union and a central bank and establish a system like we have here. Southern Europe will abandon it I think but the currency itself will survive.

Same question (as I posed to ThirdTerm) goes to you if you think the periphery leaves and the Euro survives. As for fiscal union- where are you getting that idea from? There aren't really serious talks of it and do you really think any remaining periphery nations let alone core nations like France, Finland, etc. would be willing to give up control to Germany like that? It won't happen politically. Given history it actually sounds kind of scary (a Germany controlled Europe).


Also to both of you, by southern states are you referring to PIIGS?

 

[myp]

Another issue is that it isn't as simple as countries just leaving the Eurozone and everyone else goes on their merry way. Germany and other Eurozone banks have substantial amounts of Greek, Spanish, Italian, etc. collateral and debt- things that would be redominated once a currency change in those countries was made leading to large losses for those banks- to the point where they would need bailouts. Given varying levels of different sovereign debts held by banks of each country, it may well be that they end up needing very different bailouts and possibly even central bank aid- something that we do not know the ECB would do. Beyond that if there is need for inflation or more inflation in one country than another, the incentive quickly becomes to leave the Euro and set monetary policy nationally.

 

[myp]

Spain saw yields increase despite the recent bailout plan news. Once more too little too late if a rescue is the plan in my opinion.

 

[clax]

i think it will collapse, for the simple reason that the different European countries have different socioeconomic characteristic, but the euro has the same buying power. in Romania as it dose in Germany. so therefore it is unable to adapt to the market in which is in. but if the eu was to become a united country, sharing the same economy it would survive

 

[David]

i think it will collapse, for the simple reason that the different European countries have different socioeconomic characteristic, but the euro has the same buying power. in Romania as it dose in Germany. so therefore it is unable to adapt to the market in which is in. but if the eu was to become a united country, sharing the same economy it would survive

That's the big question, does Europe decide an economic union is unworkable or that POLITICAL union is the logical conclusion of their efforts? Does the EU go to the dustbin of history or mark the 1st time sense the fall of Rome that Europe is united under a single flag? A united EU would in fact surpass the greatest glories of Rome with a fraction of the bloodshed and without a single conquest.

Does ethnic nationalism or European nationalism win?

 

[myp]

Does ethnic nationalism or European nationalism win?

You're asking the wrong question. The real question is which option do the Germans (and Finland, Netherlands etc.) think will cost them the least? The political story just follows.

 

[David]

You're asking the wrong question. The real question is which option do the Germans (and Finland, Netherlands etc.) think will cost them the least? The political story just follows.

I asked the right question, that was the follow up.

 

[myp]

I asked the right question, that was the follow up.

You are asking it in political terms. That does not matter. The European Council has been marginalized throughout this whole thing- that is one of many examples. It is the core's economic interests (which of course will have some national political interference but that is not the same thing) that matter.

 

[clax]

You are asking it in political terms. That does not matter. The European Council has been marginalized throughout this whole thing- that is one of many examples. It is the core's economic interests (which of course will have some national political interference but that is not the same thing) that matter.

Economic factors are typically key in political factors, where they are two seperate ideals they are forever intertwined. I believe that not only political factors but also economic factors are at play in the economic state of affairs in greece, as well as spain. Basically put. The adaption of world currency will make no effect on economy of a nation but it will influence the politics of said nation

 

[myp]

Economic factors are typically key in political factors, where they are two seperate ideals they are forever intertwined. I believe that not only political factors but also economic factors are at play in the economic state of affairs in greece, as well as spain. Basically put. The adaption of world currency will make no effect on economy of a nation but it will influence the politics of said nation

Economic factors are what are primarily at play. You have it backwards. And the adaption of a particular currency does impact the economy- tremendously.

 

[clax]

Economic factors are what are primarily at play. You have it backwards. And the adaption of a particular currency does impact the economy- tremendously.

I dont think it can be backwards, economic factors are political factors, and vise vesa, i dont think there is a way to seperate them and see the whole picture. Look at a political endeavor, war for instance. You cant have war with no economy, and you cant have economy with out politics.

When it gets down to it politics is people, deciding what is right for a country, an economy cant exist without a politic. And vise versa. With no established rule agreed upon by people there is no posability of an economy existing. And with a general guideline for people to exist in a group, there must be an economy otherwise it would be chaos. They are not the same thing, but one cant exist without the other.

And in the case of the euro, you have too many different countries with different values and different needs using the same currency.

I dont think the euro was created to help the people i think it was created to help international banks, why do it, what was the problem with marks and pesos, and franks, and pounds? Other than banks losing money in inflation and deflation of other banks.

Why not put mexico, canada and the same currancy. If you did that, prices in mexico would be un affordable or quality of life would go down in the US and canada, just like what happend with the euro

 

[myp]

I dont think it can be backwards, economic factors are political factors, and vise vesa, i dont think there is a way to seperate them and see the whole picture. Look at a political endeavor, war for instance. You cant have war with no economy, and you cant have economy with out politics.

By economic factors I am referring to market forces primarily. By political factor I am referring to politics and ideology. They are two different disciplines, they can definitely be separated One can even explain the other but not vice-versa.

When it gets down to it politics is people, deciding what is right for a country, an economy cant exist without a politic. And vise versa. With no established rule agreed upon by people there is no posability of an economy existing. And with a general guideline for people to exist in a group, there must be an economy otherwise it would be chaos. They are not the same thing, but one cant exist without the other.

An economy will exist if people find it beneficial to interact with others. Also ideology does not matter as much here because very few people if any act only out of ideology.

I dont think the euro was created to help the people i think it was created to help international banks, why do it, what was the problem with marks and pesos, and franks, and pounds? Other than banks losing money in inflation and deflation of other banks.

There were barriers to trade, etc. that hurt the people. Also, exchange rate risk can hurt everyday people too

Why not put mexico, canada and the same currancy. If you did that, prices in mexico would be un affordable or quality of life would go down in the US and canada, just like what happend with the euro

That is not what has happened...

 

[clax]

Without using a politicl structure tell me what currency is

 

[myp]

Without using a politicl structure tell me what currency is

A medium of exchange.

 

[clax]

A medium of exchange.

how do you measure it