Why The Euro Isn't Worth Saving

The Atlantic:

Pop quiz, hotshot. You're the prime minister of Spain. It's 2005. Unemployment is at a two-decades low. Housing prices are booming. You're worried that they might be booming too much. You want to put a brake on the economy. You also hope to build up a rainy day fund for any possible bust. How big a budget surplus should you run?

Read the whole story at The Atlantic

Comments

[pastgone]

07:56 PM on 04/23/2012

Lemme tell ya, Europe's economic woes are the ONLY reason the US dollar hasn't fallen through the floor. Yeah, they're finding out the Euro was probably a mistake, but the finding out of that is what's keeping the dollar from tanking.

[Vapula]

05:25 PM on 04/23/2012

The Greeks borrowed more than they could ever repay and they knew that when they borrowed money. If a bankrupt did the same thing before bankruptcy he would be lucky to escape prosecution. Yet now the rest of Europe and Greece's lenders are supposed to forgive debts and bail them out. Greece should be kicked out of EU and made to repay all the money it owes, the rest of us should not have to finance them for their irresponsibility.

[NickTAZ]

03:56 PM on 04/23/2012

I could not disagree more with the author. Everyone posting here seems obsessed with debt and spending without realizing that the same end-times prophecies about debt have been around for centuries. I know that you will all say, "but this time it's different. This time, it's for real." To that, I say the economy has a mind of its own, and it will not collapse upon itself while there are avenues to evolve still available.

The author states that the Euro will fail because there are not the types of international financial governance needed to manage multi-national fiscal policy. What he fails to realize it that he is assuming the chicken came before the egg. Multi-national fiscal governance will emerge out of need to govern the Euro (and the like), not the other way around.

[gerald4]

11:07 AM on 04/23/2012

The US dollars (or electronic credits) that we pay foreigners to manufacture our consumer goods and services that we consumed/received have NO VALUE, except that they are redeemable for title to privately owned businesses, factories, casinos, hotels, farms, land, ports, breweries, refineries, forests, ports, breweries, refineries, and other privately owned assets located in the USA that were created by previous wealth producing US generations before de-industrialization instead of (or in addition to) Gold from Ft. Knox.

What can I redeem my Euros for?

The US government calls this "(Foreigners) INVESTING IN AMERICA".

The USA is racing to print money and then sell title to everything in the USA in order to keep ourselves from working, and just live on imported consumable products.

This is sort-of like selling our body parts to keep from working!

When the USA runs out of title to properties to sell to the manufacturing nations, we will become a third world nation of unemployed street beggars, with no assets left to sell in order to raise any money that might be used to re-industrialize the USA.

[DSciarrino]

11:06 AM on 04/23/2012

Now you tell me. where were you 20 years ago?

I remember being in France at the time the Euro was coming online. There was great optimism all around. I even heard a professor state unequivocally that Europe would soon become the United States of Europe. I also remember thinking "Not in my lifetime, and why would they aspire to become like the U.S.? Can't they aim a bit higher?" But I digress.

Obviously, the confederacy isn't working, and Europe does have to go one way (union) or the other (The Balkans). But as someone once said, a Union divided cannot stand. . .

[gerald4]

10:54 AM on 04/23/2012

Individuals in foreign industrialized countries view Europe Nations (and the United States government) as borrowing back lots of Euros (by selling freshly printed paper Soverign Treasury Bonds) from the people who Europeans paid Euros to make the things that they consumed, and then spending these huge amounts of Euros on themselves with the careless abandon of a drunken sailor on shore leave buying his new friends that he just met (voters) in a bar with free drinks, who only is concerned about today and will not plan anything for or even think about tomorrow.

Foreign citizens in foreign industrialized countries view US and European citizens as fat, lazy, incompetent, stupid, not productive and somehow self entitled "to not have to work is some dirty factory" to create the things that they consume, but only sit idle and consume the things that others work and create.

[EllietheDog]

10:25 AM on 04/23/2012

This is comical at this point. All the Progressives whining about austerity when it was debt that created this mess.

As someone has already said...."It is like a drunk drinking more hoping to avoid the inevitable hangover."

There is no solution except a financial crisis that deals with the every increasing debt...and it is not going to be pretty.

[gerald4]

10:56 AM on 04/23/2012

Foreign citizens in foreign industrialized countries will no longer loan money to nations that will not repay those loans!

I believe that it is appropriate to quote a Mr. Bruce L. Hardgraves, USN Retired, of Worland, Wyoming, who self describes himself as a "Former Drunken Sailor" who wishes to correct the record with his posted opinion in the Northern Wyoming Daily News, April 2, 2010 where he states in a letter to the editor that,

"I object and take exception to everyone saying that Obama and Congress are spending money like a drunken sailor. As a former drunken sailor, I always quit (spending money) when I ran out of money."

President Obama and Congress just keep on spending money after they run out of money. A balanced budget amendment would be like a bartender controlling the spending of the drunken sailor by refusing credit to the sailor !

President Obama and the US congress are spending borrowed money as required to make the US economy evolve into something similar to the Greek economy!

Or maybe the something similar to the Somali Economy, since like Somali, the USA does not have a Germany to loan the US government more money when we cannot meet our US government payroll obligations.

[EllietheDog]

12:59 PM on 04/23/2012

Well said!

[pastgone]

07:58 PM on 04/23/2012

"All the Progressives whining about austerity when it was debt that created this mess."

Look, you are apparently a real person, so please, at least, have the intellectual honesty to recognize that it wasn't "progressives" that ran up most of the US debt. In fact, Clinton balanced the budget, and Barack Obama is not even close to being a "progressive."

[CapSen]

10:07 AM on 04/23/2012

As for Spain, it has always had structural economic problems in that it has very little 'earning capacity'. It doesn't export anything much; the economy is too dependent on tourism and the related real estate business. That should have been addressed back in the 1970s, when it came out of a dictatorship-cum-3rd world status.

It is idiotic to assume the Euro can be 'undone'.

If it weren't for the American hegemony in the financial markets, weaker European countries wouldn't be the victim of speculation and the constant shifting of finance to where the fastest buck is to be made. I'd be all for the EU financing these weaker countries' problems all by itself, at an interest rate it sets itself.

People seem to forget all of this started with US NINJA mortgages. And the ensuing peddling of toxic assets to banks all over the world, to mitigate the disaster American banks had brought onto themselves.

If I'm mistaken, please enlighten me.

[pastgone]

08:00 PM on 04/23/2012

Well, it's hard to tell what you are saying, so enlightenment ain't easy. But if you are saying the US caused the European problems, I don't think so.

[CapSen]

08:21 PM on 04/23/2012

I think it is perfectly clear.

So tell me how the int'l financial crisis didn't start in the US, and how the US financials didn't sell toxic assets to int'l banks.

[CapSen]

10:05 AM on 04/23/2012

I've stopped taking American economists' comments on the Euro seriously, as they are invariably slanted. These people want the Euro project to fail, always have done.

It's strange 'scholars' and 'scientists' are so biased when they're supposed to be objective.

I've seen US economists gloat when the Euro went *up*, but also when it went *down* against the dollar. So how can that be? If the one is a negative development, then surely the other must be positive.

As a European I know the Euro was the best thing that ever happened to Europe. It is yet another step towards integration, and the prevention of war and poverty, as was always the underlying rationale. It had an immense positive effect on internal trade, and for the people in the street too.

It's so much easier and cheaper nowadays to travel abroad and take yr own money with you, or get it from an ATM without changing charges or having to compute prices all the time.

Also, they seem to forget the current crisis came from the US. It is US induced. It caught the EU at its weak spot, that is true. There's no common currency without common budget and fiscal policies.

The sorry thing is so many Europeans now blame the EU for their trouble, when in fact it was the US and their own national gov'ts who are to blame.

[EllietheDog]

10:21 AM on 04/23/2012

You have no clue.

The problem is debt. Something every government has been guilty of.

The Euro will break up and it will happen faster than you think.

[CapSen]

10:24 AM on 04/23/2012

It is you who has no clue about Europe and the EU.

There has always been debt; it is a bit higher now than it used to be. The US debt is on a par with Greece's; funnily enough all these S&P people and the like are only pointing to Greece, not to the US. It is too big to fail, I guess.

The Euro cannot be undone.

[pastgone]

08:02 PM on 04/23/2012

Oh, so you ARE saying the US caused Europe's troubles. You don't exactly say why or how, though. How did the US cause Greece to run up more debt than it could pay? How did the US inflate housing bubbles in Spain and Ireland?

Answer: no way the US could have, and no way the US did.

[CapSen]

08:22 PM on 04/23/2012

You can keep your head in the sand as long as you want.

Ninja ring a bell? Toxic assets? Goldman Sachs?

[efffox]

08:37 PM on 04/23/2012

Oh yes, because the economic problems had NOTHING to do with starting 2 wars and NOT PAYING FOR THEM, or giving a medicare Part D entitlement that cost MORE than Obamacares WITHOUT PAYING FOR IT or giving 2 tax cuts that mostly benefited the wealthy -during a time of war (a FIRST in HISTORY) WITHOUT PAYING FOR IT - had NOTHING to do with anything??

How ignorant are you??

[DARK STAR]

08:24 AM on 04/23/2012

Germany can't carry the entire Continent nor can the Continent be more like Germany in terms of financial success.

[CaptainVideo]

08:26 AM on 04/23/2012

The austerity policies of the German government are one of the factors that is strangling the economy of the Eurozone and causing a second dip recession Unemployment is rising again in the Eurozone. The other villain is the European Central Bank, which should be providing the system with monetary stimulus to bring the unemployment rate down.

[DARK STAR]

08:34 AM on 04/23/2012

Germany has the discipline to see an austerity measure through, IMO, as I said, the rest of the Continent does not seem to be able to do that, or "be more like Germany." Either way, my comment was very subjective; I hope that the EU evolves and that confidence returns.

[tvhatic]

09:22 AM on 04/23/2012

Problem is the eu central bank I only supposed to stabilize prices, not controll unemployment (us central bank does both). Thus proper monetary policy cannot occur

[CapSen]

10:15 AM on 04/23/2012

That is Germany, Sweden, Denmark, Finland, the Netherlands, Belgium, Luxemburg, Austria, the Baltic states and Poland. Norway and Switzerland are stealthily on the bandwagon, as they are highly dependent upon the EU. Especially of Switzerland it is said it is an EU member in all but name. It is a 'fake' non-member.

I expressly leave Britain out of the equation as all they ever do is sabotaging the EU beyond a free-market zone. I'd kick them out if I had a say over it. Then they would come back begging admittance.

It is true the 'weaker' states will never be up to a par with the Northern members, but we'll just have to live with that and make the best of it.

As a matter of fact it would be a wise thing to incorporate Turkey as it is the up and coming economic power in SE Europe, and a bridge to new, untested markets.

But the political wind is blowing in the opposite direction. Sadly.

[DARK STAR]

12:05 PM on 04/23/2012

Agreed, thank you for that reply.

[CaptainVideo]

08:07 AM on 04/23/2012

The Euro would be worth saving if the European Central Bank and the governments of the major countries, especially Germany were willing to give up the current austerity policies that are strangling the economies of the weaker countries and pusing the Eurozone into a second dip recession. As long as they are not willing to abandon those failed policies the Eurozone is doomed.

What the Eurozone needs above all, is a more expansionary monetary policy to restore full employment to the Eurozone. In addition, countries like Germany that are runniing surpluses need to follow a more expansionary fiscal policy to act as an engine of growth that will cause the economies of the weaker countries to grow. Growth in the weaker countries would sharply reduce their deficits.

[CaptainVideo]

08:24 AM on 04/23/2012

As long as the current disasterous austerity policies are continued, I would not put any money into Euros even if it were the last money on earth. I actually had money invested in Euro denominated securities in the past, but no more.

[Schimmelreiter]

01:21 PM on 04/23/2012

It isn't Germany and others who are telling Greece where to cut expenses though.
It is the Greek government who had no problem to increase their pensions and put the austerity measures on the common man while at the same time members of parliament and the rich transfer their assets outside the Eurozone.
It is not that difficult to understand that Germany and others demand foremost a reform of a corrupt and ineffective Greek government before they throw billions of euros at them which will be wasted the same way as the transfer payments from the EU since more than 30 years.

[Schimmelreiter]

01:25 PM on 04/23/2012

...should demand...

[frank1946]

07:47 AM on 04/23/2012

Europe Fizzles again ?

Germany forecloses and no growth for a decade ?

Socialism works ? French believe it.

[CaptainVideo]

08:01 AM on 04/23/2012

The reason the Eurozone is not working is not because of socialism, but rather because of the right wing austeritiy policies imposed on the Eurozone by the European Central Bank and the various governments. These contractionary monetary and fiscal policies are strangling the weaker countries.

[CaptainVideo]

08:08 AM on 04/23/2012

The French understand that the current austerity policies that the Eurozone is following is failing.

[CaptainVideo]

08:18 AM on 04/23/2012

Hopefully the new French socialist administration will stop supporting the insane austerity policies of the Eurozone and focing it to change. What would help even more is if the Merkel (die Hungerkanzlerin) administration in Germany would fall.

[frank day]

07:11 AM on 04/23/2012

You can't have economic integration without political integration.

And what's best for giant multinationals is usually not what's best for the average citizen.

[CapSen]

10:21 AM on 04/23/2012

Yep, that's the challenge.

In Europe that second thing you mention probably worked out better than in the US.

[Siebenstein]

06:28 AM on 04/23/2012

World Bank and IMF are the worst contemporary slavemasters.

[CaptainVideo]

08:10 AM on 04/23/2012

Not so. The European Central Bank, with its unwillingness to provide the Eurozone with the economic stimulus it needs and the Merkel government in Germany and some of the other governments in the Eurozone, that are imposing austerity where stimulus is needed are the contemporary slavemasters.

[tvhatic]

09:26 AM on 04/23/2012

He's right. Nations cannot share a fiat currency and not share a political governance. If we look at the us states, they share a currency, but those states who prosper subsidize struggling states via federal spending. This is not happening in eu, so failing eu nations fall into a spiral of fiscal issues. Other option would be to drop the euro and allow floating currency exchanges which serve the same balancing purpose

[Siebenstein]

08:16 PM on 04/23/2012

Sorry, but you clearly don't know enough to engage in that conversation.

[Siebenstein]

06:25 AM on 04/23/2012

Let's talk about the weakness of the Dollar !

The US government's obsession with world supremacy us pushing the hunger for the indebtness of other nations.

http://www.timothygartonash.com/oldforum/unitedeurope.html
http://money.cnn.com/2012/01/04/markets/thebuzz/index.htm
http://www.freedomforceinternational.org/freedomcontent.cfm?fuseaction=confessionsecon&refpage=issues