My post on “the EURO is dead” on Mon Jun 06, 2011 12:12 pm
My post on “the EURO is dead” on Thu Jul 14, 2011 12:10 pmJimboPSM wrote:Agree 100%arjay wrote:Despite all the rhetoric in the media the Euro isn't going to die.....
As I said some time ago on another thread:JimboPSM wrote:..... The will in Europe for the EUR to succeed is seriously underestimated in the US (and by quite a few Europeans as well).... most Europeans are extremely conscious of the impact of two world wars in their homeland that resulted in millions of deaths and widespread devastation and there are no lengths that those Europeans will not go to, and the EUR is one of them, to avoid a repetition.
My post on “Is this the end of the Euro?” on Thu Nov 24, 2011 4:01 pmJimboPSM wrote:The biggest vulnerability / problem with the Eurozone is that, although there is “monetary union”, there is not much of a “political union”; it is claimed by many Eurozone detractors that without “political union” that the Eurozone cannot work.
In my opinion it can work, but it requires hard work and a continual willingness to negotiate and compromise to deal with all the banana skins that a union of such disparate nationalities inevitably produces (not exactly the easiest thing in the world when you consider it has to encompass the egos of all the politicians involved).
A full “political union” is more likely to create further divides as (for it to succeed) it requires a degree of ceding of political sovereignty which will raise the nationalistic hackles of political opportunists and agitators in many of the member countries.
The problems that the lack of “political union” can bring clearly be seen when one contrasts the Eurozone with how well its main comparably sized competitor, the USA, works in facing up to its own fiscal problems.
Over the last few months as the US approaches its debt ceiling; the GOP and the Democrats (in the House and Senate) along with the White House have been striving tirelessly and selflessly to negotiate and compromise, willingly putting all their respective sacred cows on the table for the betterment of the country as a whole rather than seeking a political advantage for their own party..........
Hmmm...... actually, when you think rather more deeply about it, the problems of the Eurozone don’t really seem all that badl
My post on “Is this the end of the Euro?” on Fri Nov 25, 2011 7:16 amJimboPSM wrote:The link did not work for me so I won't comment on the article, however here are some brief thoughts on my position regarding the EEC and the EUR that (by concidence) I was just putting together.
The EEC puts me in conflict with myself, instinctively the nationalistic little Englander part of me really doesn’t like it but when I stand back and look at it coolly, rationally and objectively I am forced to admit that it is actually better in the long run for the UK (and every other member).
It is incredibly easy to find all kinds of faults with the EEC and the EUR and there are multitudinous arguments for not being a member of the EEC and not having the EUR as your currency, however in the long run I believe every country in the EEC (including Germany) benefits by being in the EEC and will benefit further by having the EUR as a common currency.
Operationally the current structure of the EEC for the “EUR” countries inevitably creates trade imbalances that cannot be remedied by conventional measures that were the norm before they had a common currency i.e. traditionally when a trade imbalance occurred surplus countries would revalue their currency (or it would "float" upwards and deficit countries would devalue their currency (or it would "sink" downwards, such measures are obviously unavailable when there is a common currency.
As the conventional remedy is unavailable, in my opinion the only realistic available alternative is currently highly politically unpalatable by the “Sovereign” countries that are in surplus as it needs those surplus "Sovereign" countries to redistribute some of their gains to deficit countries.
At first sight this appears manifestly unfair, but it should be remembered that surplus "Sovereign" countries benefit as their currency does not float upwards.
The biggest beneficiary by far within the EUR countries has been Germany, in traditional terms its “currency” has been kept artificially low and its exports have benefitted enormously whereas the Mediterranean deficit countries have their “currency” held artificially high and their exports have suffered and, as more and more time passes, so the problem gets further and further exacerbated.
Reading between the lines, my understanding is that this is actually fully understood by all the participants, most especially by Angela Merkel and Germany who have been the primary beneficiary, but as an extremely astute politician Angela Merkel also knows that for her politically it can be suicide to do it and it can be suicide not to do it, she really is caught between a rock and a hard place.
The biggest clamours for the breakup of the EUR are coming from the US (who would be a huge beneficiary if the EUR were to fail and/or the EEC were to break up), UK and European fright wing politicians who revel in jingoistic chest thumping and the financial markets in general who view it as a huge money making opportunity for tomorrow (the short termism of the markets prevents them thinking as far ahead as the day after tomorrow).
Standing back from all the things I don’t like (and there are many) and taking all aspects into consideration my perception is that the sum of all the arguments for not being in the EEC and the EUR are heavily outweighed by sum of all the arguments for being in the EEC and the EUR.
The EEC as a whole can compete on a reasonably level playing field with the US and China, but if it were to be split up the potential for each country to be vulnerable to economic sabotage by other countries and/or financial institutions increases dramatically – anyone happen to remember how easily George Soros was able to make a killing on the GBP?
My post on “Baht What up with Dat?????” on Thu Jan 22, 2015 7:51 pmJimboPSM wrote:As I have said before, reports of the imminent death of the EURO are greatly exaggerated.
It continues to amaze me how the financial media, and in particular the US financial media, is unable to comprehend just how deeply committed EURO member countries are to making it work.
Memories of the death, destruction and family losses of two world wars in the European theatre are indelibly seared into the psyche of the EEC and EURO advocates.
As I pointed out about myself earlier “instinctively the nationalistic little Englander part of me really doesn’t like it but when I stand back and look at it coolly, rationally and objectively I am forced to admit that it is actually better in the long run for the UK”.
While I know many people who, like myself, because of nationalistic pride do not really like the loss of sovereignty involved in being a member of the EEC and having the EURO as a currency (instead of our hallowed pound), when push comes to shove in assessing the longer term economic benefits they are of the same mind as myself.
JimboPSM wrote:While the EUR may have fallen back, it is still substantially healthier against the USD and GBP than when it was introduced.
Here is a simple chart in percentage terms that shows that:
- • The EUR is worth 30% more against the USD than it was in 2001
• The EUR is worth 25% more against the GBP than it was in 2001
• However the EUR is worth 3% less against the THB than it was in 2001 (but as the THB has been subject to manipulation and is overvalued, it is not exactly the best measure to use)Since the crash in 2008 there have been multiple attempts to undermine the EUR and multiple reports of the imminent death of the EUR (all of which have proven to be completely bogus).
Even though all these attempts have taken a toll on the value of the EUR, as I pointed out above the EUR is still worth some 30% more against the USD than it was in 2001.
Although there have been (and will continue to be) problems with the EUR, in my opinion there is no doubt that the EUR has been a considerable success – and it is its very success that drives bonkers the Euro sceptics, the xenophobes and a large part of the media.
It's not exactly rocket science to identify the usual suspects in the media who regularly and wilfully misinform their readers and viewers.
The financial interests and the (hidden) agendas of those criticising the EUR and the EU should be closely examined before giving any credence to their oft-repeated and manifestly incorrect prophecies of doom.
