Will the eurozone survive?

Europe stands on the edge of an abyss, its most dangerous financial crisis since the 1930s. Greece, Spain, and Italy are the closest to tumbling over, but all the others in the eurozone are roped together like Alpine climbers, the fall of one threatening to bring down the rest. And the drag on the rest of the world, very much including the United States, would be calamitous. Say au revoir to our faltering recovery.

The facts of the eurozone showdown are brutally simple. Growth is stalled, even in the most successful member, Germany, and in many countries it is contracting. Unemployment is high and soaring; today Spain’s unemployment rate is some 24 percent. Banks are collapsing, and over-indebted governments are running out of both money and credit.

Will the Eurozone survive? The deeper the crisis gets, the more I am convinced that the whole loony project is doomed to fail, and the more I think that it deserves to fail.

Greece isn’t close to tumbling over, it’s already in financial chaos. They cooked the books in order to get into the Eurozone, and now they’re paying the price. The new Greek government, such as it is, is trying to stick with the Euro, which effectively means surrendering control of their financial affairs to Frankfurt as a condition of receiving bail-out money from the European Central Bank. They will be forced to increase taxes (there is a Greek tradition of not paying tax, which is one of the reasons they are in so much trouble), or introduce even more public service cuts. That threat brought rioters out on to the streets before their recent election, and is likely to do so again. I have even read suggestions of a possible revolution in Greece, but I have no idea of how realistic a prospect that is.

The Spanish bailout has highlighted the sheer lunacy of the current situation. As Nigel Farage (look him up on the BBC or Youtube if you don’t know who he is) recently pointed out, the Italians are now expected to lend money to Spain at 3%, but to get that money the have to borrow from the markets at 7%. It’s designed to force Italy into the crisis that everyone is desparate to avoid.

The Irish economy has collapsed, so has the Portuguese. The ECB is currently busy buying its own debt in order to prop up Portugal. Even Cyprus is talking about seeking a bailout. If Italy, the third largest economy in the Eurozone, needs support, then I just can’t see the project surviving. The only strong economy is Germany, but there has to be a limit on how long the German people are prepared to prop up the rest of the Eurozone before they start to demand an end to it.

perhaps the EU won’t, but Europe will. Northern Europe that is. the rest of Europe didn’t do well 20 years ago, and aren’t doing well now.

we just need to remove the real economic parasites (investment bankers) and put the economy under public control. at least then, if we’re doomed, it’s our own fault.

The EU will survive in some form, it’s the Euro currency which looks doomed to go down the pan.

To my mind we need to remove the cronyism and Buggins turn bureaucratic mentality if the EU as a whole is ever to become a serious political force in global terms. There are 27 European commissioners, one from each member state. Eligibility is determined by nationality rather than merit. The commissioners tend to be failed politicians who are deemed by their peers to be worthy of a nice cushy and extremely well paid billet in Europe. They are appointees, and don’t have to worry about minor things like democratic accountability.

Herman Van Rompuy (no, I’d never heard of him previously either) was appointed to the position of President of the European Council, the man who is supposed to represent the EU on the world stage. He had previously been prime minister of Belgium , and was obscure even by their standards. He got the job by way of a lethal cocktail of cronyism and compromise.

These buggers seem utterly unable to deal with the reality of what they have created. With their world crashing down around their ears, they still manage to convince themselves that everything will be tickety-boo. Just one more loan…..

The northern states are certainly the economic powerhouse of Europe, but having less money than Germany didn’t mean that the south was part of the third world. They were chugging along quite nicely, but Spain, Portugal et al saw joining the EU (Italy was a founding member) as a way of getting huge economic grants, paid for by wealthier states. Ireland joined, and the money which flooded in created a false boom. The crash was spectacular. It’s now little better than an economic wasteland, and it will take the Irish years to get over it.

That, in part, is because like Greece they are shackled to the Euro. When Iceland had their banking crisis, one of the first things they did was devalue their currency. Their exports of fish, aluminium and tourism immediately became cheaper for the rest of the world to buy. The Icelanders had things hard for a couple of years, but they are bouncing back now and their future looks much rosier. When you have no control over the currency you are using, devaluation isn’t possible.

I certainly don’t believe we should remove the investment bankers, just make sure that they are properly regulated. They are gambling with other peoples’ money and we need to ensure that they are doing it responsibly. Economies entirely under state control have a history of doing badly. I may be a supporter of welfare states, but I also believe in the capitalist system as long as we curb its worst excesses.

The Euro currency , the way it was made, is one the biggest hoax of the last decades.

Masters-Slaves modern societies must end! The real economy must emerge! And for economy i don t mean buying stocks at wall street or euro-bonds, but managing resources and not wasting precious resources like oil and uranium.

So can you explain what prompted Italy to join the Eurozone?

they were among the founders and is a fairly rich first world nation, but with a lot of political turmoil.

anyway, i call for a Germanic Union of Scandinavia, Germany, the Netherlands and Flanders; all speak a Germanic language, all have coalition governments, all are relatively economically robust, while being liberal, progressive, social democracies. let all those single-party latin countries sort their own shit out.

It will fall if people believe it will fall. Strengthened by the fact that we have a few weak spots that basically absorb the wealth of the rest. It wasn’t doomed to fail. If countries can stick together, so can a bigger patch of land. But it all went so very fast, they wanted it to become one country far faster than realistically was possible. One should start with seeing the consequences of certain actions before taking that action, and perhaps that wasn’t thought out very well. A solution now is to take it back a few steps. Though in this crisis any solution will take a lot longer than it should.

I, personally, don’t know why didn’t the East-European countries like Hungary tried to quit the EU yet. It would mean salvation to us. Why?

1.) Unemployment would probably decrease.

2.) We won’t need to increase taxes.

And, most importantly

3.) The stock prices of East-European countries soared like an eagle as a consequence of the fall of the eurozone. This + the other 2 = guaranteed bounce back.

we have a few weak spots

That’s a glorious bit of understatement, considering that major players like Italy and Spain now have credit ratings hovering just above “junk bond” status.

It wasn’t doomed to fail.

But you rather contradict yourself when you say “But it all went so very fast, they wanted it to become one country far faster than realistically was possible”. I think this is the crux of the matter, it was a classic example of fools rushing in where angels fear to tread. There are too many z listers at the top. There are not pragmatists and they seem to be trying to deal with the world as they think it ought to be, not the way it actually is. They jumped in feet first, without anyone considering what could possibly go wrong.

I am really struggling to see the Eurozone surviving in its present form. There is just too much going wrong with the project. The hole the Eurofanatics are digging is just getting deeper and deeper. The idea may come back to haunt us in years to come, but if it collapses now, it will be years before anyone will take it seriously again.

I was hoping that someone like JohnnyBeGood would give us a German perspective on how long the German people are going to continue to pay everyone else’s bills before they start to demand radical change.

That’s a glorious bit of understatement, considering that major players like Italy and Spain now have credit ratings hovering just above “junk bond” status.

“Few” refers to the few countries. “Weak spots” refer to the situation of those countries. It wouldn’t be fair to the rest to start dramatising the issue.

But you rather contradict yourself when you say “But it all went so very fast, they wanted it to become one country far faster than realistically was possible”.

No, I didn’t.

It could have gone right had they not made certain mistakes. You assume it was doomed to fail beforehand, and I can’t begin to express how silly that statement is. We currently have countries all over the world that are doing decently well, so how on Earth can a “bigger country” suddenly not do well either? The reason it went wrong, again, is because they went too fast and didn’t check the possible consequences of certain situations. Merging weak countries with strong countries and immediately pumping money towards them is not a solution. We must instead merge the strong countries and subtly help the weaker countries up to a decent level. And make the process go much slower. It’s much easier to respond to threats once you know beforehand what you need to do.

I was hoping that someone like JohnnyBeGood would give us a German perspective on how long the German people are going to continue to pay everyone else’s bills before they start to demand radical change.

While you think I’m making understatements, you’re really making overstatements by implying every single country in Europe is in deep shit except Germany.

Political parties here are beginning to state as well something must be done to stop the constant streams of money flowing towards our southern neighbours, and I doubt other countries are not doing the same thing.

You assume it was doomed to fail beforehand

There is no reason why a single currency could not succeed in the right environment. But I certainly did think that this implementation of the idea was doomed to fail right from the off. Nothing silly about that. There were too many unknowns, too many assumptions made, and I never saw much evidence of a plan B being put into place. There are too many lightweights at the top, and a lack of will to compromise on goals.

I know Britain is seen as the enfant terrible of the EU, but the British decision to wait and see before before committing the country to joining the Eurozone was undoubtedly the right one. Public pressure did that, and it saved us from paying a much larger price for this failure.

The reason it went wrong, again, is because they went too fast and didn’t check the possible consequences of certain situations

Well, exactly. That’s pretty much what I said. I’m happy to discuss politics, but I’m really not interested in getting into one of your semantics arguements.

While you think I’m making understatements, you’re really making overstatements by implying every single country in Europe is in deep shit except Germany.

Did I imply that, or are you inferring something which wasn’t there? There was certainly no intention to suggest that Germany is the only country not on the brink of disaster. But there can be no doubt that if it wasn’t for the Germans, this project would have been dead and buried by now. I have been reading that there are murmurs of discontent in Germany about the level of their taxes which are flowing out of the country, and I would be interested to hear some German views on this. That is all I meant.

it wasn’t foresight that caused England to stay out of the Euro. it was stubborn chauvanism, and being undecided whether to be US’s bitch, or joing Europe. same reason they still use obsolete measuring units, while actually switching to American short count, and many such things.

it wasn’t foresight that caused England to stay out of the Euro. it was stubborn chauvanism,

Of course there was a goodly dose of that too. We spent eight hundred years fighting the French, you don’t expect us to forgive them that easily, do you? ;)

During the 90s, public opinion was set against joining the Euro. A very eccentric tycoon called James Goldsmith started a political party on the strength of it. He had no hope of winning, but he did enough damage to the Conservative Party in the 1997 general election that he frightened Tony Blair into committing to a referendum if the cabinet decided it would be in Britain’s interest to join the Euro. When the little man still has a voice, public opinion works.

and being undecided whether to be US’s bitch

Well, that’s purely a political thing. The British public are still rather unhappy at the Yanks for dragging us into the second Iraq war.

same reason they still use obsolete measuring units

We were using metric standards (with a couple of exceptions) last time I looked. Or are you thinking of New England?

while actually switching to American short count

That got lost in translation. I tried looking that up, and got nowhere. What does it mean?

I know Britain is seen as the enfant terrible of the EU, but the British decision to wait and see before before committing the country to joining the Eurozone was undoubtedly the right one.

Nah, I see that attitude all the time. “You see, my decision was right solely based on a good guess in a case study.” Similarly, I would have found it quite annoying if everything went perfectly right and then suddenly they’d opt to join.

But I certainly did think that this implementation of the idea was doomed to fail right from the off.

One can’t really prove what one thought beforehand unless an essay was submitted about it. But, as I said above, “this is what I predicted” doesn’t necessarily mean it was the only possible or even expected outcome. I certainly didn’t think it would go smoothly, but if they all went about it in a better way, it would have been more likely that it worked out.

Well, exactly. That’s pretty much what I said. I’m happy to discuss politics, but I’m really not interested in getting into one of your semantics arguements.

I was simply a little annoyed being accused of something (contradiction) when it would lead to semantics in the first place. Case dismissed.

Did I imply that, or are you inferring something which wasn’t there?

“German people paying everyone else’s bills”? That certainly implies only the Germans have the money while the rest have the costs. Nevertheless, if you didn’t mean that, we’re all clear here.

Originally posted by beauval:

I was hoping that someone like JohnnyBeGood would give us a German perspective on how long the German people are going to continue to pay everyone else’s bills before they start to demand radical change.

Well currently there is some displeasure with Greece, Spain and Italy. But not much demand for a radical change(except for continuing to set harsh conditions for financial help). There are some Politicians/Parties from the extreme right and left who are now cashing in on their Anti-EU doom-saying. But most people are more resigned, than anything else.
The complaining level is actually so low compared to other issues that it seems more like a Weather issue. You complain when its bad, but ultimately you don´t think there is anything you can do.

We were using metric standards (with a couple of exceptions) last time I looked. Or are you thinking of New England?

sure you don’t use inches, miles, feet, yards, pounds, stones etc?

That got lost in translation. I tried looking that up, and got nowhere. What does it mean?

math: 10^3, 10^6, 10^9, 10^12, 10^15, 10^18 etc.
long count: thousand, million, milliard, billion, billiard, trillion, trilliard.
short count: thousand, million, billion, trillion, quadrillion etc.

short count technically doesn’t make any sense, and like continental Europe, England used mostly long count up to one or two decades ago. now they use short count like America. you tell me why…

Nah, I see that attitude all the time. “You see, my decision was right solely based on a good guess in a case study.”

The Latin Monetary Union in the C19 worked perfectly well, on its own level, in terms of enhancing trade. But over the years it gradually fell apart due to corruption, greed and theft. Much of which was instigated, unsurprisingly, by the Vatican.

Now, back to modern times. The EU is incompetent and corrupt on multiple levels. It hasn’t had its accounts signed off by its auditors for 17 years, because it is either unable or unwilling to explain how 4.5 billion euros have managed to disappear into thin air over that time. If a corporation tried to pull that stunt, its directors would have served their prison sentences by now, and be free men again. And yet the good ship EU sails on regardless.

I worked in shipping and transport for years, and I couldn’t begin to count the number of times we were instructed to carry consignments across borders quite unnecessarily, just so we could get bits of paper stamped by customs. That was done so someone could claim one of the trade subsidies that the EU was handing out like confetti. The fraud was blatant, yet it went unchecked for years. The administration of the EU is a shambles.

The introduction of the Euro currency was overseen by the Santer Commission, which famously resigned en masse in 1999 amid a storm of allegations of corruption, fraud, nepotism and ineptitude on an eye watering scale.

Come on Dark, you’ve got to admit that it didn’t take a bloody genius to work out that if you put the EU in charge of a new currency, something might go wrong .

“German people paying everyone else’s bills”? That certainly implies only the Germans have the money while the rest have the costs.

Uhm, yes, it does a bit, doesn’t it. Guilty as charged, m’lord. But in my defence, I do try to keep my little ramblings as light as I can, otherwise beauval might become a very dull boy. If the odd sweeping statement creeps in now and again, then so be it. I’ve been here for a while, I thought you would have picked up on that by now.

sure you don’t use inches, miles, feet, yards, pounds, stones etc?

We used to. Miles are one of the few exception, because changing a million signposts is going to be a long and expensive exercise. It will happen in time. The other old style measure I can think of is that draught beer is still sold in pints, ‘cos we like it that way. Half a litre isn’t enough, a litre is too much, but a pint is just right.

Having said that, I must admit that old wrinklies like me do still tend to measure ourselves in feet and inches, and weigh ourselves in stones and pounds. But officially we’re not supposed to.

long count: thousand, million, milliard, billion, billiard, trillion, trilliard.

Now I know what you mean. Adopting the American system made a lot of sense. Even when measuring something as big as America’s GDP, our old style trillion was far too big to be useful. I have come across milliards before in documents, but it was never used in an everyday way.

Originally posted by beauval:

So can you explain what prompted Italy to join the Eurozone?

Beacouse there was no popular referendum. Only the idiot-bastard politicians of the time decided without asking the people.

Look at Greece if they could print their own currency, they would have had no problem or minimal..

Look at Japan, their internal debt is huge BUT they can print the money as much as they want and the public stocks of debt can be sold only to japanese.

Many people confuse the economy with the finance.. some for ignorance others coz they are evil.

as it is now the euro.. it s madness.. or they reform it or it s better to reset and start a new one.

trillion and even trilliard in long count is used i think in digital science, in cosmology, and in life sciences. probably other fields of physics as well. it gets confusing cross-language, because it’s just uncomfortable to express things in septillions and the like. especially because septillion is literally derived from 7 and million, while in short count it’s used for 4 times one million, not seven. and sextillion is used in short count for 3.5 times a million, which is just silly. basicaly, short count is just incorrect.

oh hey, how did i forget about driving on the left. then they also have an archaic political system.. :/ oh well.

Originally posted by TheKnifeGrinder:

Look at Greece if they could print their own currency, they would have had no problem or minimal..

They would be in much deeper shit than they are now. No possibility to get a loan based on their own money(so they would have to pay back their loans in foreign currency) and even loans in foreign currency would be next to impossible. So to cover the Budget which is bigger than the tax income they would have to print money. This and the fact that they can´t get loans would devalue the currency.
Since the greek economy is nowhere near self-sufficient and natural resources that can be sold/used are rather limited compared to the amount that has to be imported. The devaluation will do a bit more than just destroy savings and debts(and considering that most of the states debts are and would be in Euros/Dollars it would not even be helpful in paying of the countries debt).
But most importantly it will not increase the money influx from exports compared to the money out-flux due to necessary imports. And with a country in such economic and political chaos investments would be rare.

Basically you would get the same as now just worse. Instead of some people having less money, you would have people having shit loads of money that they can not buy anything for.

Originally posted by OmegaDoom:

oh hey, how did i forget about driving on the left. then they also have an archaic political system.. :/ oh well.

Unsure what’s negative about driving on the left (if your comment was indeed negative), or what makes the UK political system ‘archaic’.

Come on Dark, you’ve got to admit that it didn’t take a bloody genius to work out that if you put the EU in charge of a new currency, something might go wrong .

That’s true. I just don’t believe it was destined to fail from the start. Not everything goes wrong, and not everyone is corrupt.

Unsure what’s negative about driving on the left

Mostly annoyance. If the whole world drives on the right/left, there’ll be no confusion on that ground.

Originally posted by JohnnyBeGood:

Originally posted by TheKnifeGrinder:

Look at Greece if they could print their own currency, they would have had no problem or minimal..

They would be in much deeper shit than they are now. No possibility to get a loan based on their own money(so they would have to pay back their loans in foreign currency) and even loans in foreign currency would be next to impossible. So to cover the Budget which is bigger than the tax income they would have to print money. This and the fact that they can´t get loans would devalue the currency.
Since the greek economy is nowhere near self-sufficient and natural resources that can be sold/used are rather limited compared to the amount that has to be imported. The devaluation will do a bit more than just destroy savings and debts(and considering that most of the states debts are and would be in Euros/Dollars it would not even be helpful in paying of the countries debt).
But most importantly it will not increase the money influx from exports compared to the money out-flux due to necessary imports. And with a country in such economic and political chaos investments would be rare.

Basically you would get the same as now just worse. Instead of some people having less money, you would have people having shit loads of money that they can not buy anything for.

Not all countries are in the euro zone and they are doing pretty good! Look at Turkey (the country not the chicken lol) or Sweden (they have double currency) and not forget Japan as i said in my post, japan don’t have oil but they still have the possibility to print paper money.. i am pretty sure japan is doing great.

The UK was smart, very smart.. they took the advantages to be in Euro-confederation, but retain their printing money capability.. they rightfully thought it was madness to allow banks to control their country through money printing..

http://www.youtube.com/watch?v=hztt0MDGTsM

http://www.youtube.com/watch?v=_3QoUEHDqog