As is patently obvious the EU solution to the crisis has been non-existent. Where are the central finance functions to co-ordinate any plan? Where is the unity amongst the countries?
Ireland guaranteed, Angela had a hissy and then went and did exactly that a few days later. Now Denmark and Austria are following suit.
Yet the UK, Italy and Spain are reticent, whilst France boasts about leadership whilst providing none.
Some said the Euro-area was never a good single currency area. Indeed, it was the subject of my master's thesis in 1995!
But this crisis may perhaps show that the Euro cannot continue without radical surgery. perhaps the pro-Europe side will use this as an opportunity to gain the powers they need over national governments - either that or the EU will begin to break up.
Just a few months left after all to make my prediction of the Euro area falling apart by end 2008 come true.....
Congrats, you've found the silver lining.
ReplyDeleteSome are saying that this is the point at which we should join! Nooooooo!
ReplyDeleteThe only problem is that a disintegration of the Euro might be quite messy if done under pressure rather than carefully. It should be done sooner rather than later before the national politics gets out of hand.
Will we have to go and sort Europe out... again?
BE: "Will we have to go and sort Europe out... again?"
ReplyDeleteNo, Putin will do that this time. We'll have enough trouble keeping his hands off our throat to worry about the rest or Europe.
A commonwealth of Europe is fine by me, in fact it will be fine by the good peoples of Europe too.
ReplyDeleteFiat currency is a political currency which is what the Euro is just like every other, without the political power that goes with it, (democracy ect) if is doomed.
But we could get inventive? how about a duel currency system, taking away the monopoly of the central banks? make the Euro a commodity based currency only available in large denominations, legal tender in all EU nations along side the political currency.
This would have the effect of holding the political currencies in check, and all the technocratic Eu baggage could be done away with as its only there to promote the euros current political currency status.
Passer by: that was what John Major proposed - a common currency but not a single currency.
ReplyDeleteAs pointed out by Newmania - Russia is still a tiny economic force compared with the western alliance. If we needed to re-arm we could do so quite easily.
Anon - Putin is screwed. Russia is finrly back in its box now - oil wealth was fleeting and the oligarchs stole it anyway.
ReplyDeleteThe Russian bear will be quiet for some time as its precious commodities fall in value.
absolutely right about Russia, CU
ReplyDeleteand probably your prediction about the EU, too
now, how about the FTSE, eh ?? :+)
I am looking foward to the introduction of passerby's 'duel' currency - presumably when the fighting-in-the-streets starts in earnest
(why am I so bloody cheerful today ?)
There will be plenty of movement in the background...mainly revolving around France trying to get everyone else to guarantee it's citizens savings and bailing it out.
ReplyDeleteThis is primarily why the EU can't work.
Blue eyes, Yes I know, but it fell on deaf ears, something tells me that if the euro is pushed to the brink, all options will be on the table, esp with the eastern euro nations.
ReplyDeleteCuS, don't forget the demographic meltdown in Russia and coming to china soon as well, which makes even the state of European demographics look healthy. America is still having babies to pay their deficit off, how ever immoral that is.
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ReplyDeleteIt'd be appropriate if the EU edifice fell apart whilst a Frenchman was in charge. I'd like to see Sarko standing in the ruins.
ReplyDeleteInteresting move from the rushkies this morning lending Iceland 4 billion euro. I wonder if they have their eyes on a naval base on our doorsteps?
ReplyDeleteHistory teaches us that the Euro was doomed from the start.
ReplyDeleteYes, there are advantages (economies of scale, less FX risk)and disadvantages (inflexibility) to currency unions. I am not taking sides.
But there have been hundreds of attempts in Europe in the past to create currency unions (we used to have a single world currency - gold!) some have been successful, others not.
Off the top of my head, Belgium & Luxembourg have shared a currency since Heaven knows when, for example. East Germany started using DM, which was a hugely expensive mistake, but they hung on in there (it's a national solidarity thing).
But on a larger scale than this, currency unions have never worked before, why on earth would it work this time?
The Euro was a means to a political end - this crisis or the next might concentrate minds. Is integration more important than divergent national interests?
ReplyDeleteThe Irish and Germans have shown us the answer this time with their unilateral savings schemes. Lord Lamont said that he didn't think this was the break-up - if not then we will see lots of moves after the wreckage has been cleaned up.
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