RMCF - I don't think anyone has a crystal ball and predict what is going to happen. If Ireland pulls out of the Euro our currency will be devalued, I have read that some Irish people are opening German savings accounts and transfering their funds into it.
From today's independent:
Morgan Kelly, a professor of economics at University College, Dublin, said it was no longer a question of whether Ireland would go bust, but when.
[broken link removed]
These were actually some of the articles I mentioned as having read that were sort of scary.
Zero chance. The Euro is a currency, not an economy. Abandoning it will not solve anyones economic problems. In fact it would make them worse as the replacement currencies would be smaller and less stable than the Euro. You'd also have the added costs of currency exchange and exchange rate risks. A lot of the hysteria is being whipped up by the UK press who are still reeling at the fact that their currency has collapsed by a third in value during this crisis. Euro is still well ahead of both Sterling and Dollar since the crisis started, so it has been the strongest of the three to date. Do you hear people calling for the abandonment of the Dollar and Sterling*? - no.
*P.S. there are actually a small number of people who are calling for Sterling to be abandoned and UK to enter the Euro.
The dollar and pound are representative of one country a piece, not a collection of 16 nations all in different stages of their economic, political and social cycles. Each of the 16 nations requires different interest rates to be set in order to maintain their economies on firm foundations.
Likewise many believe the recent downturn in Sterling is having a good effect in increasing manufacturing orders from abroad and in creating inflation in the system to reduce the debt burden over the longer term. We will see how successfull this is, I believe a strong currency is good over the longer term but at least the UK has the option of control.
In terms of the UK entering the Euro, a few woolly socialists may think this is a good idea but any economist of sense knows it would be a crazy idea.
The UK has already lost out a lot through failure to enter the Euro. It has significantly disadvantaged it's industry with exchange rate, currency and transaction risks. Before the Euro, the UK was a first world country. Now large parts of the UK are drifting into the second world. Incomes are low, national debt is huge, standard of living is slowly falling behind the remainder of Europe.
Stats dont tell the full story. A classic example is the unemployment rate. The figure used for Ireland is the live register. This includes everyone who is signing on for any reason, so the figure is artificially high. For example, in Ireland, someone who is on a 3 or 4 day week, and earning enough to live on, is still classified as unemployed as they are unemployed for part of the week. They wouldnt be classified as unemployed in most countries as their income would be above the threshold for claiming benefits.
I don't see the UK's position as any worse than the rest of the EU -
http://news.bbc.co.uk/2/hi/business/10150007.stm
http://news.bbc.co.uk/2/hi/business/10150056.stm
http://news.bbc.co.uk/2/hi/business/10150081.stm
http://news.bbc.co.uk/2/hi/business/10150118.stm
Many of the stats paint a better picture. At the end of the day the whole of Europe is going to suffer a fall in living standards v the rest of the productive world.
There has never, never been a currency union like the Euro, so this comment is nonsense. There have been lots of currency agreements, Bretton Woods, EMU etc. but these have always been arrangements between separate currencies."the Euro will probably break up in the next 15 to 20 years” because currency unions do not survive and they haven’t in the past.
There has never, never been a currency union like the Euro, so this comment is nonsense. There have been lots of currency agreements, Bretton Woods, EMU etc. but these have always been arrangements between separate currencies.
I agree with him on one thing, if Greece were allowed to sink the Euro would soar. So make no mistake, Germany will decide if and when it will ditch Greece. There is no way Germany will let the Euro collapse.
+1the euro dipped below $0.90 and peaked above $1.50.
Over the course of it's life it's average value has been just under $1.20.
Right now it's just under $1.20.
In other words, no need to panic.
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