Quite Right on the Euro

Ambrose Evans Pritchard isn\’t the only person who has been saying this:

My point is – and always has been – that launching the euro was the easy part. The test would be 1) whether countries with vastly different structures, trade patterns, wage bargaining systems, debt structures, sensitivities to interest rates, productivity growth rates, and historic inflation rates would diverge so far over time that this would threaten the viability of the system.

2) Whether EMU could weather a bad storm without single treasury and debt union to back it up.

3) Whether the eurozone bloc had the “solidarity characteristic of a nation” (the Bundesbank’s term) required for it to endure through bad times.

As Jon Livesey and others have pointed out on my last blog, the euro-zone is not an “optimal currency area” – OCA in the jargon.

I was saying it back in 2002 for example. Nothing\’s happened so far to make me change my mind.

5 comments on “Quite Right on the Euro

  1. This is bollocks on stilts. June 29th 2001, Ambrose Evans Pritchard wrote an article:

    “All change: but currency gamble may bring chaos. The changeover poses a logistical and administrative nightmare”

    On May 29th 2001 he argued:

    “Disaster warning for firms over launch of euro”
    – ‘grave mistake’, ‘melt down’, etc

    On May 15th 201 he wrote:

    “Euro could cause chaos, EU told”
    – ‘tragedy coming’, ‘chaos’, etc

  2. Whether you like it or not, the euro must now be judged a success as it is threatening to take over from the US$ as the world’s favourite currency.

    Europe may not be an “optimal currency area”, but then neither is the UK or the USA. They/we live. You simply have to learn to adjust.

  3. “You simply have to learn to adjust.” That’s handy.
    NHS a shit-hole?
    You simply have to learn to adjust.
    Schools a shambles?
    You simply have to learn to adjust.
    Old folks neglected or bullied?
    They simply have to learn to adjust.

  4. The question of whether the Euro is a success or a failure is worthless without comparing it to alternative currency arrangments. So put simply is the Eurozone better off for being a Eurozone compared to the seperate currencies that existed before? We don’t have the perfect comparison (two unions of nations that chose different paths) so lets restrict ourselves to considering those nations that opted into the Eurozone against those that opted out. I’ve not noticed any disasters or roaring successes on either side so I’d suggest that, in the absence of confident results either way, the least we can declare of the pound is “it ain’t broke”.

    Frankly, I don’t see the Euro as ending in disaster. I’m just not sure I really understand the point of it. And the notes and coins… an exercise in sterility.

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