Tim Garton Ash essays into fields economic:
But we are in turbulent financial times, and they may get even more so. The euro is strengthening, while the dollar and the pound are weakening. What if, a few years from now, Britain is back to the bad old days of sterling crises? What if belonging to a strong currency bloc looks increasingly attractive in a world of big players and big storms?
Erm, apparently he has missed the point that you can only have a sterling crisis when you\’ve got a fixed exchange rate. If you\’ve got a floating one, as we have, then we cannot have one.
Note that the last one we had was indeed when we had a rate fixed in the EMS. As was the one before that actually, a result of a fixed exchange rate…..hmm, might be a pattern here, for so was the one before that, and, umm, the one before that.
So it\’s really rather odd to think that joining the euro, which is of course the same as declaring an exchange rate fixed for all time, is the solution to something which only happens with fixed exchange rates. As Dani Rodrik has pointed out, it\’s entirely possible (in fact, in a non-optimal currency area, almost certain) to have even worse problems within a currency union than out of it.