I don\’t see why

The Greek debt and deficit crisis, the exposed contradictory pressures on the euro, and now the Irish emergency have combined to raise fundamental questions about the viability of a single currency shared by widely divergent economies. European leaders have been issuing shrill warnings that the very future of the EU hinges on the survival of the euro.

There\’s two bits here that I\’m having a very hard time understanding.

The first is why a default should mean the end of the euro. To take an obvious example, the Lehman default didn\’t mean the end of the US dollar.

Sure, I can and do understand that there\’ll not be a real solution to this non-optimal currency area without either some countries leaving it or a great deal more economic and fiscal union.

But a default? We\’ve had, what, 800 sovereign defaults over the centuries. What\’s one more?

The other is that I don\’t see the end of the euro as being the end of the EU. Of a particular vision of it, yes. If the euro goe then so does that (for some) desire to have ever greater economic and fiscal union. But why that should mean the end of the free movement of goods, capital and people I don\’t know.

9 thoughts on “I don\’t see why”

  1. “European leaders have been issuing shrill warnings that the very future of the EU hinges on the survival of the euro.”

    Scaremongering. Turning a crisis into a beneficial crisis. Painting the currency as at risk and greater integration as the only solution. Something far more valuable than money is invested in that Euro – political prestige.

    I also think our leaders are hooked on ‘action’. Not for them a reserved and calm approach to problems. They perhaps believe that a State that isn’t seen is a State that isn’t earning respect and obedience from the people. Therefore a State must be seen as strong and never wrong.

  2. But why that should mean the end of the free movement of goods, capital and people I don’t know.

    Because those desperately trying to sell the eu dream have for so long been arguing that their federal model is the only guarantor of such things (as well as world peace, helping the aged and saving little puppy dogs).

    They may not have convinced us swivel eyed euro-sceptics, but they have certainly deluded themselves.

  3. If the Euro does break up it gets rid of one of EU-philes main arguments, that the EU and european integration is inevitable so we had better go with it. That is why they are so scared and will do anything to fend it off.

  4. Has anyone given any consideration to how the Euro would fission?
    Surely, they couldn’t just set a date, print some new notes & then roll it out. There’d be truckloads of Euro notes hurtling round Europe looking for the most advantageous parking spot. I know I’d be loading the car with my stash ( :¬p ) & getting it north to France or Germany sharpish rather than end up with a devalued newPeseta or m€d if it covered all of the PIGS. I mean somones going to sus it if the printing presses are running 24/7

    Could you reissue the currencies without actually changing the circulating notes? Have an exchange rate between folding stuff & what’s in the system. You’d have to have something like that initially anyway so why not at a floating rate rather than a fixed conversion.

    All beyond my competence but as I’m backards & forards cross that Pyrennian border a lot be nice to know.

    Tim adds: Cash, these days, is such a trivial part of the money supply that it’s a rounding error. It’s all that electronic money in the banks that would do the runner.

  5. Come to think of it Cataluna’ll be seriously pissed, as will Padamia. Both see themselves as being a lot more economically ‘northern’ than their spendthrift cousins. Barca just gave the stiff middle one to Madrid over the bull fighting issue & everyone knows it didn’t have much to do with animal rights but was a response to the failure of the independence demands in the court.

    Personally doesn’t bother me in the slightest. Be nice to see the nations split as well as the EU. Jocks can get on with f***g up their country with their own money. Small is beautiful say I.

  6. Further to above, why coudn’t you have a Europe with dozens of currencies?
    Never bought into that ease of travel schtik. For a couple of holidays a year you need to change the entire economic system?
    This isn’t 1970. Simple mobile fone app could handle exchange rates with real time updates. How often do you need to know the price of a beer to the nearest tenth centime?

  7. Tim, that’s exactly my point.
    We get sold the € on the basis it’s better we all use the same dosh. Why? It’s not as if prices are the same everywhere. When I’m in France I buy fags in Belgium & if I’m passing fuel up in Luxembourg. I can handle £/€ exchange in my head but we’re not in a pencil/ back of an envelope era any more. No reason why you couldn’t have lots of different currencies, especially if its being spent on plastic.

  8. “We’ve had, what, 800 sovereign defaults over the centuries.”

    This is not a sovereign default, this will be a global domino style default when it finally happens because everyone owes everyone else money.

    Not that it matters, the money is already gone and any bailout sums spent are entirely fictional, the west has been broke since a few years now, but kept borrowing to disguise the fact.

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