Comments on: Can the euro omelette be unscrambled?

By: LMOB

LMOB — Mon, 07 May 2012 04:54:06 +0000

The Americans caused the GFC and now they will have to just put up with the fact that the EU is going to take a while to sort out its fiscal unity. The Euro will survive and the world is going to be using both the Euro and the Yuan for international trade, including the purchase of oil.

By: Farkel4

Farkel4 — Wed, 18 Apr 2012 11:55:05 +0000

My prior comment critical of Economics as a study as practiced was not allowed to be shown. Another truth of Economists as a whole… weak.

By: MrRFox

MrRFox — Wed, 18 Apr 2012 05:03:43 +0000

@ZGHerm – As you say, self-contradictory half-measures can’t work. It has to be either “all in”, with the EZ becoming a new “country” and the existing nation-states disappearing, or the Euro has to go – unscramble the egg.

Either one works, doesn’t it? But of course, citizens don’t care to see “their country” disappear, and pols pander to that impulse – with success. Euro elites want the opposite, and pander scare-stories of calamity if the Euro is scaled back.

If Germany and a few others left the EZ, it wouldn’t be the end of the world for those who depart, would it? If they did, then the Euro could be weakened to a level appropriate for the weak states that continue to use it, and they would not have to deal with the problem of recasting existing Euro-denominated obligations into another currency. ‘Course, it sucks if you’re a creditor on such an obligation – but somebody has to eat the loss – who better than the people who were dumb enough to lend good money to Greeks et.al.?

By: ZGHerm

ZGHerm — Wed, 18 Apr 2012 00:56:26 +0000

Scrambling or unscrambling is not really the issue here.
Although we keep focusing on the currency and the financial institutions the problem is structural.
Europe tried to get the best of both worlds.
They tried to keep national independence as much as possible but create a common market and currency so they could compete with the North American and Asian competitors for increased profit.
Although on selfish grounds, they started going in the right direction with the Union, and financial cooperation since our world is becoming more and more global, and interconnected, thus mutual cooperations lead to prosperity, success.
But there are no half measures. In an integral system either all elements work for the same purpose or none of them, and after the initial honeymoon period, while the constant growth machine was still working, the upswing covered the false foundations, but this is not the case any more.
No superficial, political or financial measures can help, only further integration, a true Union with a supra-national mutual/democratic structure.
Unscrambling, and separation is a dead end. In our global system no individual or nation is capable of going alone, sustaining itself, any such attempt would most likely lead to far right or far left leaderships and very volatile scenarios.

By: paintcan

paintcan — Tue, 17 Apr 2012 14:21:48 +0000

John2244 – I’m not slighting New York. I just remember some of what was said at the time and it wasn’t kind. And a lot of the suggestions were stupid. Many non New Yorkers were talking about the city the way many talk about Greece today.

When New York City has fiscal problems, they are larger than many smaller countries. It’s “awesome”.

And I think I agree with Mick69 that a world government is on the way but I will probably not live long enough to see it. Sometimes I wonder if anyone will live long enough to see it? As long as it doesn’t turn into the first episode of Lexx, I’d probably think they were doing pretty good.

By: Farkel4

Farkel4 — Tue, 17 Apr 2012 13:32:50 +0000

Find a 5 or 7 year old entry level global Economics university text and the first chapter will sing the sweet song of the Euro… History only proves the obvious point…Economics is the new Alchemy. Talking heads spout ideas that time proves wrong, and the next day the same talking heads explain the new thesis. Individuals and groups act in their own self interest. Many Individuals and groups will lie, cheat, steal, and take what they want. Now you have a free Online Master’s Degree in Macro-Economics… the rest is rubbish.

By: mick68

mick68 — Mon, 16 Apr 2012 21:46:12 +0000

Agree with this article, but I believe the power which put the EU together is far greater than that which some suggest will pull it apart.
Behind the scenes, powerful people are orchestrating a world government, of which this is a pilot project meant to show the way.

By: ARJTurgot2

ARJTurgot2 — Mon, 16 Apr 2012 20:26:01 +0000

@SeaWa

For a good time research why the Burgundy regions of France can only grow Pinot Noir grapes (or Chardonnay). Losing market share, rather than de-regulate, they tapped the EU’s subsidies via the Common Agricultural Policy, and lost the market to Oregon, New Zealand, and anyone else that was able to innovate. Sadly, some of their best people understand exactly why they are getting creamed, but can’t do anything about. Check out the details of Hollande (and his ex-wife’s) economic plan and it’s something from the 1838 Commune.

Everyone sneered at Bush for his famous quote on there being no word in French for Entrepreneur, and completely missed his point.

By: stevedebi

stevedebi — Mon, 16 Apr 2012 19:57:48 +0000

Eggs? Omelet? Nonsense. We are speaking of finance, not farming. The entire scheme of the Euro was flawed from the beginning, and the only solution would be a political union, which is not going to happen.

It is all going to fall apart, sooner or later (and I’m guessing sooner, as the southern countries encounter more and more social unrest); the costs of austerity are simply too high for the local populations. When it happens, the countries that have exercised more fiscal discipline will have some problems but recover rapidly, and the countries that have been prodigal will really suffer until they can recover their national currencies and economies.

The article is correct in saying that a structured departure would be preferable, but I don’t really think the political will is available for such a solution. If it had been, the Euro zone would never have gotten to this point.

By: Rollo

Rollo — Mon, 16 Apr 2012 19:38:07 +0000

Keep thinking. An effective unilateral exit requires dictatorial powers which none of the Eurozone governments have. Chances are that an overnight economic power grab would simply end up being ruled unconstitutional. The possibility of a consensus breakup is unrealistic because it involves the countries agreeing on exit rates from EUR to the new currencies which would be impossible to agree on since by setting these rates value would be transferred across the countries. The entry rates to EUR were different since they rested on traded currency rates and there was a spirit of cooperation and exuberance. The divorce would not be such a happy affair.

That said, it is probably an illusion to think that an exit would solve anything that a simple default wouldn’t. A weak exchange rate would produce inflation, but not growth in countries that lack an industrial base and would need massive investment to build up exporting capability. Where would that investment come from after the massive default/redenomination of debt?

Chances are that there is no policy choice that involves less pain, just a choice between suffering massively in a short period or chronically over an extended period.