Slashdot Mirror
The Euro
Dizer writes: "Today sees the historic introduction of the new European Currency (Euro) into European hands. The Eurozone market, with a population
of 300 million people, will be cashing in their Punts, Francs and Deutschmarks in favour of the new common Euro currency. This is the biggest currency transition in history, vive l'Europe! See stories on
ireland.com or the BBC."
The fact that Ireland has done extraordinarily well with European integration is probably NOT why it is using the Euro. Ireland has had more than its share of problems with the English, and probably welcome any changes that lead it away from English dependence.
-- Dan
When the factories in Detroit lay people off they can move to Dallas, LA, etc. But when people are layed off in Paris they won't be able to chase jobs to Berlin.
uh. labor CAN move freely within EU. try learning facts of the world outside USA before bashing. could be enlightening exprience.
signatures pending - ansa@kos.to - (dont mail there)
Is one answer, there are others, our economy is out of step with that of Europe, we have very different tax rules.
But IMO as a Brit the real reason is that we hate the fact that someone else came up with a better idea. Personally I can't wait to use the Euro in the UK as then it will make getting a mortgage or a loan from A.N. Other country much easier and I can pick the rates in a much more competative way.
The next few years should be great for the UK as we aren't going into recession (touch wood) so we'll hopefully steal a march. We could steal a much bigger march as the strongest fish in the Euro.
An Eye for an Eye will make the whole world blind - Gandhi
Well, there are certain advantages to having your own currency. The big thing is that interest rates, and the exchange rates are adjusted to your economy, not somebody elses.
Witness what's happening in Argentina right now. They pegged their currency to the U.S. dollar - in all practical terms that means they adopted the U.S. dollar. But the U.S. dollar kept gaining value as the American economy grew, so that Argentinian exports became too expensive and the economy suffered. A free-floating Peso would have devalued to keep things in balance.
This probably won't happen in Europe because European countries have been integrating their economies over the last half decade. With common regulations, and free-flowing goods, the economies should grow (or shrink) together. As long as that's true things should work out.
It is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail. - Abraham Maslow
So, you congratulate the Brits for being selfish and nationalistic? The irony is, of course, that the British economy and currency are in pretty sad shape. Britain isn't a wealthy empire anymore, it has become a second-rate nation. Britain only stands to gain by joining the monetary union, as many businesses might prefer to have their European offices in an English-speaking country. But until Britain adopts the Euro, it just doesn't make much sense for businesses to go there.
Dunno. Time will tell I guess. But I don't see why the differences between European states should be greater than the differences between (for example) American states. Labour, goods, and capital move freely, so when one part of the Eurozone becomes undervalued investors should come in and snap up the bargains.
It is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail. - Abraham Maslow
It is precisely this attitude that makes me ashamed to be British.
Vive la EU!
Seriously:
There's a widespread assumption in the UK, and most widespread among the Euroskeptics, that we are unequivocally better than everyone else and that their ways of doing things are worse.
I don't buy it. Doing someone else down is the nastiest expression of patriotism, and usually conceals a narrow-minded reluctance to scrutinise one's own actions.
Yes, the banking currency-conversion objection is valid: and so are the issues to do with non-anonymity of large-denomination notes.But the exchange rate doesn't fluctuate wildly -- the Pound is typically locked to within +/- 0.1% of the Euro.
Personally, I'm looking forward to using the same currency whether at home or abroad. And I'm looking forward to the opportunity to vote for tighter integration with the EU.
When banknotes where first introduced over 17th to 19th century, they were viewed as certificates that a certain bank (usually a single "central bank" per country), would exchange for something of tangible value (usually an equivalent in coins made of precious metal). After WWII a monetary system was introduced in which the USD was the only bill pegged to gold, and other currencies were floating against it. The emptyness of the Fed's gold reserve and the oil crisis broke that system in the 70s, replaced for the first time by the complete floating of all currencies agains each other, with none pegged to any tangible good, and the IMF playinga pivotal role of watchdog to ensure this balance does not diverge.
But the USD became used so widely in international transactions, that it became the de-facto standard against which the currencies values were measured. This gave a huge technical priviledge to the US : the USD could be ridiculously cheap, as it was in the early 90s (when a USD was worth the equivalent of about 0.80 euros in the european currencies of the time), without making holders of USD poorer, since the price of goods on international markets was labelled in USD, giving the US industry an artificial competitive advantage.
Conversely, the USD could be ridiculously overpriced, such as in the mid 80s when it was 25% more expensive then it is now compared to European currencies, making it easier for the US government to finance a huge deficit, while still being able to sustain an abysmal deficit in the balance of payments (since creditor institutions used USD as their reserve currency)
The main economic sense behind the euro is to take away part of that privilege from the US, by making Europe a zone where internal business could be made without any influence of the USD's values. Actual euro banknotes allows banks around the world to actually stash the currency, and makes the integration irreversible, and hence more reliable.
So the US has been considerably opposed to Europe monetary integration, and have worked hard, with their British sidekicks, to make it not happen. Actually the changeover might be seen as the biggest thing that has went in the face of US national interest in the last 30 years, maybe since the end of WWII.
Really? Name a major manufacturer of computing equipment that in the EU that is not a foreign conglomerate.
Get used to paying more for the products you really want.
Just to clarify the parent poster's point, it is theoretically possible for everyone in a country to reduce all of their salaries and government benefits to compensate for their
decreasing productivity. However, it is generally impractical to get everyone to agree to do this in sync, while it is trivial if not automatic if that country has a separate currency.
The situation in Argentina is a bit different, because part of the problem is that the government claimed to back its currency with more US dollars than they actually currently have.
But the bigger threat is inflation. It's simple and happens anytime there are changes to standard pricing schemes, be that a GST/VAT, exchange rate, whatever.
- Manufacturers don't want to receive less than what they've previously been getting. So they round up.
- Distributors don't want to receive less than what they've previously been getting. So they round up.
- Retailers don't want receive less than what they've previously been getting. So they round up.
It all gets passed on to the consumer (me). Now I need more money to pay for this, so I ask for a raise....That's the classic price/wages spiral.Economics 101 says that inflation is inversely related to the exchange rate. So that means if inflation goes up, then the exchange rate will go down.
As Germany (the driver of EU commerce), has just officially gone into recession, this inflation pressure is going to be a serious confidence issue in the Euro. As the currency depreciates, there will be the "I told you so" bleating...
Britain, by not taking part of the Euro, is best placed to benefit in the short/medium term. Short term means less than 2 years. Medium term means 2-5 years in financial circles - IT has different time lines.
The only thing that concerns me is the effect this has on the German economy. If there is serious inflation over short/medium term, this could all come undone. If there's not, and the German economy kicks in during this period, then the Euro will take off.
So does Anonymous Coward have good karma?
The control of this currency rests with the German Government. Unlike the presidency of the EEC, which rotates so that each country can have a turn at running Europe, the control of the Euro is fixed with the Germans.
This is not fair or right.
The UK is the most powerful economy in Europe, and its government is clearly the best at managing an economy. If anyone should be running the Euro, fixing the interest rates and running the inevitable European tax system, its the Bank of England, and NOT the Bundesbank.
Either way, whoever is running the Euro, giving control of your currency to another nation is suicide.
Can you imagine the US Treasury accepting the control of the Dollar and the US economy from Canada or Mexico?
That is precisely what is happening in Europe. This is totally wrong, and everyone here is being brainwashed into accepting the Euro because it is superficially convenient.
First of all, stating that the UK is the most powerfull economy of europe is bullshit. Expressed in growth, Ireland wins. If you consider the value of the pound to be the measuring tool, then might I remind you that a strong currency makes export (selling, profits) harder. Most of the european countries are exporting much more than they are importing. The reunion of germany has been payed with the germans giving up their strong DM. This was negotiated by Jacques Delors, Mitterand and Kohl. So give the germans credit where due, they are pulling something off that Europe in itself has yet to make true, political and total unification. It takes time, it hurts, and it is certainly not easy. But in the end it makes us all stronger and brings more stability in our fortress than ever before. I think it's simply the right way to tackle the bigger battle at stake here: The economic wars with the US and Asia.
By the way, the euro is not 'fixed with the germans' as you said. I consider that a typical narrow visioned patriotic view on the matter, but not a clear thinking one. The euro is controlled by the european central bank, which is headed by dutchman Wim Dhuisenberg. Germany is economically still the driving force behind it, because they are simply plain good efficient commonsense hardworking people. That is not to say other states don't work as hard, they simply are not as efficient (and by culture, they usually didn't need to be)
I'm sure this sounds horrendous, but London shopping malls say they ARE accepting and returning euro currency. That's right. We will not need to change currencies and pay taxes whilst doing so in your country, whch is of course a shopping benefit and a way to make sure tourists don't go to Paris instead because of the money thing. People can travel and shop with on single currency. It will make trading goods fairer, and will in the long run slowly integrate a respect for foreign cultures and standards through the pricing of the same goods in different parts of europe. Like Prodi said, we carry Europe in our pockets now, it's not just a far from our beds thing. I'm proud of it, and as far as I am concerned there cannot be enough Europe!
Stating that Brittain needs control of the currency is a laugh, you don't even want to be part of it, but oh look, now that we've got it you want to control it ? That sounds like a envious kid in pre-school. We need Brittain in the system, because yes we want your strong country to support the currency, talking on the same level that every other nation does, and we're sure that in the long term the UK will come to acknowledge the benefit of the Euro. It's not about control, it's about Unification. The UK is no longer an island, but it takes some time for people to see that, along with Denmark and Noorwegen.
- Positive thinking Belgian.
With great power comes great electricity bills.
I would suggest that you try thinking through the poster's comments before engaging in ignorant-American bashing.
The United States does have true labor mobility. Moving from one section of the US to another for economic advantage is not only easy, it is very common. In addition to the lack of legal barriers, there are no language barriers and few cultural ones.
Are you asserting that the average Parisian, having just been layed off, could and would chase jobs in Berlin? The average Detroiter could and would do so in Dallas. The Parisian is prevented from doing this, but the barrier is de facto rather than de jure as you seem to assume. From a macroeconomic perspective, it amounts to the same thing: the workers do not, in fact, move.
London is the number one financial place in Europe, it would have been pretty hard for another country to get this institution, if Britain had joined right away.