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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."
Not really, before the euro, the deutchmark was the most stable currency. Remember 199x (x < 5), when the British pound was forced out of the EMU (monetary union) by Soros (amongst others). At that time, which was not too far in the past, the pound was the weakest currency, a state they shared with the Italian lire.
I think it's alt+numeric 0128: Yup :-)
After all, all they have to do is turn the Quake II icon sideways.
Picture of a 5 Euro bill, 10 Euro bill, 1 Euro coin
They are pretty cool looking.
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
One of the advantages that Europe has is that language and culture maintain national entities in such a way as to resist the "winner take all" scenario, in which all the educated professionals move to a tiny handful of economic supercenters. Economic growth can be distributed geographically more in Europe, but it has nothing to do with any restrictions on travel.
One of the ironies of economic popular wisdom in the 90's is apparent by the fact that Brazil, with its protectionist policies, is doing reasonably well, while Argentina, which did almost everything the IMF and the US banking establishment told it to it, is about to go toes-up. The Argentine disaster could spell the end of WTO-styled globalism far more than the protests of Seattle etc. ever could
Well, being one of the 300 million affected, I just thought that I could karma whore a little and get an "informative" mod by telling you (the non-european or non-affected-even-if-european people) a few issues that arise in real life with this change :-) Let's hope not to be another of a million messages about this O:-)
There's more, but I don't recall anything specially interesting now, so let's hope that another one with a better english and memory can say something more fulfilling ;-)
My weblog in spanish
I tried three cash machines this morning (there were queues, people are enthousiastic apparently) and one of them had an error. I don't know whether it was out of bills or there was some bigger problem.
Then I tried the recharging stations for the (chipcard based) debit card called "Chipknip" (similar to Proton in Belgium and Geldkarte in Germany). Two out of three malfunctioning.
Now, these chipcards are not used very much by the general public. But the thing is, banks have promoted it a lot lately, because it would make the transition easier. The banks should have done a better job if they are really serious about this.
Also, I have a device which I can use to recharge my chipcard at home. I connect it to a phone line and then it makes a connection with the bank.
I noticed that from now on I can recharge it with 25 euro as a minimum. Previously the minimum was about 10 euro. I wished they had maintained that minimum amount.
-------
Warning: Slashdot may contain traces of nuts.
This is such a short sighted view point. Only through cooperation can European countries have a say in world affairs, the UK, a country of about 60 million people, will be ignored in the face of trading blocks of 300 million people and upwards.
Sooner or later, the UK will come crawling into the Euro with its tail between its legs, and feeling rather stupid.
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.
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Well.. I'll (almost) pass on the Argentina situation. Argentina does not have the US dollar as a currency. Indeed, it is considering 'dollarisation' where it does adapt the dollar as a currency. Right now, it has a currency board with insufficient reserves to support its chosen exchange rate with the US$ given:
(1) Argentina's budget deficit
(2) its large (private) US dollar borrowings, and
(3) modest US$ export earnings
In this situation, Argentina becomes a sitting duck for currency speculators. Irrespective of the 'true' value of the peso, it is near impossible to maintain the value of the currency. Add in a crazy political situation (most of the public sector deficit in Argentina is from *local* government - where politicans are from different political parties to central government, and hence much to gain from embarassing the central government...). Result, chaos. And that's even before a long running recession, supply-side inefficencies, etc.
Back to Europe.
There is an economics theory called 'optimal currency zones' which makes much the same case you do: how can the central bank pursue a coherent monetary (ie interest rate) policy, when the different countries that make up Europe have such different economies?
We don't know.
Only experience will tell. But one thing seems forgotten: the US has widely differing economic areas. How closely correlated are tobacco farming in Virginia, car manufacturing in Detroit, optical networking in San Francisco and investment banking in Wall Street? When car making is suffering from Japanese competition, it might seem to make sense to devalue the Detroit dollar - yet no-one has ever suggested breaking the US into regional currencies.
And the advantages of a single currency are huge: greater price transparency for consumers, lower inflation from greater competition, lower long-term interest rates, etc.
Most importantly of all: work or not, <b>everyone</b> should hope the Euro is a success. Neither the US, the UK, nor Asia will benefit from an economically weak Europe.
And I'm really looking forward to getting hold of my first Euro notes and coins when I go to France on Friday!
--- My dad's political betting
I can provide some data from a loosely analogous situation in the United States. US bills are printed at 12 locations in the US, and are originally distributed to banks based on which of the 12 districts that bank is located in.
I'm part of a fun projectthat involves tracking the motion of US currency. I live near (60 miles from) San Francisco--here are the locations the bills I've marked come from, and their relative proportion.
San Francisco 776 32.0%
Kansas City 323 13.3%
New York 205 8.5%
Dallas 187 7.7%
Minneapolis 182 7.5%
Chicago 146 6.0%
Atlanta 133 5.5%
St. Louis 129 5.3%
Cleveland 99 4.1%
Boston 97 4.0%
Richmond 82 3.4%
Philadelphia 63 2.6%
Now, while the banks print out different numbers of bills and such, it's pretty clear that the San Francisco printed bills dominate my sample.
This analogy is unlike the situation with Euro coins for at least one reason--the lifetime of bills is much shorter than the lifetime of coins. Bills tend to last a year or two in circulation, coins for a decade or more. So, as time goes on, I'd expect mixing to be a much larger effect for coins in the EU than it is for bills in the US...
I'm a nature photographer.
To think Ireland would use a different currency than the rest of the U.K.
Ireland is not part of the United Kingdom. It's straightforward:
Ireland is a nation. The United Kingdom of Great Britain and Northern Ireland is a nation. This was formed for seperate nations, principalities, and provinces - England, Scotland, Wales, and Ireland. Most of Ireland left, leaving Northern Ireland. Meanwhile Great Britain is an island, which contains most of, but not all, of Scotland, England and Wales. Ireland is also an island, but doesn't only contain Ireland. The British Isles is an archipeligo, which contains Great Britain and all the smaller islands that go to make up the United Kingdom of Great Britain and Northern Ireland, and Ireland, and the Isle of Man. The Isle of Man is not part of the United Kingdom of Great Britain and Northern Ireland, but is a dependancy. The Isle of Man is in the Irish Sea. The Channel Islands are not part of the British Isles, but are dependancies like the Isle of Man.
Maybe if the Treasury had a 98 sale, they'd get out there.
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.
Because of the internal divisions in the Conservative (Tory) party.
The history is that the Major government took over from Thatcher after she had been governing the country for 11 years and had become amazingly unpopular. The economy was in a mess and headed for a recession, people were fed up with crackpot schemes such as the poll tax, unemployment was high and the public services were collapsing. In many ways the 1992 election was similar to the 2000 US election, the right won an election that on all political calculations they should have lost. But they did so on a minority of the vote and with a very small majority in the Commons.
One of the reasons Thatcher had become unpopular in the party was that she had become anti-European and had refused to countenance going into the then ERM, a currency board that predated the Euro. When Major as Chancellor finally persuaded Thatcher to let him take the country in the pound was unrealistically high. This then led in part to the economic crisis that would peak a few years later in 1993. a bunch of speculators led by Goerge Sorros realised that HMG could not sustain the pound at its then level in the ERM, it was simply unsustainable. But Major and co refused to countenance a devaluation. Finaly the markets won and the pound fell out of the ERM. This had the immediate effect of ending the recession caused by an over-valued pound. The cost however was the Major government's credibility since they had spent $20 billion trying to sustain the higher level - equivalent to the cost of running the air force at the time.
The longer term effect was that a sizable faction in the Tory party began to use anti-Europeanism as a means to snipe at Major. A hard core of about a dozen rebels lost the party whip, but they had a large number of sympathisers. More importantly they were better organized in the constituency parties which are typically racist and reactionary.
In the 1997 election the Tory party was virtually anahilated, loosing 200 seats. That is their worst performance since universal suffrage. As always in the UK the MPs to loose their seats were the ones in the most marginal constituencies. These were also by and large the ones that were industrial rather than agricultural and as a result the ones most likely to have Europhile MPs.
By 1997 there was no prospect of the UK entering the Euro in the first wave even thought the pragmatic Blair administration supported the idea. That meant that there was no prospect of entering in that parliament. By now the Tory party was virulently opposed to the Euro and had made it practically their only campaign issue. If there was a referendum and the Tory party was to win a No vote it could easily allow the Tories to recover their lost momentum, possibly winning the next election. The political cost of negotiating to enter the Euro was consequently high and the benefit negligible since it could not be completed in one parliament.
The political calculation at this point is rather different. It now makes little difference whether the UK joins in 2003 or 2008, having missed the opportunity to set the ground rules the UK might as well watch what happens. The current Euro exchange rate is absurdly low and so a more equitable exchange rate to the pound and dollar is likely to sort itself out. It is likely that HMG will choose that moment to declare some form of currency peg. Over time the peg will become more permanent leading eventually to the UK entering the Euro.
The political advantage to doing so early remains low, the cost high. This is particularly so since 60% of the UK media market is controlled by Rupert Murdoch, an Austrailian with no particular concern for the UK or its inhabitants but a considerable and justified fear of the European Union curtailing his ambitions through anti-monopoly (trust) regulation.
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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.
The exchanges and markets have been working in Euros for the last year. This makes a unified market within the Euro-zone countries. However, until we had a real currency, there was a crisis of confidence.
I duely went out and got my 20DM worth of Euro coins in December. This was part of the so-called familiarity and to try to front-load the system to help with the problem of small change.
A couple of days ago, I had a guy at a bookshop at Frankfurt airport try to pass me off with two 10 year old banknotes of a withdrawn design. I objected because the notes could only be changed at a bank, and he gave me modern notes. The old bank notes were in very good condition and probably genuine, but I still refused.
Well I was out last night, spending Deutschmarks in a pub all night. Did I rush out to get my Euros, no as I anticipated a queue at the cash-points. I stayed away from the ECB because I didn't like the crush.
In the morning, I noted that the region transport company, the RMV seemed to have a lot of ticket machines out of order. However, I was able to get money from an ATM w/o queueing and without problem.
We are relatively lucky in that the exchange rate is set close enough to 2 at 1.95583. However, the retailers have been given a little too much leeway in setting their prices, so there is a lot of retail price inflation (already apparent during December). In France, they introduced a price freeze for three months to prevent this.
In real terms, it will probably start being useful on my next ski-trip. No more currencies to worry about apart from the Swiss Franc, and already, some resorts in Switzerland are saying that they will accept the Euro. Many have been taking Deutschmarks and French Franks already for things like lift-passes.
I expect that there may be some problems tomorrow when the first real business day for the shops starts, probably with availability of change as the public have practically none. Shops should give change in Euros, even if you spend DM.
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Actually the election was far more finely balanced. The Tories benefitted from an unexpectedly high turnout which was largely due to the weather, it was the first fine day of spring. The margin was very narrow, less than 2000 votes in 20 seats. In fact had the 50 seats with the smallest majorities gone 50:50 to Tory/Labour then Labour would have won narrowly.
The voter perception of Labour policy was largely fuelled by the Murdoch press. What Major offered was a Conservative government minus Thatcher. The mistake the Labour party had made was that by daemonising Thatcher they allowed the Tories to get re-elected simply by putting a new face at the helm. The Labour policy changes from 1992 through 1997 were of presentaion, not substance.
The major change was not in the Labour party but in the Conservatives. Racked with open internal warfare few of the cabinet made any attempt to conceal their contempt for their party leader. The numerous corruption scandals, starting with sex and ending with peculation and perjury erased any remaining vesigest of respect for the party.
The main similarity between 1992 and 2000 is the extent to which a viciously partisan press tipped the balance in favour of the right. Bush was consistently praised despite his obvious deficiencies while every opportunity was taken to attack Gore. So Bush got a bye for lying about driving while drunk while Gore was called a liar for mistakenly saying he visited Texas with the head of FEMA when it was the deputy head, he having visited 19 other states with the head one might think it an innocent mistake. The list goes on.
The relevance to the Euro is that but for the campaign against it in the Murdoch press it is unlikely that UK opposition would be anything like as great.
We will see if the end result is the same, before 9/11 that looked very likely. The ecconomy was in recession, the administration had lost control of the Senate due to crass political judgement, the California energy crisis caused by blatant market manipulation by Bush's texas cronies at Enron. Of course the hil Bush now needs to climb is that the press loves nothing better than making history repeat. So just as the Clinton years were spent trying to repeat Watergate, the press will now be trying to tie Bush II to the script of Bush I.
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In general the majority of the british population see the 'foreigners' as either peasants/pig farmers or 'militant french farmers' (who for some bizarre reason every time they have a problem with their government they blockade calais... I suspect they don't like us either...)
:-)
Also one of the most powerful countries in the EU is Germany. British people don't trust germans - even the under 30's who you wouldn't think would bother about a war fought 60 years ago have this inherited distrust from their parents and grandparents.
And, well, *everybody* hates the French
Personally I can't see it happening in my lifetime. Heck it took us 200 years to decimalize...
I think it's a really stupid idea, and will end in tears or war.
Economic integration is a strong factor in preventing wars, not starting them. Why invade another country when you can get its riches merely by trading? After WW2, the elite of the world got together and said "Never again!", and globalism was born.
With 300-million people on board, the EU will be able to go toe-to-toe with the US economy. As a US citizen, you will be mildly effected by this, as the world outside the US has become a little more competitive, and you, reciprocally, a little less so.
In response, the US has joined free-trade zone of the Organization of American States. This zone has a greater population than the (present) euro-zone, though, besides Canada with a relatively small population, the OAS includes mostly third-world and emerging nations with massive debts.
The long-term prospects for the EU are excellent.