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Anonymous
Feasibility of the Euro 2017-03-27 03:49:50 Post No. 1904506
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Feasibility of the Euro 2017-03-27 03:49:50 Post No. 1904506
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"Europe’s common market exemplifies a situation that is unfavorable to a common currency. It is composed of separate nations, whose residents speak different languages, have different customs, and have far greater loyalty and attachment to their own country than to the common market or to the idea of "Europe." Despite being a free trade area, goods move less freely than in the United States, and so does capital." -Milton Friedman, 1997
Is the Euro a feasible project as it stands right now? Southern Europe and Northern Europe seem too economically divergent right now to have a currency union. Southern Europe is once again on the brink of recession while Northern Europe has relatively healthy economic structure. If the ECB tried to ease money to save the Southern Europeans, it'd push the Northern Euros into accepting higher inflation than they would otherwise want. If they keep things the way they are now, Southern Europe will slip into an inevitable crisis. Portugal's debt crisis is still an issue and on the verge of needing a second bailout with bondholders still nervous about the country's unsound finances. Greece is having issues meeting its bailout targets and Italy is on the verge of a banking collapse that could put Europe into recession.
Is a fiscal union or breakup of the EU inevitable under these conditions? Did anybody consider the negatives of a monetary union in this case? Are there any defenses of the current structure?
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>>1904506
Damn I hope the Euro crashes to the fucking ground. Being payed in dollars living in Portugal. Fingers crossed.
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>>1904506
It wont. The European governments will prevent the collapse from happening at any cost.
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>>1905269
Ever heard the saying "cant squeeze blood from a stone"? I personally see the collapse of the EU thus the Euro being shredded for hamster bedding.
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>>1905257
Euro is having a slight bounce, about to get positioned for a free fall currently. Also france and germany will have elections this year.
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>>1904506
>Did anybody consider the negatives of a monetary union in this case?
Not seriously. It was a political project from the start. Like so many fundamental decisions in the EU (like for example the infamous Maastricht Criteria), they weren't really based on sound economic policy, but rather on the desired political outcome.
>Is a fiscal union or breakup of the EU inevitable under these conditions?
That's the thing it is *not* a fiscal union! If it were, that would be one step closer to fixing it. It's just a monetary union. This means that the monetary policy is set by the ECB centrally, but the fiscal policy is set by 19 different governments. That's a problem if you want to coordinate measures against a recession. This is part of the reason why the EU is only just leaving the post-2008 recession while the US is far ahead on recovery.
Having a centralized EU ministry of finance is one of the proposed directions forward. Of course this doesn't sit well with a lot of people. I'm not sure a break-up is inevitable, but it wouldn't be the worst. Not a complete destruction of the common currency - the Euro has been awesome for many countries. But the Eurozone should have never expanded as much as it did. Putting rock solid currencies like the German Mark or the Austrian Schilling under the same umbrella as the Italian Lira or the Greek Drachma was bound to fail. The southern countries had sky-high inflation to for decades to keep their economy going. Now all 19 countries should target 2% inflation according to ECB guidelines. That's not going to work out for everyone.
We should have kicked Greece out with a few others to follow.
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>>1904506
The Euro is doomed. Le Pen probably won't win the second round in this election, but her victory in the first round is going to galvanize nationalists around Europe. I doubt the Euro will last another 10 years.
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>>1905448
10? Fuck that. Im hoping for 2 tops.
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>>1904506
Italy is not on the verge of collapsing faggot
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