Steve Kurtz wrote on 17-Dec:
>
> > Rather than about the weakness of the Euro, the article was about the
> > problems that arise from the abolition of national sovereignity over
> > national currencies. Note that 4 of the 5 countries mentioned have
> > *weak* own currencies, so they should rather "gain" from the Euro.
> > Nonetheless, as the EC report admits, the negative effects prevail.
>
> The only 'gain' the weaker currency countries get is slightly cheaper
> imports.
They *should* also get other advantages, e.g. a more stable economy...
> > there is also harm for the previously strong currencies such as DEM,
> > because the DEM exchange rate has already been fixated to the Euro
> > 3 years ago (i.e. the harm to Germany has already been done and little
> > will change during 2002).
>
> Only harm is slightly more expensive imports.
Independent economists have listed many other harms (e.g. higher
unemployment) which have indeed arrived since the introduction of the Euro.
> > it's hard to see any *economic* argument in favor of the Euro
> > (while there are lots of emotional, political/imperial and vested-interest
> > arguments for it). Do you have one?
>
> Yes. The policy setting by the 'Euro countries' together gets many times
> the weight when negotiating with US, China, Japan, UK etc.
That's an imperial argument rather than an economic one. (although of course
the economy will be influenced by imperial strength) I asked for *economic*
arguments (let's say EU-internal effects on daily life).
> > Unfortunately, the EMU is indeed a straitjacket [policy wise]
>
> Nobody likes disciplines when they prove more difficult than
> anticipated. (ex.: a diet) The results from the discipline might still
> prove to be beneficial.
In your example of the diet, the *same* person first has the uneasy
discipline and later can reap the benefit. However, in the EMU,
*different* persons/groups/countries will reap the benefits than have
the disadvantages.
> > The point is that there aren't "real world rateS" anymore but just ONE
> > "real world rate" for the whole Euro area. This has devastating effects
> > on different regions within that area.
>
> The ONE interest rate = the overnight rate (like LIBOR, or Fed Funds).
> Corps., small businesses, and consumers borrow for months and even for many
> years. A central bank cannot set or have great impact upon the middle and
> long term rates.
My point remains. Even the EU report admits it! ("Monetary conditions in a
single member state can be inappropriate, as the single euro-area interest
rate may not be in line with the individual country's needs.")
> > Economies adjust, but the question is what it will cost in terms of
> > additional unemployment, social unrest, organized and street crime, etc.
>
> That's a causative stretch, Chris. I prefer massive population growth during
> one century (400% as the main driver of economic and social distress. We all
> have our own biases! :-)
The massive population growth during 1850-1950 doesn't matter much (and
can't be changed in retrospect anyway) for the developments around 2000.
The Euro introduction does matter pretty much.
> > What's especially worrying about this non-listening is
> > that it isn't simply incompetence on the EC's part, but rather a reckless
> > megalomaniacal calculation that is so concerned about the profits for the
> > few that it doesn't give a damn about the disastrous effects for the many.
>
> If the evidence exists for this, it will come out.
The evidence has long come out.
> The fact that the bureaucrats wrote the report tells me that it is probably
> poor judgement rather than conspiracy.
I didn't suggest that it's a conspiracy. Secrecy is not necessary since the
EU Commission is powerful and undemocratic enough that the people can't
prevent the Euro introduction anyway. That's the problem...
Even if it was "just" poor judgement, it would indicate that the wrong
persons are sitting in these powerful positions.
> The above may be relevant, but no countries have the cumulative debt of US
> (consumer, business,& Federal, state, and local gov't) and none are
> financed to the HUGE extent of the US by foreign capital.
That's a good argument against the Euro (which makes the EU more similar to
the US).
Chris
