Greece is not the epicentre, it's the periphery (like Ireland) and a special case. Starbatty is right in his claim that it was generally known at the time of the introduction of the euro that the Greeks had cooked the books - the decision to let them in was probably wrong, in economic terms anyway. But the problem is, of course, that at these levels, things are never completely economic - politics always creep in. Much the same is true for the USA, Japan and China.
Looked at objectively, the Greek proportion of the euro-zone economy is just too small to really rattle it. And the thing about the euro is that it is synergic - the whole (in terms of the advantages created for all involved by a 300+million population internal market) is greater than the sum of the individual national economies involved. As I said, looked at objectively. What's happening is something quite different. International financial speculators (including many of the big banks, funds and insurance companies) are behaving just like hyenas; circling the pack, hoping to cut out the weakest member and make a killing. The problem as I see it - and the analogy holds up well here - is that, if they succeed, they may panic the pack, set them all running and make more killings. That this may just succeed in bringing the world economy down around our ears AGAIN doesn't seem to worry them unduly. Just the killing and the quick buck. The ECB and the euro-zone leaders do seem to be aware of this however and my prediction is that the Greek problem will be sorted out. The general EU pattern is to wait until something really has to be done, to bicker bitterly about it and then to do it anyway - at the last minute. It's a model which has a 60-year-old history of remarkable success. The days of the US dollar as the major benchmark currency are over. The future will see a basket of benchmark currencies (dollar, euro, yen [the yuan, when the Chinese finally give up controlling it], maybe even the rouble) with a number of specialist currencies (Swiss frank, British pound) playing specialised roles. Just another sign of a multi-polar world. Whether these kinds of economics are what the world really needs is another question ... Francis On 24 Mrz., 16:47, Slip Disc <[email protected]> wrote: > You think the Euro has the strength to bailout Greece and probably > others who have sunk below their own worth, and still remain viable? > I mean the Euro has been falling with a bad low last month which might > seem high yet to some standards but I think the rate at which it falls > will be the key, if it starts to plummet things will get shaky. The US > comparison seems to make sense but the reality is that we have the > same political base in all regions whereas the EU doesn't. There is > the central bank but all else is fragmented. Greece is only the > epicenter of what seems to be a massive fallout, a slow tsunami. I > think that the Euro is still in its transitional stages and if there > is a viable recovery then it will gain a long lasting strength and > hold strong for years to come. This is all about the lack of > foresight on the part of economic ministers in several countries. The > bubbles are bursting and there is probably undue panic. I don't know > but as far as the interview goes they both have some good points and > end without any resolve or agreement. There is a polarization going > on. > > On Mar 24, 10:02 am, frantheman <[email protected]> wrote: > > > > > Starbatty is a crank and has been since his attempt to stop the > > introduction of the euro thirteen years ago. One of the issues he > > manages to ignore completely is the advantage of the huge internal > > market, finalised by the euro, within the EU. There are always going > > to be problems for different regions in a larger group - the US is the > > very same but no-one suggests that the rust-belt should have a > > different currency to Silicon Valley because they are in different > > economic situations. In the end, taken as a whole, all the members of > > the euro-zone have profited overall from its introduction. > > > There are a couple of particular issues here as well. Germans had a > > really traumatic experience with inflation nearly 90 years ago which > > has marked popular memory ever since > > (http://en.wikipedia.org/wiki/Inflation_in_the_Weimar_Republic). > > And the D-Mark, identified with the economic miracle of the post-war > > years and a popular symbol for the strength and success of the > > (West-)German economy, was loved, so that the euro never had a chance > > of enthusiastic acceptance here. All the relevant economic indicators > > in the past decade show that the euro has been more stable (and > > inflation less) than in almost any comparable D-Mark period. However, > > you'll have to search hard to find a German who believes that. > > Perception is frequently more powerful than facts. > > > Francis > > > On 24 Mrz., 05:37, Slip Disc <[email protected]> wrote: > > > > Tell us what you think after you check out this Interview conducted by > > > Thomas Tuma and Alexander Jung of Spiegel Online International > > > with......... > > > > Peter Bofinger, 55, a member of the German Council of Economic > > > Experts, a respected panel of five economists who advise the federal > > > government in Berlin. The economist, who lives in the Bavarian city of > > > Würzburg, founded a pro-euro initiative in 1997. > > > > AND > > > > Joachim Starbatty, 69, a professor emeritus in economics at the > > > University of Tübingen in southwestern Germany. In 1997, he and three > > > other academics filed a lawsuit against the introduction of the euro > > > at Germany's Constitutional Court, though it was ultimately > > > unsuccessful. > > > > The Interview is titled: > > > Bringer of Prosperity or Bottomless Pit? > > > Top German Economists Debate the Euro > > > > SPIEGEL: Mr. Bofinger and Mr. Starbatty, do you think it was a mistake > > > to introduce the euro? > > > > Peter Bofinger: No, of course not. Today, we live in a currency zone > > > that, despite everything, is significantly more stable than where the > > > dollar or yen are used. The euro has brought growth and prosperity to > > > Europe. > > > > Joachim Starbatty: Actually, the euro was a mistake with particularly > > > serious consequences. A monetary union requires its members to pursue > > > the same policies and be similarly productive. The so-called > > > convergence criteria were meant to ensure that this would happen. But > > > -- as the dramatic developments in Greece are now showing -- they > > > didn't. > > > > SPIEGEL: Do you feel vindicated today? > > > > Starbatty: Unfortunately, our fears have become a reality. The > > > monetary union was launched with real self-deception. > > > > Bofinger: Excuse me? > > > > Starbatty: The euro was sold to us as a modernization program for > > > Europe, and we were also told that it would push the Community toward > > > stability. But, in reality, it has drifted apart and become a truly > > > unstable entity. > > > > Bofinger: Unstable? The inflation rate has been very moderate, > > > hovering at around 2 percent since 1999, and it is significantly lower > > > than it was when Germany used the mark. We have a lower budget deficit > > > than the Americans, the Japanese and the British. Our debt-GDP ratio > > > is also lower than it is in the United States and Japan. There is no > > > reason why the euro should be coming under pressure. The decision to > > > introduce it was smart and far-sighted. > > > > SPIEGEL: Without any drawbacks? > > > > Bofinger: Sure, the euro zone is currently looking a little worse for > > > the wear. But that's to be expected, given the storm the global > > > economy has gone through. Still, thanks to the common currency, it's > > > no longer possible, for example, to wage speculative attacks on > > > individual currencies. This eliminates a key disruptive factor that > > > massively destabilized markets in the past. > > > > Starbatty: But that's exactly the problem! In the past, exchange rates > > > served as a valve. Individual countries could control their economies > > > by allowing their currencies to gain or lose value. Now, this > > > adjustment mechanism no longer works and, as a result, a completely > > > different sort of dangerous imbalance has emerged. Today, there are > > > two blocs within the monetary union: a strong currency bloc in the > > > north and a weak one in the south. The robust north has joined forces > > > with countries that have constantly devalued their currency throughout > > > their histories. Just look at the Italian lira, for example. At the > > > end of the 1950s, I paid 6.70 German marks for 1,000 lire. The final > > > exchange rate was less than one mark for 1,000 lire. > > > > SPIEGEL: What would happen if the old currencies were reintroduced in > > > the euro zone tomorrow? > > > > Bofinger: It would be a catastrophe. The German mark would have to > > > appreciate significantly -- I'd say by 10 percent to 20 percent. > > > Everything that we've worked so hard to attain in terms of > > > competitiveness would vanish overnight. There would be wailing and the > > > gnashing of teeth in Germany. And Europe would be making a serious > > > mistake if it were to revert to regionalism and nationalism during > > > this phase of advancing globalization. > > > > Starbatty: I see things completely differently. The euro was also sold > > > to citizens as an instrument for securing peace. I never understood > > > that because, if that really were the case, you would have to open the > > > monetary union to everyone. Instead, in light of its failure, we are > > > now witnessing just how nationalism arises in the first place. EU > > > flags have already been burned in Greece. > > > > SPIEGEL: Would it have been better if all countries in Europe had kept > > > their own currencies? > > > > Starbatty: Yes. A community can't function when it's made up of > > > unequal partners who are supposed to behave as equals. With the euro, > > > Germany has created an artificial competitive advantage for itself, > > > which has enabled us to conquer markets all over the world. But this > > > has also led to the buildup of massive excess capacity in our export > > > industries and, consequently, the export-oriented companies in the > > > southwestern state of Baden-Württemberg are hurting. The monetary > > > union changed the structure of economies in an unhealthy way. > > > > Bofinger: Oh, come on! You can't blame the euro for these imbalances! > > > The blame primarily lies with economic policies. Since 1995, there > > > have been almost no appreciable wage increases in Germany, partly as a > > > result of pressure brought on from increases in subcontracted labor. > > > Politicians have done everything to relieve employers of the burden of > > > paying social security contributions because we fell into this strange > > > panic, believing we weren't globally competitive. With our economic > > > policies, we placed too much of a lopsided emphasis on exports. The > > > Irish, Greeks and Spaniards, on the other hand, put too much emphasis > > > on domestic demand. > > > > 'Putting the Virtuous in the Dock Rather than the Real Offenders' > > > > SPIEGEL: In recent days, French Finance Minister Christine Lagarde has > > > repeatedly criticized Germany's export surpluses for being high > > > compared with those of other EU countries. Is she right to do so? > > > > Starbatty: No. I think it's strange that Madame Lagarde is putting the > > > virtuous, who have always been oriented toward stability, in the dock > > > rather than the real offenders. > > > > Bofinger: But the Germans have sinned just as much as the Spaniards, > > > for example. The Spaniards made their wages too high, while we in > > > Germany practiced the opposite by not increasing the purchasing power > > > of workers for years. > > > > Starbatty: So what? It made us successful. It arose from the concern > > > that jobs would migrate abroad. And Germany's moderate wage policy has > > > made the country attractive to companies again. > > > > Bofinger: You should look at it more holistically. We wouldn't have > > > been able to increase our exports if the other countries had behaved > > > like us and had not increased their demand for an entire decade. In my > > > view, the monetary union is like a relationship: To function properly, > > > its participants must orient their behavior toward the general good. > > > If each > > ... > > Erfahren Sie mehr » -- You received this message because you are subscribed to the Google Groups ""Minds Eye"" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/minds-eye?hl=en.
