Should the Euro finally be abandoned?

KyussBishop

Reading an article here on Ireland, from a good Post-Keynesian writer (I don't vouch for the details, but I think his general point is good - recommend his other articles too):
http://www.forbes.com/sites/johntharvey/2013/07/08/ireland-no-more-austerity/

The big main point regarding the crisis that I pretty much never see anyone discuss, is that while we are in the Euro, the only way to end the crisis is by Europe collectively agreeing to enact either monetary reform, or centralized low-interest debt, so that the EU can effectively engage in stimulus for restoring full employment. Individual countries can not do this alone, due to the Euro and current political agreements.

The only alternative outside the Euro, is...to be outside the Euro, engaging in pretty much the same policies at a national level. Getting to that point would not be pretty, but since we are facing at least another decade of crisis, and the possibility of stagnated high-unemployment levels, there is still a fair chance this may be a less painful alternative (it would certainly allow a significant improvement in employment levels - depending on each countries individual policies).

I've spent a lot of time reading up on the available solutions within Europe, and I just don't see how we could ever get past the political impasse we have at the moment, which is blocking or neutering the benefits of most attempted reforms.


There is also the question, of whether the Euro itself can still survive through the next decade of the economic crisis (something that is not certain at all): If it can't, then we are almost certainly better off abandoning it now (since we will take the hit from that in the future anyway), so we can restore full employment, instead of going through many more years of high unemployment until the Euro finally self-destructs.

Unless something massive changes in European politics, I don't see any other way out of the current crisis - just a long hard grind through austerity.

clairefontaine

It begs the question, when do you give up? Or is it a case of so far steeped in blood.

oscarBravo

clairefontaine wrote: »

Or is it a case of so far steeped in blood.

...what?

clairefontaine

oscarBravo wrote: »

...what?

I am so far stepped in blood that I should wade no more, returning were as tedious as to go'r. -Macbeth

oscarBravo

Um, OK. Who are the witches in this analogy? Who is Macduff?

For that matter, who is Macbeth?

I'm still confused.

clairefontaine

oscarBravo wrote: »

Um, OK. Who are the witches in this analogy? Who is Macduff?

For that matter, who is Macbeth?

I'm still confused.

No what it means, is when you are knee deep in the middle of a mess, it can feel like its neither here nor there whether you scrap your plans or if you move forward with them.

oscarBravo

clairefontaine wrote: »

No what it means, is when you are knee deep in the middle of a mess, it can feel like its neither here nor there whether you scrap your plans or if you move forward with them.

OK - but the very question is premised not only on the assumption that those responsible for the implementation of the Euro have dug themselves into a quagmire through their own hubris (not an unpopular view, to be sure) but are aware of having done so and are grimly pressing on with what they know to be a doomed course of action regardless.

Things are far from perfect in the Eurozone, but Macbeth Act III they ain't.

clairefontaine

oscarBravo wrote: »

OK - but the very question is premised not only on the assumption that those responsible for the implementation of the Euro have dug themselves into a quagmire through their own hubris (not an unpopular view, to be sure) but are aware of having done so and are grimly pressing on with what they know to be a doomed course of action regardless.

Things are far from perfect in the Eurozone, but Macbeth Act III they ain't.

People are actually considering bitcoin. A level of ridiculousness I never thought possible.

The euro is still strong against other currencies so they must be doing something right.

Austerity will breed austerity. They know it isn't working and yet continue with this policy. It will only be when the wing nuts in Germany feel the pinch of an austerity driven Europe that they might sober up.

KyussBishop

I think there are a complicated set of reasons as to why things are still stuck (these being just a handful):
1: Vague hope of reform in Europe (which, looked at more realistically, looks like it will never come)
2: The idea that 'There is No Alternative' (i.e. austerity propaganda)
3: Bad economics (widespread failure in society/politics/academia to see alternatives staring us in the face, and vested interests among finance/banking/wealthy, trying to keep it this way to keep profiting from crisis)
4: Political discord in Europe (with it being far too easy for a small number of powerful countries, to block needed reforms)
5: Fear of economic collapse (politicians seem afraid to even begin tackling some issues, such as fraud, because the problems they expose could further destabilize/take-down economies - ironically ensuring no reform happens, and that another economic crisis will happen in the future due to nothing being fixed)

We are painfully in need of some clear analysis of where we stand from politicians (who, by and large, do not seem to understand the crisis at all, due to being trapped in orthodox economic views - based on theory that gets fundamental macroeconomics wrong), and have them point out (to the public and to Europe) that we must either:
1: Actually engage in real stimulus-based recovery policies (aimed at full employment), or
2: Bite the bullet, acknowledge that recovery will not come, and admit failure of the Euro, ending it now before it implodes on us later after many more years of highly-damaging unemployment.


The best solution of all, is one where all countries stay in the Euro, and Europe engages in stimulus based recovery. If that will not come about though (and it doesn't look like it will), then on our current course the Euro may self-destruct eventually anyway, which would mean ending it now (with economies restoring full employment earlier), would be less damaging than a disorderly disintegration later (after many more years of high unemployment).

McDave

oscarBravo wrote: »

...what?

Possible scenarios:

- Certain European countries were tired of being steeped in the blood of being dependent on dollar-related policies, and have no intention of shedding more blood at the sharp end of dealings with other rapidly evolving world powers;

- Certain countries had enough of being steeped in the blood of inflationary economic policies, occasionally and temporarily moderated by self-defeating devaluations;

OR

- Certain countries were somewhat embarrassed at getting duffed up by the likes of George Soros, but ultimately felt it was better to be steeped in their own blood.

micosoft

clairefontaine wrote: »

People are actually considering bitcoin. A level of ridiculousness I never thought possible.

The euro is still strong against other currencies so they must be doing something right.

Austerity will breed austerity. They know it isn't working and yet continue with this policy. It will only be when the wing nuts in Germany feel the pinch of an austerity driven Europe that they might sober up.

332 million people use the Euro every day. To actually compare it to some ponzi type scheme like Bitcoin with 60k or so users is hyperbole to say the least.

Austerity worked pretty well for Germany though? They undertook austerity in the late nineties when they realised their economy was not competitive. In fact you can argue that Germany has been living within it's means, sorry, austerity since reunification.

What does spending more money then you have breed?

micosoft

KyussBishop wrote: »

There is also the question, of whether the Euro itself can still survive through the next decade of the economic crisis (something that is not certain at all): If it can't, then we are almost certainly better off abandoning it now (since we will take the hit from that in the future anyway), so we can restore full employment, instead of going through many more years of high unemployment until the Euro finally self-destructs.

Unless something massive changes in European politics, I don't see any other way out of the current crisis - just a long hard grind through austerity.

Everything you wrote is a non sequitur. Nothing is certain but the Euro surviving is far more certain then the alternative...

Why is it certain abandoning the Euro now is better then waiting?
How will that "restore full employment".

KyussBishop

There is no certainty to the Euro's survival at all - there is at least another decade of the crisis to go, with the same persistently high-unemployment and economic stagnation for many countries - this could easily lead to a country leaving the Euro, and pulling the rest of Europe along with it.

If that will happen in the future, then leaving the Euro now gives us the significant damage from the exit, and leaving in the future gives us significant damage from the exit plus even greater compounded damage from many extra years of high-unemployment and reduced economic output (both of which can be ended sooner, by regaining sovereign control over currency now - I have explained this in previous posts).

Preferably Europe would stick together and exercise policies that would bring that recovery for the whole of Europe, but that looks very much like it will not happen at this stage.

whatstherush

KyussBishop wrote: »

then leaving the Euro now gives us the significant damage from the exit

What would the significant damage be, in your opinion, if we(Ireland) left tomorrow?

KyussBishop

It's hard to tell, as it's not something I've read up on directly, and it would also heavily depend on our response to the situation after regaining sovereign control over our currency.

Some things I can think of:
- We would likely be looking at a heavy devaluation of our currency
- Potentially a defaulting of our debts (redenominating the debt is an effective default as well) - retaining any foreign currency as part of our debts would be a very bad idea, so this would be largely unavoidable - note that this would remove multiple decades of future debt burdens
- We'd lose a large chunk of our multinationals I'd say
- We'd definitely lose much of our financial sector (not necessarily a bad thing - we are holding back introducing adequate regulations, and letting criminals away without punishment, largely to convince big financial firms to stay here - still, we'll need to, at least partially, cut the rope eventually if we want to fix our regulatory system)
- We'd have a drop in the general quality of living (resolvable over time)
- Our government might continue with backwards economic policy that compounds the damage even more (stimulus-funded full employment during bad economic times, is not yet a widespread idea in politics)
- We would not have a physical currency set-and-ready to be introduced overnight, so banks would likely be closed for a week or weeks (effectively shutting down the economy for that time), while we try to switch over - this could be ameliorated by all-electronic currency transactions, introduced well in advance, as that's very easy to switchover
- We'd have a decade or more of (potentially very heavy) adjustments, but by the end of it we'd eventually reach full recovery (with the right policies, we can even comfortably ride it out with full employment all the way, ensuring a decent - even if temporarily reduced - quality of life for everyone; this could even speed up recovery so it only takes a few years)


That's a number of things I can think of offhand, so it's far from pretty - if the Euro implodes anytime in the next decade though (a real possibility, given how much time is left in this crisis), we might go through this anyway, but with even greater damage from:
- Persistently high unemployment (a permanent loss of labour potential that can never be recovered)
- Erosion of skills among the unemployed
- Further emigration
- Further decimation of public services
- More people slipping into poverty and economic hardship
- Worsening of public health due to worsened services
- More people dying through poor health services and through other circumstances imposed on them by the crisis (suicides through financial difficulty being one)
- More homelessness
- In a decade we may still be in precisely the same situation we are in today, if not worse since another financial crisis could easily happen in that time

The second list there, is damage we can avoid with the proper stimulus-aided recovery policies (undertaken locally outside the Euro, or throughout the EU within the Euro - the latter being the best of all worlds as it avoids all damage noted in both lists), but in my view it is very unlikely we are going to see those policies enacted within Europe.

Effectively, the first list (a Euro exit) is a reduction in quality of life and comfort for everyone but which can (with the right policies) still ensure a decent, even if reduced, quality of life for everyone (sharing the pain equally), and the second list throws some unlucky sections of society into the gutter (and for longer), to buffer the rest of societies comfort levels.

McDave

KyussBishop wrote: »

There is no certainty to the Euro's survival at all - there is at least another decade of the crisis to go, with the same persistently high-unemployment and economic stagnation for many countries - this could easily lead to a country leaving the Euro, and pulling the rest of Europe along with it.

If that will happen in the future, then leaving the Euro now gives us the significant damage from the exit, and leaving in the future gives us significant damage from the exit plus even greater compounded damage from many extra years of high-unemployment and reduced economic output (both of which can be ended sooner, by regaining sovereign control over currency now - I have explained this in previous posts).

Preferably Europe would stick together and exercise policies that would bring that recovery for the whole of Europe, but that looks very much like it will not happen at this stage.

There's no certainty that it will collapse either.

Even if there were a possibility, or even probability, it is highly probably that a core would continue with a single currency. And if we continue on our path of undoing the damage FF did to the economy, we would stand a very good chance of qualifying for a new core Eurozone.

As to whether the EZ can pull through, I think it effectively depends on the German electorate signalling its will to continue with the single currency, after which we should see pretty major regulatory changes, followed by a very large EU-wide investment programme focussing largely on infrastructure, but also on education and enterprise development.

KyussBishop

McDave wrote: »

There's no certainty that it will collapse either.

Even if there were a possibility, or even probability, it is highly probably that a core would continue with a single currency. And if we continue on our path of undoing the damage FF did to the economy, we would stand a very good chance of qualifying for a new core Eurozone.

As to whether the EZ can pull through, I think it effectively depends on the German electorate signalling its will to continue with the single currency, after which we should see pretty major regulatory changes, followed by a very large EU-wide investment programme focussing largely on infrastructure, but also on education and enterprise development.

If Germany did agree to such an investment program, it would pretty much be the best of all worlds in my view - it's been half a decade now though, and this is looking more and more like an impossibility as time goes on. We'll know more definitively though, after the German elections in September.

If that doesn't happen, the future of the Euro will depend upon whether countries like Italy/France (or...just about any other nation in the Euro) decide to leave the Euro, which is not inconceivable at all since many of them would be better off outside of the Euro.

Perhaps we would be able to join a core set of nations upon the Euro collapsing (maybe even managing to avoid switching currency in that case), but if we are held in such a union with the same conditions (no recovery policies), we may well still turn out worse-off in the long run, than falling out.

McDave

KyussBishop wrote: »

If Germany did agree to such an investment program, it would pretty much be the best of all worlds in my view - it's been half a decade now though, and this is looking more and more like an impossibility as time goes on. We'll know more definitively though, after the German elections in September.

If that doesn't happen, the future of the Euro will depend upon whether countries like Italy/France (or...just about any other nation in the Euro) decide to leave the Euro, which is not inconceivable at all since many of them would be better off outside of the Euro.

Perhaps we would be able to join a core set of nations upon the Euro collapsing (maybe even managing to avoid switching currency in that case), but if we are held in such a union with the same conditions (no recovery policies), we may well still turn out worse-off in the long run, than falling out.

If all the EZ members demonstrate they're going to play ball, and there is agreement, I'd say a period of sustained investment is pretty much nailed on. Europe needs it anyway. And part of the EU really need infrastructure upgrades, not to mention connections with trading partners to the east (towards Russia) and southeast (through the Balkans to Turkey). And energy infrastructure too. All this will benefit Germany anyway.

KyussBishop

I agree completely, it's just that the problem thus far, has been that there is no agreement among European nations on this, and powerful members (particularly Germany) seem to be blocking this, with no end in sight to that.

It is in their best interests as well, to be getting funding for such a program, but things seem to just be stuck in political discord at the moment.

McDave

KyussBishop wrote: »

I agree completely, it's just that the problem thus far, has been that there is no agreement among European nations on this, and powerful members (particularly Germany) seem to be blocking this, with no end in sight to that.

It is in their best interests as well, to be getting funding for such a program, but things seem to just be stuck in political discord at the moment.

As I see it, the Germans are not going to support any major injection of funds without agreement on a sustainable solution to the Euro crisis. In that light, I think the 'block' is temporary. And will be unblocked when the time is right.

whatstherush

KyussBishop wrote: »

Some things I can think of:
- We would likely be looking at a heavy devaluation of our currency
- Potentially a defaulting of our debts (redenominating the debt is an effective default as well) - retaining any foreign currency as part of our debts would be a very bad idea, so this would be largely unavoidable - note that this would remove multiple decades of future debt burdens

So with a heavily devalued currency to begin with, the subsequent default on foreign held debt, presumably there will money creation to fund the stimulus, which will lead to further devaluation. How do we pay for oil, or do you envisage one of the small sacrifices we'll have to make is ride around on bikes and go back to the turf fire?

KyussBishop wrote: »

- We'd lose a large chunk of our multinationals I'd say
- We'd definitely lose much of our financial sector (not necessarily a bad thing - we are holding back introducing adequate regulations, and letting criminals away without punishment, largely to convince big financial firms to stay here - still, we'll need to, at least partially, cut the rope eventually if we want to fix our regulatory system)

KyussBishop wrote: »

but which can (with the right policies) still ensure a decent, even if reduced, quality of life for everyone (sharing the pain equally), and the second list throws some unlucky sections of society into the gutter (and for longer)

The first list throws people working in MNCs and Fin into the gutter, but sure as long as they're reassigned making widgets its not too bad I suppose.

KyussBishop wrote: »

- We'd have a decade or more of (potentially very heavy) adjustments, but by the end of it we'd eventually reach full recovery (with the right policies, we can even comfortably ride it out with full employment all the way, ensuring a decent - even if temporarily reduced - quality of life for everyone; this could even speed up recovery so it only takes a few years)

If control over currency, defaulting on foreign debt and the "right policies" can achieve full employment, why hasn't one of the many countries around the world with these tools available, tried/achieved this?

KyussBishop wrote: »

if the Euro implodes anytime in the next decade though (a real possibility, given how much time is left in this crisis), we might go through this anyway,

And IF the euro doesn't implode, we'll have gone through that pain for what?
As one of the people you'll be throwing under the bus (double whammy of MNC + Fin), I'll take my chances with the Euro.

KyussBishop

whatstherush wrote: »

So with a heavily devalued currency to begin with, the subsequent default on foreign held debt, presumably there will money creation to fund the stimulus, which will lead to further devaluation. How do we pay for oil, or do you envisage one of the small sacrifices we'll have to make is ride around on bikes and go back to the turf fire?

You're assuming a doubling-down on devaluation, out of nowhere, which is a straw-man - if we're going to be utilizing money creation, it doesn't make sense to engage in a devaluation beforehand.

Ireland would have to go through a temporary reduction in quality of life during this period, while recovering the economy, and an increased cost of oil would be an unavoidable part of that - the important thing is to distribute that fairly, by giving everybody the opportunity to have a job, instead of throwing people to the gutter with unemployment today (where the comparatively 'beneficial' price of oil today, means féck all to them, since they aren't earning anything).

It's perfectly manageable to setup such a system, so vulnerable people have the money to provide heat in winter, and plenty of room for tax reductions to keep transport affordable.

Can even direct infrastructural upgrades at transport and power for the future - which is going to be important, because oil is going to get ever more expensive as time goes on, and we will need to move away from that anyway, regardless of whether we're in the Euro or not (and better to start sooner rather than later - especially when we are wasting so much productive potential with unemployment).

We can have an equitably distributed crunch now, where we can recover quickly, or the potential of a decade or more of stagnation with Europe, before things begin to recover (am not personally optimistic of the EU problems being resolved anytime soon).

whatstherush wrote: »

The first list throws people working in MNCs and Fin into the gutter, but sure as long as they're reassigned making widgets its not too bad I suppose.

Nobody is 'thrown into the gutter' with anything I support, as there'd specifically be a job program for them to move into - assuming there is no useful work to do, is simply a lack of imagination at best, or more likely just ignorance.

The primary multinationals we'd lose, are those here for tax benefits within the Euro.

whatstherush wrote: »

If control over currency, defaulting on foreign debt and the "right policies" can achieve full employment, why hasn't one of the many countries around the world with these tools available, tried/achieved this?

Inherently fallacious 'ad populum' arguments, do not provide any actual argument against the potential for full employment.

Pretty much the entire economics academia/profession around the world, has been dominated by neoclassical economics for more than 30 years now (a theory which gets macroeconomics wrong on a fundamental level), which affects the economic decision making of most governments - something that is only slowly showing signs of changing now, during the crisis.

whatstherush wrote: »

And IF the euro doesn't implode, we'll have gone through that pain for what?
As one of the people you'll be throwing under the bus (double whammy of MNC + Fin), I'll take my chances with the Euro.

Exiting the euro itself is likely to bring on the implosion of it - we'll have gone through the pain for restoring our economy within the decade, instead of stagnating for another decade or more as we have the potential to do now (as we have been doing for the last half-decade) if Europe does not enact recovery policies.

Since the primary multinationals and financiers leaving us, would be ones here for tax benefits within the Euro, and here for the significantly lax regulations (which worsened our crisis considerably), I'd say good riddance to the parasites, and would hope we reform our economy into something more sustainable, than a weakly regulated tax-haven.


Going through that pain to have a clean reform of the structure of our economy (and a recovery), would be far better than hanging onto the pittance thrown to us by the financiers that dominate us now through debt, and who will for the coming decades if we don't make a clean break (and who will hold us away from recovery, since it's how they profit - a lot of it through government debt, and even more from economic destruction within the economy).

The Corinthian

clairefontaine wrote: »

People are actually considering bitcoin. A level of ridiculousness I never thought possible.

Six years ago people considered property the best place to put their money, so why would you think that they've become any less ridiculous all of a sudden?

clairefontaine

The Corinthian wrote: »

Six years ago people considered property the best place to put their money, so why would you think that they've become any less ridiculous all of a sudden?

Bitcoin takes it to a new level me thinks.

thomas.frink

Not everything can be planned for and calculated, and it may be the Euro can or can’t survive due to unforeseen circumstances.

However, much of the EU's future is predicated on the assumption that Germany is rich, and that Germany will remain rich and able to shore up the more profligate parts of the EU.

Germany's wealth is largely based on its industrial underbelly, and it's by no means certain that is a safe as previously thought.

For example, Germans took a decision and invested massively and led the way in solar power technology with companies like QCells, Conergy, Solon and Solarworld. They assumption was that Germany would benefit not just from the manufacturing and jobs, but also as a “first-mover” lead in renewables, would reap the rewards later. Unfortunately QCells, Conergy, Solon and Solarworld have all gone bust or faced massive debt restructuring, as the Chinese simply copied the technology, and now the Chinese have 80% of the worlds solar power market. Cost to the Germans is over €100 billion.

Germany is talking another big gamble that its industry is going to be powered by windmills, and is planning a massive investment into windmills. We know that wind power is expensive, and the further increases this will demand have to be paid somehow. Meanwhile, electricity prices in Germany are already double those in the USA, and gas prices in Germany 4 times those in the USA.

In world markets, large German manufacturers dependent on German Electricity and Gas are increasingly becoming uncompetitive, which means jobs lost.

The good news is that BASF, one of the worlds leading chemical companies and steadfastly German, is investing €4.2 billion in a new emulsion polymer plant. The bad news is the investment is in Texas, and not the EU, and they have said a combination of high and increasing energy prices and labour prices in the EU mean that its not possible to invest in the EU in the current climate.

It’s the same in France with LaFarge setting up plants outside the EU as they can’t manufacture in the EU due to the excessive costs of energy and labour.

What if Germany doesn’t remain rich, sees unemployment rising and sees tax receipts falling and social security bills rising? What happens the EU and the Euro then? What happens them if the UK have left the EU and Germany is no longer the financial backstay of both the EU and the Euro?

While no one wants to contemplate the consequences for Europe, it’s simply the case that the EU is no longer attractive for the big manufacturers as the EU has priced itself out of the market for even steadfastly pro EU companies such as BASF and LaFarge. Every other large manufacturer across the EU is faced with the same issues, and the prospect of attracting investment from foreign large manufacturers into europe seems impossible.

Boroso

I see once again the EU has hailed the end of the Euro crises, and taken credit for its successful handling of the last few years.

We've been here before, alas, and each time events come back to haunt us. How anyone can consider it a success to see youth unemployment over 50% in parts of the Eurozone, the Portuguese economy shrinking by 20%, and emigration from many countries the only solution to a lifetime on benefits for hundreds of thousands of people and families.

Incidentally, any putative recovery in Ireland will be greatly hampered and stunted due the the policies which have driven hundreds of thousands of the best and the brightest abroad.

McDave

Boroso wrote: »

I see once again the EU has hailed the end of the Euro crises, and taken credit for its successful handling of the last few years.

We've been here before, alas, and each time events come back to haunt us. How anyone can consider it a success to see youth unemployment over 50% in parts of the Eurozone, the Portuguese economy shrinking by 20%, and emigration from many countries the only solution to a lifetime on benefits for hundreds of thousands of people and families.

Incidentally, any putative recovery in Ireland will be greatly hampered and stunted due the the policies which have driven hundreds of thousands of the best and the brightest abroad.

Let's start with Ireland, because it's the subject we know most about.

Ireland's recession was mainly caused by massive public and private borrowing and overspending for at least a decade. In such a boom-bust approach to macroeconomics, it was inevitable that such a long period of massive misallocation of resources would be followed by recession. It was preprogrammed and unavoidable, unless one of course believes in pyramid economics.

So, in reality, any 'putative recovery' in Ireland is going to be hampered by the lack of resources caused by our excessive debt levels. We didn't save for a rainy day and spent like drunken sailors. So it's no wonder there's nothing left in the kitty.

Other countries in the Eurozone with strongly negative indicators will have to address their own boom-bust problems, or their endemic corruption. Only then can they get back on the path to sustainable growth.

GCU Flexible Demeanour

Boroso wrote: »

How anyone can consider it a success to see youth unemployment over 50% in parts of the Eurozone,<...>

I'd say there is an even more practical problem. How can anyone think that Europe can fund an ageing population when so many of the relatively small cohort of young people can't get work?

McDave wrote: »

Ireland's recession was mainly caused by massive public and private borrowing and overspending for at least a decade.

What public borrowing are you referring to?

Boroso

McDave wrote: »

Let's start with Ireland, because it's the subject we know most about.

Really, that's for each of us to decide for ourselves and if you prefer to limit yourself in a discussion about the future of the Euro to discussing Irelands position, either historical or current, that's a decision for you alone. I am guessing that, for most people, the future of the Euro will not be decided or even much influenced by Irelands historical or current position.

While your analysis of Ireland's history is not innaccurate, you also seem to make no mention of the interest rate issue which many commentators consider exacerbated the position, and which is a necessary and direct result of a single currency. An issue which, incidentally, has not been resolved because it is unresolvable.

GCU Flexible Demeanour wrote: »

I'd say there is an even more practical problem. How can anyone think that Europe can fund an ageing population when so many of the relatively small cohort of young people can't get work?What public borrowing are you referring to?

Added to that the points made above about the largest European companies not only saying the can no longer invest in the EU, but in practice being forced to invest outside the EU, due to the horrendous costs now imposed on business in the EU, it does not bode well for anyone in the EU's future.

McDave

GCU Flexible Demeanour wrote: »

What public borrowing are you referring to?

You're joking aren't you? :rolleyes: Why, the borrowing that was required from 2007 on to plug the increasing budget deficit as our bubble economy burst and our dodgy 'GDP' fell away.

McDave

Boroso wrote: »

Really, that's for each of us to decide for ourselves and if you prefer to limit yourself in a discussion about the future of the Euro to discussing Irelands position, either historical or current, that's a decision for you alone. I am guessing that, for most people, the future of the Euro will not be decided or even much influenced by Irelands historical or current position.

While your analysis of Ireland's history is not innaccurate, you also seem to make no mention of the interest rate issue which many commentators consider exacerbated the position, and which is a necessary and direct result of a single currency. An issue which, incidentally, has not been resolved because it.

You can 'start' where *you* like, and I can deal with your scenarios accordingly.

I *decided* to start with Ireland, and for very obvious reasons. Most of us in Ireland are familiar with the domestic situation which led to our problems, including massive public and private borrowing from extra-EZ sources and overspend, and a complete failure to regulate and oversee our financial institutions. Our problems were caused by our own policy failings, and not by the Euro. Other countries within the Euro haven't suffered much through the financial crisis, and certain countries outside the Euro have. National variations in the ordering of macroeconomies has led to differing outcomes, but to date even the worst case scenarios haven't caused any country to exit.

As for interest rates, what is the 'issue' to which you refer?

GCU Flexible Demeanour

Boroso wrote: »

Added to that the points made above about the largest European companies not only saying the can no longer invest in the EU, but in practice being forced to invest outside the EU, due to the horrendous costs now imposed on business in the EU, it does not bode well for anyone in the EU's future.

Indeed, and isn't it fair to say this is part of a longer-term trend. Go back ten years or more, and you'll find recognition in EU circles of the need for reform and specific measures (such as the Prospectus Directive) intended to create an EU investment engine capable of competing (in particular) with the US. Part of that was a recognition of a trend, where firms from EU Member States that had outgrown their domestic markets tended to expand into the US, rather than across Europe.

It was a trend that make something of a mockery of the EU project, as it highlighted the extent to which decades of harmonising laws had failed to create a meaningful single market. To an extent, that was what fuelled the hubris behind the euro project. The EU had to take a bold step to seem relevant.

McDave wrote: »

You're joking aren't you? :rolleyes: Why, the borrowing that was required from 2007 on to plug the increasing budget deficit as our bubble economy burst and our dodgy 'GDP' fell away.

Ah, yeah, I was just clarifying as your loose use of language suggested that massive public borrowing was a driver of the crisis, rather than one of its products. So, basically, you mean stuff like the huge public borrowing needed to bail out Anglo, and the loans that we got through the Troika process. Fine, so long as we're all clear.

Boroso

GCU Flexible Demeanour wrote: »

Indeed, and isn't it fair to say this is part of a longer-term trend. Go back ten years or more, and you'll find recognition in EU circles of the need for reform and specific measures (such as the Prospectus Directive) intended to create an EU investment engine capable of competing (in particular) with the US. Part of that was a recognition of a trend, where firms from EU Member States that had outgrown their domestic markets tended to expand into the US, rather than across Europe.

It was a trend that make something of a mockery of the EU project, as it highlighted the extent to which decades of harmonising laws had failed to create a meaningful single market. To an extent, that was what fuelled the hubris behind the euro project. The EU had to take a bold step to seem relevant.

Its should be worrying when, as claimed above, some of the largest and most important EU companies, like BASF, not only say they can no longer afford to invest in the EU, but when they actually choose instead to invest outside the EU ( as BASF are doing), then that highlights there is a problem.

It seems the EU is incapable of acting quickly or effectively to implement the correct change(s) so that BASF, and others, can begin to invest again in the EU, rather than outside the EU.

It seems that the tide may turning and that the people of the EU are waking up to the fact that the EU itself is now a leading factor in preventing growth and prosperity, due in no small part to its cumbersome and sluggish way of working. Wwe may see the anti EU vote in the coming EU elections reflect that.

Of course, many dyed in the wool EU-o-philes can't actually contemplate that their deeply held and cherished views of a one-size-fits-all Europe, foisted on the people of Europe whether they want it or not, might be an idea whose time is past, and the same people will probably find clever arguments why actual democracy is somehow inferior and less desirable than rule by a small political class intent on avoiding democracy, all the while pretending to be democratic. I've actually heard some of them make teh argument that not allowing the people a vote is more democratic than allowing them a vote!

oscarBravo

Boroso wrote: »

I've actually heard some of them make teh argument that not allowing the people a vote is more democratic than allowing them a vote!

Doubtless you have a source for that.

Boroso

oscarBravo wrote: »

Doubtless you have a source for that.

Of course. Even last week the British Labour party was arguing in parliament against allowing the British people a democratic referendum, arguing that they were, in effect, to stupid to be allowed a say.

Personally I am less interested in that than I am in what BASF has to tell us about where the EU has reached vis a vis the EU competitors, which seems much more important.

Can you really believe that a company so steadfastly German, and other large steadfastly EU companies, have stated that conditions in the EU are such that it can no longer afford to invest in the EU, and are actually making billion dollar investments outside the EU where conditions are more favourable?

Are you not at all interested in what appears to be the rekindling of interest in politics across the EU, and the interest now being taken in politics by a whole generation of people across the EU, which might even result in reversing the crises of trust in the EU which we see right across Europe?

micosoft

You stated that:

Boroso wrote: »

I've actually heard some of them make teh argument that not allowing the people a vote is more democratic than allowing them a vote!

You were asked to back this up which you did with this...

Boroso wrote: »

Of course. Even last week the British Labour party was arguing in parliament against allowing the British people a democratic referendum, arguing that they were, in effect, to stupid to be allowed a say.

Which is distinctly different from the "more democratic not to vote" claim you made. Your "in effect" piece is significantly different to what the Labour party said as well.

oscarBravo

Boroso wrote: »

It seems the EU is incapable of acting quickly or effectively to implement the correct change(s) so that BASF, and others, can begin to invest again in the EU, rather than outside the EU.

What changes should the EU implement to satisfy BASF?

Boroso

micosoft wrote: »

You stated that:



You were asked to back this up which you did with this...



Which is distinctly different from the "more democratic not to vote" claim you made. Your "in effect" piece is significantly different to what the Labour party said as well.

If you are unaware of what Kinnock and Mandelson etc etc said in the house of Lords, then you are aware. Its a small point and not worth dwelling on.

The final irony was politicians like Kinnock and Mandelson, both in receipt of pensions from the EU, and both unelected themselves, trying to stymie a bill offering the UK people a democratic referendum.

But, as I say, it's a small point and not really that relevant to this thread.

What's interesting is you seem to prefer to ignore the interesting points of consequence here, and try to distract from them by focusing on such a small and insignificant point

Boroso

oscarBravo wrote: »

What changes should the EU implement to satisfy BASF?

I guess thats a question for them. Do you have a view yourself?

GCU Flexible Demeanour

Boroso wrote: »

But, as I say, it's a small point and not really that relevant to this thread.

You'll notice, they've a pronounced tendency to seize on small, irrelevant points as it keeps the discussion away from the substantial issue.

oscarBravo

Boroso wrote: »

I guess thats a question for them.

So you have a belief that the EU can't do what it takes to satisfy BASF, without knowing what would satisfy BASF?

Do you have a view yourself?

I'm just challenging what appears to be boilerplate tabloidesque Euroskepticism by asking for specifics, and receiving evasions in response.

It all seems terribly familiar somehow.

Boroso

oscarBravo wrote: »

So you have a belief that the EU can't do what it takes to satisfy BASF, without knowing what would satisfy BASF?

I only know the reasons BASF say they can no longer invest in the EU, which are facts about what they have said, rather than beliefs.

oscarBravo wrote: »

I'm just challenging what appears to be boilerplate tabloidesque Euroskepticism by asking for specifics, and receiving evasions in response.

The British Chancellor will today tell the EU that it must “reform or continue to decline”.

He will go on to say ““Make no mistake, our continent is falling behind. We can’t go on like this.”

It’s so easy to dismiss such views with name-calling, perheps even as as “boilerplate tabloidesque Euroskepticism”, but it's not a response in any adult sense. To do so seems to reveal a refusal to accept that reform and change is needed in the EU, and there is a change already happening across Europe as a reaction to that lack of seeming ability to change or reform with the EU. Indeed, it is that very view, the inability to recognise the flaws in the EU project and design, which has so hampered the ability of the EU to change, and which has done so much damage already to the EU and the people of Europe.

spank_inferno

Or..

Or... Its just pandering to the floating Tory -> UKIP voter ahead of imunent elections.

Dave Cameron & Gideon Osbourne will be sabre rattling for the next 5 months.

Once that election cycle has passed they will quieten down again.

Boroso

spank_inferno wrote: »

Or..

Or... Its just pandering to the floating Tory -> UKIP voter ahead of imunent elections.

Dave Cameron & Gideon Osbourne will be sabre rattling for the next 5 months.

Once that election cycle has passed they will quieten down again.

Of course, they are politicians. Could it be both?

Sure, we can all play the game of double-think-the-politician, or even double-double-think-the-politician. It may even be the Chancellor and the Tories has been rattled by their fear of UKIP's apparent continuing success. Or by the Tories internal polling showing their position vis a vis UKIP. It could be lots of things.

If it's your view that the growing movement across Europe for reform will die back in 5 months, then that's quite a brave prodiction, and we'll all have to wait and see.

oscarBravo

Boroso wrote: »

I only know the reasons BASF say they can no longer invest in the EU, which are facts about what they have said, rather than beliefs.

...and those reasons are...?

micosoft

Boroso wrote: »

I only know the reasons BASF say they can no longer invest in the EU, which are facts about what they have said, rather than beliefs.



The British Chancellor will today tell the EU that it must “reform or continue to decline”.

He will go on to say ““Make no mistake, our continent is falling behind. We can’t go on like this.”

It’s so easy to dismiss such views with name-calling, perheps even as as “boilerplate tabloidesque Euroskepticism”, but it's not a response in any adult sense. To do so seems to reveal a refusal to accept that reform and change is needed in the EU, and there is a change already happening across Europe as a reaction to that lack of seeming ability to change or reform with the EU. Indeed, it is that very view, the inability to recognise the flaws in the EU project and design, which has so hampered the ability of the EU to change, and which has done so much damage already to the EU and the people of Europe.

And what reform would that be? The proposal to have a national veto on European despite the fact this was explicitly put in by Thatcher in order to assure a open market? The Tories will lead their troops up the mountain, and then back down again on this one.

I appreciate you have no evidence that BASF are considering not investing in Europe because of the EU so I will give you two evidence backed examples of companies leaving/not investing in countries because of EU membership.
Nissan threatens to leave UK if it leaves the EU
Goldman Sachs threatens to leave UK if it leaves the EU
See how it works?

Boroso

micosoft wrote: »

And what reform would that be? The proposal to have a national veto on European despite the fact this was explicitly put in by Thatcher in order to assure a open market? The Tories will lead their troops up the mountain, and then back down again on this one.

I appreciate you have no evidence that BASF are considering not investing in Europe because of the EU so I will give you two evidence backed examples of companies leaving/not investing in countries because of EU membership.
Nissan threatens to leave UK if it leaves the EU
Goldman Sachs threatens to leave UK if it leaves the EU
See how it works?

A quick google search will show anyone that BASF is not threatening anything. but is actually now, and has been for some time, investing in plants outside the EU, mainly in the USA and China.

I am sure if the UK decide to leave the UK (which is doubtful but possible) there will be changes. However, to base a policy on such a strategic decision on supposed threats by Nissan and Goldman Sachs might seem rash.

I seem to remember similar propaganda saying similar things if the UK did not join the Euro. Incidentally, the UK market for both Nissan and Goldman Sachs are major markets for both companies, and to completely pull out of the UK for either might seem rash.

If it's right for the UK to leave the EU, then it's right for the UK, and the wrong thing for the UK to do is not to do the right thing for the UK based on propaganda or threats by some companies.

No one wants to see the UK leave the EU for the wrong reasons, and a much better outcome would be to remain in a reformed EU.

micosoft

Boroso wrote: »

A quick google search will show anyone that BASF is not threatening anything. but is actually now, and has been for some time, investing in plants outside the EU, mainly in the USA and China.

You made the claim that the EU/Euro was causing BASF to move abroad and the only evidence that you can allude to (I mean, telling someone to google it?) is that the largest multinational chemical corporation in the world is opening plants in China beside where their customers manufacture products, is the most tenuous argument I've heard since Professor Axel Temming of the University of Hamburg came up with acronym Critical Interactions BEtween Species and their Implications for a PreCAUtionary FiSheries Management in a variable Environment - a Modelling Approach (BECAUSE)

Boroso wrote: »

I am sure if the UK decide to leave the UK (which is doubtful but possible) there will be changes. However, to base a policy on such a strategic decision on supposed threats by Nissan and Goldman Sachs might seem rash.

So rather then your weak/non-existent proposition that BASF are leaving Germany because of the EU/Euro I gave direct references to companies directly saying the may leave the UK if the UK leaves the Euro. Trying to change tack/talk about policy does not avoid the fact I gave evidence where you gave none.

Boroso wrote: »

I seem to remember similar propaganda saying similar things if the UK did not join the Euro. Incidentally, the UK market for both Nissan and Goldman Sachs are major markets for both companies, and to completely pull out of the UK for either might seem rash.

Try to remember a little harder and provide some evidence for that. I'm sure the management of these companies have thought through the consequences of a Brixit far more thoroughly then you have - do you really think Goldman Sachs are given to "rash decisions" and not knowing what they are about?

Boroso wrote: »

If it's right for the UK to leave the EU, then it's right for the UK, and the wrong thing for the UK to do is not to do the right thing for the UK based on propaganda or threats by some companies.

So if we were to take your unsubstantiated statement that BASF is not investing in Germany because of [insert made up reason here] from the EU/Euro we should still do the right thing by the EU/Euro rather then giving into propaganda or threats from BASF? Yes or No? Or is it one rule.....

Company makes anti EU statement = The right reasons
Company makes pro EU statement = propaganda and threats

Boroso wrote: »

No one wants to see the UK leave the EU for the wrong reasons, and a much better outcome would be to remain in a reformed EU.

You do GCU Flexible Demeanour I mean Boroso. Regardless of the reasons. Which you have proved above.

micosoft

From BASF's history:
"The first stage of German industrialization begins in 1835 with the building of the first German railway. At around the same time, customs barriers between the individual German states are abolished, creating an internal German market - a powerful incentive for the growth of new industries such as engineering and iron smelting."
Seems like they were early to take advantage of a Union!

Unfortunately they decided to invest outside of EU/Euro back in 1873 "Production facilities and sales offices are set up abroad: in New York in 1873" because of those silly Eurocrats.

Fascinating company!

GCU Flexible Demeanour

micosoft wrote: »

<...> if the UK leaves the Euro. <...>.

Do we need to spend a little less time on auto-refute, and a little more reflecting on the issues?

micosoft

GCU Flexible Demeanour wrote: »

Do we need to spend a little less time on auto-refute, and a little more reflecting on the issues?

We installed auto-refute on Boards.ie when we got infected with auto-eu-issues.