Should the Euro finally be abandoned?

oscarBravo

oscarBravo wrote: »

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...?

...?

GCU Flexible Demeanour

micosoft wrote: »

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

I've just had a more meaningful exchange of views on this site:

http://alice.pandorabots.com/

Conversation Log:

GCU: The EU isn't necessarily intrinsically harmful. But people do need to critically assess EU developments, and not just accept official statements at face value.
ALICE: What specifically brings not necessarily intrinsically harmful to mind? Humans are not always infallible.
GCU: Well, I wouldn't see the point about taking a dogmatic position either in favour or against the EU.
ALICE: No one says you have to.
jCU: People can sometimes respond as if a dogmatic position was being asserted.
ALICE: Humans are not always infallible.
GCU: That is certainly so.
ALICE: Thanks for explaining it.
GCU: My pleasure, you've been a great help to me.
ALICE: You are one of the most polite people I know.

Boroso

micosoft wrote: »

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)


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.

I really have no issue with what you choose to believe which is a matter for you.


Your tone and manner in your responses here are less than civil, which is a shame.

GCU Flexible Demeanour wrote: »

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

The problem with that suggestion is apparent. It’s hard for some to realise that the growing dissatisfaction across Europe with the EU is legitimate, is democratic and, more important, is necessary.

Anyone who considers whether their country might be better off out of the EU is simply beyond their comprehension, which seems limited by a belief that, whatever happens, we must all stay in the EU forever and ever, and the only reforms to be made are to give more and more power to the EU.

oscarBravo

Boroso, could you answer my question please?

Boroso

oscarBravo wrote: »

Boroso, could you answer my question please?

I will answer, but also have to point out this is a discussion forum and not an interview forum. Your style seems to be to avoid the substance of some posts, and seize on something not strictly relevant and then turn it into a Q & A with you as the quizmaster.

The reasons are simple; The costs are too high compared to elsewhere. The chemical industry is a heavy user of energy, and the energy costs in the EU are now considerably higher than they are elsewhere. Anyone knows that in Ireland the costs of their energy bills have gone up enormously over the last few years, which is the same all over the EU. Within the EU, the green lobby has meant that so called green "taxes" have priced the cost of energy across the EU way out of line with competitors in the world, to the extent that the EU is referred to as a "green basket case" by many Americans who can't believe that the people of Europe have put up with what they view as such a crazy energy policy.

Additionally, the labour costs across the EU are amongst the highest in the world, and the double whammy of high energy prices and high labour costs serves to make European countries grossly uncompetitive.

Hence companies like BASF and others are making investments outside the EU where they can produce chemicals at a fraction of the cost that they could produce within the EU> While they still have plants in the EU, and probably always will, the vast bulk of their investment (billions of dollars) in now made outside the EU.

As mentioned, if you want to discuss I am happy to do that, but I am not interested in a discussion which consists of an interview.

McDave

GCU Flexible Demeanour wrote: »

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.

'Ah, yeah' my arse. :rolleyes:

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

You don't seem to understand that massive borrowing put Ireland into a position where it had no resources to introduce counter-cyclical policies when the tide went out on public and private debt. And, yes, public debt includes both the cost of the public pay bill once 'bubble' tax revenues collapsed, and the socialisation of bank debts legally incurred in this jurisdiction and consequent in part on lack of regulation and oversight. The recession we have endured in recent years is a direct consequence of those factors.

GCU Flexible Demeanour

McDave wrote: »

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

But what's now more than a little unspecific (again) is the precise decade you have in mind.

McDave wrote: »

You don't seem to understand that massive borrowing put Ireland into a position where it had no resources to introduce counter-cyclical policies when the tide went out on public and private debt.

My understanding would actually transcend that. Even if the resources existing, there wouldn't be much point in Ireland attempting a demand stimulus, as we've a high marginal propensity to import.

In any event, the point is (of course) that Irish public debt was low before the crisis.

McDave

GCU Flexible Demeanour wrote: »

In any event, the point is (of course) that Irish public debt was low before the crisis.

Which completely misses the point. Public commitments increased unsustainably as the decade before the recession proceeded. As these commitments were funded by unsustainable receipts, the over-commitments turned to debt practically overnight.

The debts didn't appear from nowhere. Nor did the recession that ensued. And our ability to respond to the new conditions of limited credit was neutered by our overspend.

Accordingly, it's quite clear that our recession was due to debts we incurred. Instead of having absurd public commitments, we should have had some slack in the form of, say, reserves, or a lower debt-to-GNP ratio.

And of course none of this is even taking into account the effects of accumulated private debt, much of which worked its way into banking debts.

GCU Flexible Demeanour

McDave wrote: »

Public commitments increased unsustainably as the decade before the recession proceeded.

If you said that, and said no more, we could agree. Describing that as 'public debt' is simply wrong.

McDave

GCU Flexible Demeanour wrote: »

If you said that, and said no more, we could agree. Describing that as 'public debt' is simply wrong.

It's clear you don't understand the dynamic of debt. It doesn't appear out of nowhere. Because we had unsustainable commitments, the systemic shock of 2008 crystallised them into debts practically overnight. The rapid appearance of those large debts in 2008 led directly to our recession.

The debts led to the recession. Even worse, they prevented us form responding in a countercyclical fashion, thus ensuring the recession endured.

sock puppet

McDave wrote: »

The rapid appearance of those large debts in 2008 led directly to our recession.

[citation needed]

Boroso

McDave wrote: »

It's clear you don't understand the dynamic of debt. It doesn't appear out of nowhere. Because we had unsustainable commitments, the systemic shock of 2008 crystallised them into debts practically overnight. The rapid appearance of those large debts in 2008 led directly to our recession.

The debts led to the recession. Even worse, they prevented us form responding in a countercyclical fashion, thus ensuring the recession endured.

It's reasonably clear you seem obsessed by Ireland’s position in and contribution to, the Euro, and vastly overstate the countries importance vis a vis the Euro.

Unfortunately, Ireland’s historical or future position within the Euro will affect the Euro and the future of the Euro, to only a miniscule degree.

oscarBravo

Boroso wrote: »

The reasons are simple; The costs are too high compared to elsewhere. The chemical industry is a heavy user of energy, and the energy costs in the EU are now considerably higher than they are elsewhere. Anyone knows that in Ireland the costs of their energy bills have gone up enormously over the last few years, which is the same all over the EU. Within the EU, the green lobby has meant that so called green "taxes" have priced the cost of energy across the EU way out of line with competitors in the world, to the extent that the EU is referred to as a "green basket case" by many Americans who can't believe that the people of Europe have put up with what they view as such a crazy energy policy.

Additionally, the labour costs across the EU are amongst the highest in the world, and the double whammy of high energy prices and high labour costs serves to make European countries grossly uncompetitive.

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.

So, what are those correct changes?

Or are you going to refuse to back up this claim on the specious grounds of refusing to be "interviewed"?

GCU Flexible Demeanour

oscarBravo wrote: »

So, what are those correct changes?

Or are you going to refuse to back up this claim on the specious grounds of refusing to be "interviewed"?

Look, are we seriously trying to pretend that there isn't an issue with European competitiveness, or that Europe hasn't already had strategies in this area that have achieved a lot less than was hoped?

Let me say, I've no idea if BASF is or isn't a good example. But suggesting the substantial point at issue is, in some way, needing to be proved is Twilight Zone stuff. Again, can I point to the willingness of the European Commission to acknowledge these realities in their published material on "Europ2020"

http://ec.europa.eu/europe2020/services/faqs/index_en.htm#1
What is the difference between Europe 2020 and its predecessor the Lisbon Strategy?

Europe 2020 builds on lessons learned from the earlier strategy, recognising its strengths (the right goals of growth and job creation, 18m new jobs created since 2000) but addressing its weaknesses (poor implementation, with big differences between EU countries in the speed and depth of reform).

The new strategy also reflects changes in the EU's situation since 2000 – in particular the immediate need to recover from the economic crisis.

http://ec.europa.eu/europe2020/services/faqs/index_en.htm#4

The EU is already under pressure from competitors and demographic change. Simply returning to our pre-crisis situation will see us falling further behind.

So we need to start now to design the measures that will make the EU stronger and more competitive in future.

Reforms also take time – we must start now if we want to protect what we most value about our way of life.

If the European Commission is wiling to give unforced acknowledgment of these realities in its own promotional material, why do we feel a need to pretend as if this was something needing to be proved?

oscarBravo

GCU Flexible Demeanour wrote: »

Look, are we seriously trying to pretend that there isn't an issue with European competitiveness, or that Europe hasn't already had strategies in this area that have achieved a lot less than was hoped?

I'm mostly calling out a soapboxer for making claims with no interest in backing them up.

If you don't know what action the EU should take to discourage companies from investing outside the union, don't criticise the EU for not taking that action.

McDave

sock puppet wrote: »

[citation needed]

Have you been keeping up with current affairs? Practically overnight our economy went into reverse. In a matter of months we could no longer borrow on the bond markets. The only thing that kept us afloat was ECB liquidity and the Troika 'bailout'.

In 2007 our debt to GDP ratio was declining. It shot up the following years (if you really need actual direction on this score, see last graph on this page: http://www.esri.ie/irish_economy/).

Our budget went from surplus in 2007, to balance in 2008 to deficit in 2009 (see first graph on: http://www.tradingeconomics.com/ireland/government-budget).

Growth collapsed in 2008 (see third graph at http://www.esri.ie/irish_economy/), and was falling away even in 2007.

Ireland clearly started going into recession in 2008. If you want to say (although you're clearly saying nothing), that our recession had nothing to do with our debt, I think you're mistaken. If we had had sustainable expenditure, we wouldn't have gone into debt freefall, and might well have avoided recession. We could have even avoided the massive increase in our debt, and borrowed within Maastricht criteria to get us over the worst. Had we had reserves, we might have deployed them to implement countercyclical policies to ameliorate or avoid recession. Had we regulated our banks, we could have avoided socialising losses. We didn't and those losses became debts.

In short, we incurred so many debts on so many fronts we had nothing in the tank to control the downturn. So it is quite clear that our debts caused our recession. Without those debts, there most probably not have been a recession, like many other countries in the EZ throughout the credit crunch/financial crisis.

McDave

Boroso wrote: »

It's reasonably clear you seem obsessed by Ireland’s position in and contribution to, the Euro, and vastly overstate the countries importance vis a vis the a Euro.

Nowhere have I made such claims. By attempting to personalise matters, it's clear you don't have anything of substance to say. If you do have anything of substance to say, please spell it out for all to see. Instead of attempting to bait posters with wild allegations about what they have not posted.

[BTW, you're more than welcome to come back to me linking to posts I've made which back up your claim. But I guarantee you you won't be able to find such posts.]

K-9

McDave wrote: »

Which completely misses the point. Public commitments increased unsustainably as the decade before the recession proceeded. As these commitments were funded by unsustainable receipts, the over-commitments turned to debt practically overnight.

The debts didn't appear from nowhere. Nor did the recession that ensued. And our ability to respond to the new conditions of limited credit was neutered by our overspend.

Accordingly, it's quite clear that our recession was due to debts we incurred. Instead of having absurd public commitments, we should have had some slack in the form of, say, reserves, or a lower debt-to-GNP ratio.

And of course none of this is even taking into account the effects of accumulated private debt, much of which worked its way into banking debts.

We did have the pension reserve fund and IIRC the second lowest Government debt in the EU around 2006. The problem from my reading of your initial post:

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

Posters got the impression you meant high public debt levels, I can't see how anybody could say we did. I can see your reasoning that high public spending eventually led to our current Government debt levels, but the initial post is confusing things and side tracking the thread a bit.

General Mod note:

There's a lot of playing the man rather than the ball on this thread. This is a discussion site, often people will ask you to back up a specific claim, if you can't do that, just say so, avoids us going round in circles!

McDave

K-9 wrote: »

We did have the pension reserve fund and IIRC the second lowest Government debt in the EU around 2006. The problem from my reading of your initial post:



Posters got the impression you meant high public debt levels, I can't see how anybody could say we did. I can see your reasoning that high public spending eventually led to our current Government debt levels, but the initial post is confusing things and side tracking the thread a bit.

General Mod note:

There's a lot of playing the man rather than the ball on this thread. This is a discussion site, often people will ask you to back up a specific claim, if you can't do that, just say so, avoids us going round in circles!

OK. I'll revert and clarify what I mean (but not tonight). I do have a net point in there somewhere!

sin_city

micosoft wrote: »

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.

Ah yes, the problem here is that you are assuming people are using the Euros in euro zone countries because they choose to do so.

http://www.ecb.europa.eu/mopo/intro/operational/html/index.en.html

Do you know what a Ponzi scheme is?

Bitcoin is not one, however the Fiat currencies in use in Europe and the US most certainly are. Bitcoins are limited to 21 million I believe.

Now, Euros and the like: In order to pay the debt to a central bank the payer/country in question needs more of the currency. Where do they get it? Borrowing from the central bank, and then next year, in order to pay the now larger debt from a central bank the payer/country in question needs more of the currency. Where do they get it?.........................and so on.

Why do you think your Euros buy you less and less year on year?
The currency markets? lol

McDave

K-9 wrote: »

Posters got the impression you meant high public debt levels, I can't see how anybody could say we did. I can see your reasoning that high public spending eventually led to our current Government debt levels, but the initial post is confusing things and side tracking the thread a bit.

I think we can take it as a given (and relatively common knowledge at that!), that our budget was officially in surplus up until 2007 (I referred to and linked to a source a few posts up). And that our growth rate went into negative territory for three years from 2008.

I would contend that our entry into recession was as a direct result of our unavoidable entry into a debt scenario with no countercyclical options.

1. The correlation between a budget deficit and onset of negative growth (culminating rapidly in official recession) seems pretty clear. There were various reasons why we went into budget deficit, but one the most obvious of them was that our state spending was dependent on unsustainable revenues. That those revenues were unsustainable was demonstrated by the rapid collapse in the willingness of lenders to roll over debt when the global credit crunch took effect. The government had nothing in the tank to ameliorate the deep and prolonged deterioration in finances.

2. I'd contend further that the above scenario was optimistic. Why? Because our surplus/deficit was measured against GDP activity, a yardstick which although standard at EU level didn't reflect our economic size. It was widely mooted that GNP (excluding MNC accounting practices like transfer pricing) was a more accurate reflection of the size of our economy. Accordingly, we should have been measuring our spending against GNP. And not including in our calculations factors which distorted our national accounts, such as the monies MNCs were moving through our economy. I'm not even confident that as a result of (ab)using the GDP yardstick if we weren't even in real debt longer than the official figures suggest.

3. Private consumer and commercial borrowing was in the ascendant up to 2007. Years of spending was frontloaded in terms of mortgages, loans and credit card debts.

Perhaps if I had originally inserted a comma in my original post

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

things might have been a bit clearer. But I guess I was assuming posters knew and accepted that we hadn't been in official debt until 2008.

Regardless, I find it hard to understand how anyone would think our prolonged recession was not a direct consequence of our debt situation. Whether crystallised at the point of the economic crisis, or expressed as a de facto structural deficit built up as a result of unsustainable commitments.

Perhaps an economist can explain it better than I can. I guess I have the basics in order, but feel free to correct me if I haven't.

GCU Flexible Demeanour

McDave wrote: »

<...> no countercyclical options.<...>a budget deficit<...>

If there were no countercyclical options, there wouldn't be a deficit.

McDave wrote: »

<...> Perhaps an economist can explain it <...>

I suspect that an economist would point out that a small, open economy like Ireland can't really implement a demand stimulous on its own, as a very high proportion of domestic demand goes on imports. I'd suspect that economist would also say that, since we're part of a single currency area, Ireland is not a national economy; its a regional economy within the Eurozone. I'd suspect he might conclude by saying the only policy tool under control of a region is promotion of competitiveness.

McDave

GCU Flexible Demeanour wrote: »

If there were no countercyclical options, there wouldn't be a deficit.

[...]

I suspect that an economist would point out that a small, open economy like Ireland can't really implement a demand stimulous on its own, as a very high proportion of domestic demand goes on imports. I'd suspect that economist would also say that, since we're part of a single currency area, Ireland is not a national economy; its a regional economy within the Eurozone. I'd suspect he might conclude by saying the only policy tool under control of a region is promotion of competitiveness.

I expect the previous incumbents would have largely agreed with you, i.e. that there was nothing to be done. But that ignores the simple fact that throughout the whole bubble period Ireland had enough economic policy independence to pursue pro-cyclical policies.

As for the 'small, open economy' chestnut, it's only really open in certain sectors where revenue only has a limited impact on our real economy. We do have a small economy, that's for sure. But map any if our problems were down to our politicians behaving like we were a bigger fish and a bigger economy, with all the state and quango apparatuses that entailed. Not to mention the massive pay increases.

Nope, there is plenty we could have done off our own bat, e.g.:

- Concentrated on diverting resources into more infrastructure;
- Avoided incentivising holiday homes and golf clubs;
- Reformed local government;
- Taken planning seriously;
- Avoided white elephants;
- Reined in tax cuts at the beginning of the growth cycle;
- Increased tax when growth/inflation got toppy;
- Tackled excessive costs for services/tackled professional and other vested interests;
- Regulated and monitored financial institutions;
- Issued MoF/Central Bank notes on suitable investment vehicles (highlighting the likes of Anglo and INBS who queered the pitch for so many others).

The Irish authorities had all the policy tools they needed to go down these routes. Instead they chose the path of least resistance for the highest possible remuneration. The irony is that had we been more active and prudent, we would very possibly have been alongside the creditor EZ nations when the crisis hit.

GCU Flexible Demeanour

McDave wrote: »

I expect <...> the crisis hit.

I think you're mixing up too much there.

What I'm stating is not controversial. I'm simply observing that, as we are running a deficit, we could be said to be running a counter-cyclical policy, in the sense that Government is spending future income now. I'm also observing (which is also not controversial) that such a policy is wasteful for a small open economy, as that spending very quickly leaks abroad.

Our economy is profoundly open, which you'll pick up by comparing the value of our imports and exports to our GNP. What we consume, we tend to import, and what we produce we tend to export. And our export sector, by value, is overwhelmingly in the FDI sector.

Now, all that's quite separate to discussion of what actions the Irish Government could have employed to avoid the bust. Briefly, monetary policy is unambiguously an ECB matter. Taxation is unambiguously a Member State matter. There was nothing the Irish State could do to alter the ECB's monetary policy. But our tax policy certainly didn't need to give incentives to support property-related investments.

davwain

McDave wrote: »

I expect the previous incumbents would have largely agreed with you, i.e. that there was nothing to be done. But that ignores the simple fact that throughout the whole bubble period Ireland had enough economic policy independence to pursue pro-cyclical policies.

As for the 'small, open economy' chestnut, it's only really open in certain sectors where revenue only has a limited impact on our real economy. We do have a small economy, that's for sure. But map any if our problems were down to our politicians behaving like we were a bigger fish and a bigger economy, with all the state and quango apparatuses that entailed. Not to mention the massive pay increases.

Nope, there is plenty we could have done off our own bat, e.g.:

- Concentrated on diverting resources into more infrastructure;
- Avoided incentivising holiday homes and golf clubs;
- Reformed local government;
- Taken planning seriously;
- Avoided white elephants;
- Reined in tax cuts at the beginning of the growth cycle;
- Increased tax when growth/inflation got toppy;
- Tackled excessive costs for services/tackled professional and other vested interests;
- Regulated and monitored financial institutions;
- Issued MoF/Central Bank notes on suitable investment vehicles (highlighting the likes of Anglo and INBS who queered the pitch for so many others).

The Irish authorities had all the policy tools they needed to go down these routes. Instead they chose the path of least resistance for the highest possible remuneration. The irony is that had we been more active and prudent, we would very possibly have been alongside the creditor EZ nations when the crisis hit.

The great European currency that the Euro was designed to be (by its creators) has resulted in massive austerity and unemployment across too many of those countries that use that currency. There has been talk about other currency unions around the world, and there are some such unions (e.g. in Africa, some of whose countries use the CFA franc). Yet I am pleased to live in a country (Canada) whose currency (the dollar) isn't pegged to any other currency. A floating currency can be a good thing for an economy, to some degree at least. Currency fluctuations, I admit, are only one part of an economy that functions for its people.

McDave

davwain wrote: »

The great European currency that the Euro was designed to be (by its creators) has resulted in massive austerity and unemployment across too many of those countries that use that currency. There has been talk about other currency unions around the world, and there are some such unions (e.g. in Africa, some of whose countries use the CFA franc). Yet I am pleased to live in a country (Canada) whose currency (the dollar) isn't pegged to any other currency. A floating currency can be a good thing for an economy, to some degree at least. Currency fluctuations, I admit, are only one part of an economy that functions for its people.

No it hasn't. Greece was always economically way off the pace. Ireland and Spain completely lost the run of themselves misallocating resources into property bubbles. Italy has had a high national debt since before the Euro. Other countries not in the Euro also had problems after Lehmans.

There has been no 'massive austerity' here. In Greece there has been serious deflation consequent on ludicrous waste. Spain and Portugal have suffered extended recessions, but both are slowly emerging.

davwain

McDave wrote: »

No it hasn't. Greece was always economically way off the pace. Ireland and Spain completely lost the run of themselves misallocating resources into property bubbles. Italy has had a high national debt since before the Euro. Other countries not in the Euro also had problems after Lehmans.

There has been no 'massive austerity' here. In Greece there has been serious deflation consequent on ludicrous waste. Spain and Portugal have suffered extended recessions, but both are slowly emerging.

There is no doubt that governments obsessed about giving to the rich were part of the problem, and that many countries not part of any currency union were affected. Zimbabwe had its own dollar, although hyperinflation made that currency pretty much worthless.

McDave

davwain wrote: »

There is no doubt that governments obsessed about giving to the rich were part of the problem, and that many countries not part of any currency union were affected. Zimbabwe had its own dollar, although hyperinflation made that currency pretty much worthless.

Zimbabwe has no relevance to this discussion, not even in relation to Greece.

davwain

McDave wrote: »

Zimbabwe has no relevance to this discussion, not even in relation to Greece.

The answer, to "Should the euro finally be abandoned?", is "I don't know". There is no hyperinflation in Greece, but I still believe Zimbabwe is relevant, because the answer, to whether that country's now-obsolete currency should be abandoned, was "yes".

davwain

davwain wrote: »

The answer, to "Should the euro finally be abandoned?", is "I don't know". There is no hyperinflation in Greece, but I still believe Zimbabwe is relevant, because the answer, to whether that country's now-obsolete currency should be abandoned, was "yes".

Presumably you would have said the same thing of the rouble in 1998?

Economic agents do not reject a currency because of the name; they reject currencies based on the sovereign's economic fundamentals and its credibility in reducing its public debt through the appropriate channels (i.e. not via the printing press alone)

Zimbabwe could have saved its currency if it had the mind to, and if the international willingness had been there. Just as happened in Russia in the late 1990s.

Oldenboard

Italian and Spanish 10 year government bond yields stand at 1.2%, Irish bonds at 0.69%, German 0.158%. Investors demand ten times the risk premium for UK debt at 1.59%.

Greek €1 billion 6 months government bond sold at 2.94% interest last week, high considering Spain’s negative rate of -0.002%, but low considering financial news’ headlines about Greece and the Eurozone.

Why the discrepancy between what news outlets write (and is said on this thread) and what investors do?

micosoft

davwain wrote: »

The great European currency that the Euro was designed to be (by its creators) has resulted in massive austerity and unemployment across too many of those countries that use that currency. There has been talk about other currency unions around the world, and there are some such unions (e.g. in Africa, some of whose countries use the CFA franc). Yet I am pleased to live in a country (Canada) whose currency (the dollar) isn't pegged to any other currency. A floating currency can be a good thing for an economy, to some degree at least. Currency fluctuations, I admit, are only one part of an economy that functions for its people.

Did you read any of the quoted comments?

You do actually live in a currency union. All the Canadian States use the Canadian $. Do you think it would be better if you had a Quebec Franc, Ottawa Dollar, Nova Scotian Pound? If not why not (following your absurd thesis). After all, the economies of Vancouver and Nova Scotia are entirely dissimilar and thousands of km apart (further in economic difference I suspect then Ireland and Germany). Can you explain that to us?

The Corinthian

micosoft wrote: »

Can you explain that to us?

He won't. If he did, he'd inevitably end up boiling the argument down to Canadians are all, co-nationals, while with the Euro, all other Europeans are, well, foreigners.

Dig deep in these discussions and Alf Garnett will eventually make an appearance.

micosoft

The Corinthian wrote: »

He won't. If he did, he'd inevitably end up boiling the argument down to Canadians are all, co-nationals, while with the Euro, all other Europeans are, well, foreigners.

Dig deep in these discussions and Alf Garnett will eventually make an appearance.

Yup. People want to see what they want to see. Canada is a great example though of how a currency union works despite the enormous differences...
-You have a French speaking state that has little culturally in common with other Canadians?
- Saskatchewan is Agrarian (Part of Ireland?)
- Alberta is resources (Norway)
- Newfoundland is fishing (Iceland)
- Ontario - Manufacturing (Germany)
etc etc

The question is why Newfinland has not done a Greece when their economy and interest rates support Ontario...

Banjoxed

Should the Euro be abandoned? Only after we've turned our assets into Sterling.

The Corinthian

Banjoxed wrote: »

Should the Euro be abandoned? Only after we've turned our assets into Sterling.

Sterling? Not the currency I would jump to, but I'm sure you know what you're doing...

Banjoxed

The Corinthian wrote: »

Sterling? Not the currency I would jump to, but I'm sure you know what you're doing...

Easiest to transfer funds into, but whatever. Better than taking it up the bum from carpetbaggers looking to make a quick buck on any demise of the euro..

The Corinthian

Banjoxed wrote: »

Easiest to transfer funds into, but whatever.

'Easiest' to transfer funds into? Maybe you shouldn't be advising others on something you clearly have absolutely no clue about?

Banjoxed

The Corinthian wrote: »

'Easiest' to transfer funds into? Maybe you shouldn't be advising others on something you clearly have absolutely no clue about?

What would you advise?

The Corinthian

Banjoxed wrote: »

What would you advise?

Keep it in the Euro longer term, as it's undervalued (if you go by the Big Mac Index) and likely to appreciate once the dust settles on any potential Grexit.

Short term, I'd be tempted to temporarily convert to either USD or CHF for a quick profit before Greece defaults, then go back to a lower Euro before it appreciates again. I say tempted, because there could also be an eleventh hour deal or, worse still, more can kicking down the road. Additionally, this should be a short term measure as both of those currencies are presently overvalued, by the aforementioned measure.

At least this is what I was told by one of the gnomes here...

Oldenboard

Ireland GDP growth is forecast to reach 3.5% in 2015, way ahead of the Sterling Zone neighbour.

There is not much wrong with the Euro pe rse, but there are severe problems with asset bubbles and uncompetitive states. As Greece, France et al make their economies more competitive, they will grow at rates similar to Spain and Germany.

Future will be bright!