How to Get Rid of the Euro
Again, I'm late coming to this--and again, it's because of my dratted cold--but we all know the principal argument against getting rid of the euro, don't we? Correct. It simply cannot be done--not without disrupting the economy of all Europe, if not of the entire world. "Most people," as the Economist insists,
are assuming that, in the end, European leaders will do whatever it takes to save the single currency. That is because the consequences of the euro’s destruction are so catastrophic that no sensible policymaker could stand by and let it happen.
"Most people," maybe, but not Harvard economist Robert Barro. Writing in yesterday's Wall Street Journal, Barro explains just how it could be done:
A better plan is to start from the top. Germany could create a parallel currency—a new D-Mark, pegged at 1.0 to the euro. The German government would guarantee that holders of German government bonds could convert euro securities to new-D-mark instruments on a one-to-one basis up to some designated date, perhaps two years in the future. Private German contracts expressed in euros would switch to new-D-mark claims over the same period. The transition would likely feature a period in which the euro and new D-mark circulate as parallel currencies.
Other countries could follow a path toward reintroduction of their own currencies over a two-year period. For example, Italy could have a new lira at 1.0 to the euro. If all the euro-zone countries followed this course, the vanishing of the euro currency in 2014 would come to resemble the disappearance of the 11 separate European moneys in 2001.
The elimination of the euro, in other words, would cause no more disruption that did its introduction--and, as you no doubt recall, the Economist was all in favor of that.
James Delingpole, you're not so crazy after all.
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Jul '11
Re: How to Get Rid of the Euro
I'm pretty sure the panic caused by the dissolution of the euro, even if it was projected to some future date, would cause a new round of destabilizing panic in Europe. Markets tend to respond very quickly to information like this especially when given a specific target date. Maybe when the Eurozone economy is in better shape the re-introduction could take place, but if you wait for the recovery then you lose the catalyst that would cause the reform in the first place.
Jun '10
Re: How to Get Rid of the Euro
The only honest currency trader is the free market. It rewards the industrious, punishes the lazy, and you can't fire it.
Oct '11
Re: How to Get Rid of the Euro
It seems the greatest arguments against dropping the euro are 1. They'd be trading the devil they know for the unfamiliar variety. 2. Each country would be responsible for it's own economic catastrophes. The later is a feature and the former is inescapable if they want to gain economic traction again.
Mar '11
Re: How to Get Rid of the Euro
I think it was in one of Mr Delingpole's podcasts where it was pointed out that the Euro is a means towards political union - i.e. the United States of Europe. Not an end in itself. So fixing the Euro problems is missing the point of the Euro.
It is unlikely that the Euro will be dismantled, because the goal is still a giant European Federal State, just as it is Mr Obama's goal for a "fundamentally transformed" US. Fortunately for the UK, they will probably stay out of it.
In the US we are half-way there, already - we have one $.
In the future we can expect several China-like Superstates, along the lines that George Orwell predicted -- he was a little early, that's all.
Edited on Jan 10 at 11:01amOct '10
Re: How to Get Rid of the Euro
It sounds like an interesting idea but I would be concerned about the risk of arbitrage. There isn't a guarantee that the countries will fix the exchange rate at a 1-1 ratio. I don't know what the reasons may be but I have a feeling there may be incentives to use a different exchange rate, maybe to undercut another country. Another question I have is whether setting a 1-1 ratio means that the value the securities is therefore the same in the new (old) currency.
Re: How to Get Rid of the Euro
Whaat? Whoever said I was crazy?
Two points:
1. The Economist is not to be taken seriously. It is part of the corporatist/bankster/politico/technocratic conspiracy: it has no interest in free markets or small government.
2. When Britain's withdrawal from Economic Monetary Union (EMU) was first mooted, any number of experts - Economist readers all, no doubt - queued up to tell us what a disaster it would be for Britain, what chaos it would cause. Instead, it was the best thing that could have happened to Britain. Sterling devalued, exports rose, the economy experienced a huge boom.
Re: How to Get Rid of the Euro
I wish to associate myself entirely with point 2 of Brother Delingpole's remarks, if only partially with point 1. (Only partially? Well, I have a couple of friends at the Economist, and I keep hoping that one fine day they'll come around.)
Apr '11
Re: How to Get Rid of the Euro
I hope that by "coming around", you mean that they will leave the toxic organization. When I read British newspapers, I generally read the Telegraph, which my wife subscribes to and which employs a good chunk of people of Delingpole and near-Delingpole quality. I sometimes read the Guardian, which is left wing, but often intelligently so, and is where my (radical lefty) brother used to work. The Mail is excellent on the NHS, and often scoops others.
I do not read the, once excellent, Times, which is a pretty pure expression of insular mainstream prejudice. I would subscribe in a heartbeat, though, at cover price, if the alternative was the Economist. While the EIU is pretty good, the Economist is the laziest gatherer, mostly by quasi-interns, of comfortable press releases repackaged to add sneer. Continued:
Nov '10
Re: How to Get Rid of the Euro
As one who must deal with the practical management of foreign currencies every day, I can unequivocally say that it is a darn sight easier to deal in the Euro with European customers than with the basket of Drachma, Lira, Francs, Marks, Krona, Guilders, Zloties, etc, etc. I am still slightly annoyed that I still have to hedge pounds in addition to Euros.
That being said. The old FX business that used to be much bigger would find resurrection. We would go back to synthesizing a Euro equivalent.
Apr '11
Re: How to Get Rid of the Euro
My father subscribes, and my parent's home has been my London base while I've been working in Baghdad or visiting civilization from Dumfries (where my wife lives.) As such, I've been dipping into issues more frequently over the past couple of years, but have not, as yet, discovered an issue that did not make claims that seems superficially implausible, and that were revealed to be absurd after a brief google search. These are not always political, but they often are.
Sometimes they're harmless bias, such as when they claimed that their poll showed opposition to the death penalty, less than an inch from a table showing support. Sometimes they are genuinely vile, such as when they used Republican support for voter ID as an argument against it in the same sentence as they linked it with racial discrimination (also noting the Black Caucus' opposition as further evidence, while not noting that Nikki Haley, whose initiative was the hook for the article, is not white). Although this isn't an example of error, it is an example of why good people should not support or link to them.
Nov '10
Re: How to Get Rid of the Euro
David Williamson: I think it was in one of Mr Delingpole's podcasts where it was pointed out that the Euro is a means towards political union - i.e. the United States of Europe. Not an end in itself. So fixing the Euro problems is missing the point of the Euro.
It is unlikely that the Euro will be dismantled, because the goal is still a giant European Federal State, just as it is Mr Obama's goal for a "fundamentally transformed" US. Fortunately for the UK, they will probably stay out of it.
In the US we are half-way there, already - we have one $.
In the future we can expect several China-like Superstates, along the lines that George Orwell predicted -- he was a little early, that's all. · Jan 10 at 10:53am
Edited on Jan 10 at 11:01 am
Orwell's Oceania was roughly the Americas plus Britain. After WW2 there was a faction in Britain that wanted to become the 51st state (or 49th to match the chronology).
Mar '11
Re: How to Get Rid of the Euro
I just returned from spending the holidays in Germany with my in-laws. There was an interesting dynamic: everyone agrees, to a man, that the Euro is going to hell in a handbasket, and there is widespread rage at the southern European countries being so incredibly fiscally irresponsible.
However, not a single person was willing to discuss dismantling the Euro. The consensus was that the common currency is necessary for political reasons, to maintain a sense of unity around the continent (having nothing to do with loving the EU, and everything to do with erasing the scars of history).
Until German voters come around to accepting the defeat of the Euro, plans like this one in the WSJ will remain wishful thinking.
Apr '11
Re: How to Get Rid of the Euro
James Delingpole: Whaat? Whoever said I was crazy?
Two points:
1. The Economist is not to be taken seriously. It is part of the corporatist/bankster/politico/technocratic conspiracy: it has no interest in free markets or small government.
2. When Britain's withdrawal from Economic Monetary Union (EMU) was first mooted, any number of experts - Economist readers all, no doubt - queued up to tell us what a disaster it would be for Britain, what chaos it would cause. Instead, it was the best thing that could have happened to Britain. Sterling devalued, exports rose, the economy experienced a huge boom. ·
A little more on point with James' claim about Economist support for free markets; the economist is, by its charter, an ideological organization, set up with the primary intent of supporting free trade. It still claims to do so, but does so only in the manner of a somewhat more left wing and anti-American Ron Paul. They opppose most actual instances of trade being freed up, while occasionally claiming that trade in general is good, frequently as the preface for a qualifier that forms the real story. Their notional priority is not their priority in endorsements, either.
Aug '10
Re: How to Get Rid of the Euro
735 parlimentarians (MEP) making 400,000 pounds a year in pay and perks ? That is a considerable obstacle. Combined with a tradition of graft that Democrats can only dream about, getting rid of these desk anchors and the 35,000 staffers might qualify as the second Flanders Field.
Mar '11
Re: How to Get Rid of the Euro
James Delingpole:
1. The Economist is not to be taken seriously. It is part of the corporatist/bankster/politico/technocratic conspiracy: it has no interest in free markets or small government.
I will never, ever understand why some people insist that the Economist is right-wing. It's not even close.
Jan '11
Re: How to Get Rid of the Euro
May I suggest that focusing on the euro is looking at the wrong problem. EU endemic populations are not breeding enough children (future workers) needed to pay the large taxes to support their socialist systems. But, Muslim immigrants brought in as workers to pay those taxes are breeding quite well (ratio of about 4 or 5 to 1). So, the problem isn't the Euro, it's the demographic shift - the greatest in the shortest time in human history - and that bodes political, not monetary collapse.
Europe, including Britain, is rapidly changing, and endemic Europeans aren't noticing. They are dealing with relatively trivial (i.e., superficial) problems like the stability of the Euro, when, in the long (or perhaps even the short) run, the issue is whether France, or Greece, or Spain, or any of them can survive as culturally familiar national political entities. The material question is, can the EU group survive if the member countries are no longer countries? The shaky euro is just a symptom, the demographic shift and why it's occurred is one of the pathologies.
Edited on Jan 10 at 3:26pmOct '11
Re: How to Get Rid of the Euro
The significant differences between European nations mean that a single currency is unnatural and unhealthy to all of them. (Even to France, over the long term.) This has been discussed endlessly, and no credible counter-argument has been voiced. The idiocy of the Euro is by now evident to pretty much everyone outside the public sectors, at least when evaluated from the perspective of the general welfare of the European nations and the great majority of their people.
The main obstacle to the restoration of national currencies is the ensuing loss of power and status on the part of Europe's elite drones. Their self-interest was the real motivating factor behind its introduction, and the real force behind the drive to political union. They will do anything and everything in their power to retain the common currency, because without it their political project will unravel. They can see no other way to keep their power and status; they certainly aren't capable of earning it.