Euro heading for collapse?

[jerry611]

The dollar is shrinking, but you might want to hold off just a little while before switching to Euros. Last year's rejection by voters of a EU constitution may have put the Euro's future in serious doubt.

Unless Europeans unite politically, the Euro will suffer a slow death and collapse within 20 years. That is according to leading economist Paul De Grauwe in Belgium.
It is being argued that the Euro's value is inflated. Of the 12 countries using the Euro, there is only a combined growth of 2%, and unemployment is 10% or higher.

According to a poll by a German newspaper, almost 60% of Germans want to go back to marks and leave the Euro. The new government is succeeding in blaming the Euro for the nation's economic problems. There is also growing critcism against the Euro in Italy and France.

http://www.thebusinessonline.co.uk/Stories.aspx?&StoryID=E320EDE4-BDCF-41BE-8D85-CDADD4F8BB41&SectionID=F3B76EF0-7991-4389-B72E-D07EB5AA1CEE

[tocqueville]

1. complete BS

it's true that some FAR RIGHT wingnuts want to go back to the old national currencies, but they are not representative. Some economists are critical,yes but in minority. The economical situation of Europe isn't comparable with the US : despite "slow" growth and higher unemployment (it isn't 10% everywhere), Europe doesn't have trillions in debt and most ov all have a POSITIVE trade balance. And Europe is less vulnerable to high oil prices.

I love the idea of a collapse in.... 20 years....

[BooScout]

2. Paul De Grauwe is not an exactly stellar example of....

... a supporter of the EU. Never has been. I do believe this colors his opinion just a tad. I don't dismiss him though. He has a pretty good reputation as a macro-economist.

Economists are not always right. They base theories on a lot of 'what ifs' and models.

[TheWatcher]

3. Still Posting Comedy, huh?

Keep it up.

If anything, you are good for a laugh.

By the way, Grape Or Cherry?

[robcon]

4. It's not complete BS.

Euro world is a stagnant economy with exceptions.

What is BS is the idea that the Euro will be jettisoned based on economic results. That's a POLITICAL, not an economic decision. The decision will be made by politicians, and the decision will have little to do with economics, IMO.

If the politicians want to blame the Euro for their problems, they'll dump it. The Euro does not cause, not will it solve, the economic problems in Western Europe. For many countries - Ireland, Eastern Europe, the Euro is an economic godsend. For others it does not matter.

[Toucano]

5. Political unity is not necessary for the Euro to remain.

If political unity were necessary, the Euro could never have been launched without it.

The Euro is here to stay.

[robcon]

6. Just the opposite is true, Toucano.

Toucano wrote: "Political unity is not necessary for the Euro to remain."

If it were not for political unity, the Euro could not exist.

It is clear that Euro monetary policy (let's simplify to interest rates) is a very, very touchy subject.

If, for example, Germany was in the beginnings of recession, but the UK was is the throes of a vibrant expansionary economy, the idea of one interest rate for both countries would normally be unthinkable, unless there is a political accommodation. The German politicians would be screaming for low interest rates, while the UK politicians would want higher interest rates.

Unless there is a political agreement before hand that each party won't get what all of what it wants, and will have to compromise, the Euro is sunk... no one would want it. Germans would want the ability to lower deutschemark interest rates, while the UK would like the ability to raise pound sterling rates.

Political unity, or at least political accommodation, is required for a common currency/interest rates/monetary policy.