I think that most of you overlook the basic point of O'Callaghans post and focus on individual sentences. The problem with the Euro is that it is too much too soon. In Europe we have a very long history of individual countries with each their characteristics as opposed to the five houndred years of history of North America (I know there were Indian people before that but bare with me) whose states basically share a lot of common grounds.
Take France and Denmark as two countries that share very little in terms of both histroy and characteristics. France have their great Revolution of 1789(?) and even today solves internal problems by storming onto the barricades or going on strikes, whereas Danish people have always been way too lazy and comfortable to do anything like that with all "revolutions" taking place with no use of bloodshed. Also the french are an ethnically varied people in contrast to us pale danes, and as such there are differing opinions on things such as immigration laws.
We as european countries need time to adjust ourselves to each others differences. When such a process is hurried along you end up with social divides and problems, like seen in the unification of Germany, where there's even today (in my view) is first class citizens and second class citizens, and the former Yugoslavia, where internal struggle broke loose as soon as Tito was gone. With the european community (the EC) there was the historical unique chance of unifying an entire continent in a long smooth transition, but unfortunately politicians eager to sign historical documents have hastened this process into the EU with its joint army, currency and police work.
I am 100% for a unified Europe (including the countries that currently are outside), for nothing else then at least as a counterbalance to the USA. But I believe that a lot of the steps on the road to this goal (including the Euro) shouldn't necessarely be taken now, as it alienates people from the european project and makes them feel pushed into something they can't fathom in its entirety. And when national symbols (like a currency) is taken away from them at the same time, it generates an opposition against EU that prevents it from functioning optimally.
Furthermore, it should be noted that the only *concrete* advantage of the Euro as an everyday currency suggested by the entire army of politicians and economists are the removal of the need for money exchange when travelling in the EU. Hardly worth the effort in my book.

Well, sorry for the long rant, but I think it is important not to ignore or downplay currencies as a poor mans national identity.

The Euro is nothing that has been "invented" just a few years back but has a far longer history (The European Union has an even longer history). Everything started with the Montan Union directely after the second world war but this may take us too far here...The decision to have a single currency was made back in 1978 and since then (and also before) all european countries worked together to form a unified economic region so the Euro is NOT something hurried or came too fast.

Next point is that the big advantage of the Euro is NOT that you don`t have to change money anymore when you travel. The big advantage is that you have an economic region that has one currency so business in Europe don`t have the dangers of fluctating exchange rates within Europe AND with trades outside Europe. If you have high fluctations with currencies then businesses can`t plan what they will earn when exporting goods. This issue may seem small to you but when you consider that in 1985 one dollar was over 3 Deutsche Mark and in 1995 it was 1,35 Marks you may get what I mean. So the more globalisation occures in the world the more important it is to have one single currency in an economic region. This preserves jobs and is responsible for a stable economic growth in that region.

And one last point: I don`t notice any opposition to the Euro in my country and haven`t heard that, now that the Euro is finally in the pockets of everyone, there is a new opposition growing in the other countries that have the euro now.

Get over it with "national identity" and everything. Out children will know nothing else but the Euro and they will surely not have a national identity problem because of the Euro.

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I also think that your (o'callaghan's and tranceaholic's) attitude twoards the Euro, where u assume that the currency is some kind of a cultural identification and symbol of individuality, is a bit exaggerated.
Dont mix up culutre and economy too much. Currencies come and go after all! In Austria we have had 4 different currencies during the last 100 years, does that mean that we are culturally schizo..hm..QUATTRO-phrenic? just matter of global economy and politics...
I've already started to THINK in Euro after 3 days wohoo And tell me..what's better than a Hamburger for ONE Euro? What a feeling..handing over that shining beautiful thick coin and receiving some juicy fresh hot Hamburger...
I dont see any reason to wait any longer, there will always be big economic desparities(?) between countries like Poland and Germany for example, no poit to wait. In fact it's even good to "hurry up" as a kind of motivating other countries..yeah
no power tto think right now so bye

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"Those are my principles, if you don't like them... well, I have others.”

Excellent thread!

Sir. Lunchalot, You do your fellow europeans proud with your statements, you obviously are well educated on the matter

Its simple, Unification or Isolation.. Which do you think will benefit you and your children?

A united Europe is a strong Europe.

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Administrator of the Shroomery

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Administrator of the Shroomery

i still have like $10 worth of coins in guilders, marks, francs and lire from my trip to europe a few years ago. i'll be back this summer, and it'll make it a whole lot easier.

inflation is a problem though. i read in my macroeconomics book. in the past 20 years in italy, the inflation had been around 10% while Germany its been around 2%. a strong and uniform monetary policy is the solution but will all the countries agree?

i haven´t had any problems with the €uro yet...
@trancegiant: i think what you mean, things SEEM to be cheaper, but they aren´t, but it is a nice psychological effect, when you see things beeing only half (germany) as expensive than earlier

but one thing sucks.
a local club raised theír damn prices for all the drinks
some coke with rum: before 0.50€, now 1€
and almost everything is now at least 0.5 more expensive
that sucks BIG time
bahhh

c-ya

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Let´s bet he never misses the beat!
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Into trance/electronic music for 10 years.
On the forums for over 3 years.
Addicted? Always have been, and will always be!

quote:

Originally posted by Excite inflation is a problem though. i read in my macroeconomics book. in the past 20 years in italy, the inflation had been around 10% while Germany its been around 2%. a strong and uniform monetary policy is the solution but will all the countries agree?

Good to see a fellow student of business administration here!

You are right when you say that a strong and uniform monetary policy (as provided by the ecb) is the key to sucess and all countries HAD to agree to it to join the Euro. The Maastricht treaties have set a fixed level of inflation and how high the debts of each country have to be if a country wanted to join the Euro. This lead to a consolidation of the countries budgets without which there would be no euro today and the economic crisis would hit us all much harder in europe than it does at the moment.

Considering all this also shows that it is nonsense to raise the public debts (meaning that the government spends money)to strengthen the economy in europe at the moment.

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Well that's an intersting point actually. How are the inflation rates - or any other individual economic indicators - going to work for individual countries if there's a unified currency? I presume that the value of the currency is dependant on the economic state of all participant nations? So, essentially, if your country is experiencing a strong, competitive economy, whereas the all other nations are lagging behind somewhat, wouldn't that work unfairly to your detriment? The value of a strong currency cannot be underestimated - what's the incentive to not go on an importing splurge? Where's the value in being globally competitive if you're essentially dependant on the international performance of other nations?

Or is that just one of the risks involved in a unified currency?

I think the Euro can only be a more stable currency, but, quite apart from the cultural/sociological matters, can a unified currency really work without an authoritiaive unification of government?

Wow, we`re really getting in depth now but I`ll try my best to explain:

All aspects of monetary policy is no longer in the hands of the individual countries but in the hands of the european central bank (ecb) in Frankfurt. The ecb controls all aspects of how much money there is in the participating countries and all aspects of how high interst rates for banks are, so it`s not possible for a country to slide back to a high inflation but only for whole europe if the policy of the ecb fails. All this is only possible under the premises that all the participating countries stick the maxium debt limit (60% of what a country has as gross domestic product).

To generalize this: As a country (before the euro!) you had two possibilities to produce economic effects: Monetary policy and public investments. Now you only have one instrument left, making public investments. The two boarders set in the Maastricht treaty limit these actions. The maximum inflation rate limits the possibilities on the monetary side and the maximum budget debt limits the public investments. The ecb is now in control of the monetary policy so individual countries can only make public investments but not make any monetary decision.

This also answers Renegades last question, if a unified currency would only work if there was a unified government. If we had a unified government we would also put the second instrument out of the hands of the individual countires, so the answer to your question is no. The euro only works because there is an independent central bank (the ecb), a unified government is not neccesary for the Euro to succeed. But with all the investments from the european commision in europe there already is a part of the second instrument (public investments) not in the hands of the individual countires anymore, so you can clearly make out a trend towards a europe that also has a unified government (in the long run). In my opinion the path for europe is set and I believe it`s a good path.

Oh, I forgot to answer your question about importing and global competetiveness. Here it comes:

When it comes to imports we have to differ between two things: Imports into the European Union and "imports" between EU countries. Technically an import between, lets say France and Germany, is not an import anymore (also from the tax side of view although there`s still a lot to be done there, but we`re talking about currencies here), since europe is a unified economic region without inner boundaries. When we talk about imports into the EU we now have the situation that imports still depend on the value of the currency (the euro now) but we have a much better possibility of planning imports because there are fewer fluctuations in the exchange rates now and ther are less transaction costs with a single currency. So in my opinion the euro will make a shortage of imported goods less likely (although a big unified economic region like europe now has a lot more ressources within its boundaries that a single country could have) and will stabalise the prices of imported goods.

When it comes to global competitiveness we have to clear up two things before. Each currency has an inner value and an outer value I don`t know the correct terms here). The inner value is the stability of prices (=inflation) and the outer value is the exchange rates to other currencies like the dollar. The inner value is the more crucial one of the two because the outer value usually follows the inner vlaue (as now seen in argentinia where the currency crashed because the inner value of the currency was only virtual because it was attached to the dollar). The inner value of the euro is very strong (...Maastricht) and the outer value is very low at the moment. The weak outer value is not explainable in economic terms and (this is my personal point of view) only psychological because the euro was used virtual since 1999 when all bank transactions and transactions between countries were only made in euro but noone had the euro in it`s pocket. What happens now is what I expected to happen. Within the last days the europ took a big leap toward a stronger outer value and I believe this will continue since it is impossible in the long run that the outer value doesn`t follow the inner value of a currency. To sum this up: Yes I believe the euro will be very competitive with other currencies since it has a very stable inner value which is additionally secured through the Maastricht treaty.

This must have been my longest post ever and I hope that at least some of this was of interest.

...and now hand me over my diploma!

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Last edited by Sir. Lunchalot on Jan-05-2002 at 18:42

quote:

Originally posted by Renegade Well that's an intersting point actually. How are the inflation rates - or any other individual economic indicators - going to work for individual countries if there's a unified currency? I presume that the value of the currency is dependant on the economic state of all participant nations? So, essentially, if your country is experiencing a strong, competitive economy, whereas the all other nations are lagging behind somewhat, wouldn't that work unfairly to your detriment?

well i could totally see how that could be just like it is here in the states. one state may be more expensive to live in, look at california, they're internal state inflation is higher so living in california is more expensive then living in a neighbouring state.
Even america when it was young had a different currency for each of its states (then 13) until they noticed how much trouble that gave them. each state here has a different identity here (i know cause i've lived in three) but currency has nothing to do with it.

btw canada changing to the american dollar? that sounds cool, is there any political backing for that anywhere?

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If God is the answer, it must have been a very stupid question.

I heard the other day that in France a man walked into a pub and started buying beers with monopoly money and ran off when someone finally figured out what he was doing.

Made me laugh