Worldly Talk

Civil discussion and debate on real world events and issues.

Problems in the EU

Problems in the EU

So, as anyone who's being paying attention knows by know, there are some fairly serious financial issues going on in the Eurozone (and, to a lesser extent, the broader EU). Greece, Spain, Ireland, Portugal, and Italy are all in huge financial trouble, to the point where Greece (and others?) may have to exit the Euro. What can be done to fix it?

Personally, I see this as a result of the Euro. Allowing individual budgeting among participating nations while maintaining a monetary union has prevented Greece from doing what most countries would do in a debt crisis (inflation!), and the austerity measures imposed by Germany are choking the economy. When creating the Euro, I feel like the EU should have imposed greater budgetary restraints (specifically on borrowing) on member nations. The EU is obviously heading towards a greater political and financial federation (or global insignificance), and if they wish to survive, they need to work together.

And, have you ever thought that if the United-States continues on the same financial path it is going on right now, borrowing without counting, it may find itself in the same situation as some of these states?

Just think, for one minute, of all the interest you must pay every year on the federal debt that could stay in your pocket, if the US were to balance their budget and pay their debt.

About Greece, the rumor is that no one is interested to see them out and that the Euro Zone is willing to look at ways to see if something can be worked out. It's in their, Greece and the Euro Zone, interest. And, it is in ours.

The US has massive problems as relates to the budget, but this is really a different topic. The US is on a destructive course that will have massive ramifications if not fixed. However, the US has an 'out', which is printing money and depreciating their currency.

Because the 'failing' economies can't depreciate their currency (print money) to pay for their debts, they end up going further in debt. This is the real downfall of the Euro... After Greece withdraws, Portugal and Spain won't be far behind.

I think the Euro is doomed long term, just for this reason.

Actually, some people suggested that Europe should emit some Euro bonds, millions of dollars worth of them, which would have been very popular to the financial world, to counter the problem; but, for some reasons that I do not know of, they decided not to. Try to understand.

The other solution, not a very popular one anymore, understandingly, and one which was already used once or twice, is to erase some of their debt.

I'm so glad Britain never got into it now. Seriously, I had a nickname for the Euro when it first started called "Leuroll" because I predicted that it would end up being only good to wipe your arse with.

I always seem to get this sort of thing right on pure instinct alone.

Come on now Carnas. The Euro is not that worthless.

Exactly. It may very well depreciate in value over the next few years. But you're never going to see hyperinflation of the type seen in Zimbabwe or interwar Germany. At least, not without the sort of global financial catastrophe that would do the exact same thing to every currency that trades extensively with the eurozone.

The issue is that individual countries don't have the option of depreciating their currency or not.
As it is right now, Germans are putting off their retirement from 65 to 67 so that Greeks can retire at 50...

Unless their is one centralized European government (a bad idea), a common currency won't work.

Originally Posted by Squeak View Post
Centralized European government (a bad idea)
Why is that strictly speaking a bad idea? I mean, I know there's plenty of arguments against it, but you just sort of assume that they're correct. After all, there's damn near just as much diversity, twice as much landmass and almost as much population controlled by the US Federal government.

Yah!, isn't that true? Are we not witnessing a kind of movement toward the creation of a kind of federation in Europe. The birth of a new nation. Isn't that inspiring? If Greece & cie can fix their economies, who knows what can happen in Europe after that. Interesting. Isn't it?

A central Euro bank is something that was also suggested at one point that would help the Euro region, like harmonizing the whole thing, you know. Plus, it would have concrete powers to intervene, as in such cases as Greece, like printing money, for example; but, like the bond emission suggestion, it is something that is still resisted. Or, am I mistaken on this point?


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