Guest 696- Registered: 31 Mar 2010
- Posts: 8,115
Mark, the basic problem of the euro is debt-related.
If you have a house and a family income, and a fixed household budget, but a debt that is superior to this, and find you cannot keep up with repayments of the debt, then it's time to think of change, of finding a new house which is not yours but rented out to you.
In fact, your creditors will demand their owed money and you'll have to undergo a case of bankruptcy in court.
With a state, it is as follows: if you have a sovereign debt, and a fixed state budget, you have to allign the budget to keep up with repayments of the national debt.
If, however, the debt keeps rising, and you have to continue cutting into the budget to keep up with the repayments on debt, including the interest, and at some point realise that the State needs a bailout (a new loan that must be repaid with the interest), and if there are no prospects of getting out of this vicious circle (for example there are no oil-wells and no gold mines to be discovered within the sovereign territory), then you have to think of change.
If the eurozone countries do not start thinking of changing their situation, while at the same time having no prospects of financial recovery, then they are essentially wasting their time.
It's hard to see what example could be learned from the history of the USA in solving the financial problems of many a eurozone country.
In the timespan of history of the USA which you refer to, the national territory of America increased by tens of times, new states were being founded on a yearly basis, and tens of million of people were emigrating to America.
Gold and oil were discovered in the USA, and mines were dug for minerals, things which the eurozone states cannot dream of having.
Ross Miller
- Location: London Road, Dover
- Registered: 17 Sep 2008
- Posts: 3,706
Alex all currencies are now Fiat currencies
They are all backed by government debt and the ability to print money
It is irrelevant whether countries have direct mineral wealth or not
"Dream as if you'll live forever. Live as if you'll die today." - James Dean
"Being deeply loved by someone gives you strength,
While loving someone deeply gives you courage" - Laozi
Guest 696- Registered: 31 Mar 2010
- Posts: 8,115
It's not irrelevant, Ross, not in todays financial reality. Importing minerals, including oil, means money leaving the national economy on a daily basis.
As for government debt, assuming you mean sovereign debt, the eurozone countries cannot simply print their own money.
Printing of the euro is strictly regulated by a central euro-authority. I think the central bank in Frankfurt is responsible for it.
Countries like Greece, Italy, Spain and Portugal used to be able to print more money, when they each had their own currency.
The euro, when introduced, was based on the performance of the German economy, and most eurozone countries cannot keep up with the strict rules, which is why Germany, and France, are paying many of their own euros to keep afloat the budgets of other eurozone countries.
Guest 683- Registered: 11 Feb 2009
- Posts: 1,052
Alexander
The US experience was that monetary union was probably successful because there was greater political union, and therefore greater political will for it to succeed. We are some way off that at the moment.
My point was that perhaps in 150 years our decendents will be seeing greater integration across Europe and have moved away from many of the current arguments which seem to be about securing better deals for individual states rather than the greater good.
Guest 645- Registered: 12 Mar 2008
- Posts: 4,463
Britain should get out of Europe now, reckons former Tory Chancellor Lord Lawson.
He said the financial shockwaves caused by the eurozone "meltdown" were proof that the currency has flopped.
Lord Lawson, Treasury chief from 1983 to 1989 under Mrs Thatcher, added: "The time has clearly come to say enough is enough. From the old Tory warhorse.
Marek
I think therefore I am (not a Tory supporter)