euro

[Hazir]

1 month.

[Hazir]

Just one more before I leave from the Independent Newspaper :

Peter Hain, the Minister for Europe, will suggest on Thursday that eventual British membership of the European single currency is inevitable.

His remarks will spark another flurry of speculation that Tony Blair intends to call a referendum on the euro before the next general election, despite the more cautious approach favoured by the Chancellor, Gordon Brown.

In the left-wing weekly Tribune, Mr Hain expands on the Government line that membership depends on the five economic tests set by Mr Brown. He says: "The euro is marching on and no one thinks the decision can be postponed for ever, apart from the right of the Tory party." He adds: "I have always thought that the euro is a logical development of a single market and there is a need for it, in order to introduce price transparency and the harmonisation of costs."

He says public opposition to euro entry will diminish. "Next year is going to be very important as people will have new notes and coins in their wallets when they go abroad. Companies trading with Europe will start to deal in euros. Some are already considering paying their British staff in euros, while shops are talking about displaying prices in euros."

On his appointment as the Minister for Europe after the June general election, it was unclear whether Mr Hain was a Eurosceptic or a Europhile. Although he urged supporters of an early referendum to "cool it", his latest comments put him in the pro-euro camp. Allies of Tony Blair say he installed Mr Hain because he regards him as a good communicator to "sell" the euro to a reluctant British public.

Mr Hain insists in his interview that the Government was right not to rush towards a referendum after Mr Blair won a second term. He believes there has not been enough information on the advantages of joining the single currency. He says: "If we were to call a referendum, the only way a majority would vote 'yes' is if they thought the decision was being made in the interests of jobs and their future prosperity, not because of some kind of ideological pro-European dogma."

There have been contradictory signals over the euro from the Government since the election. Mr Blair's aides believe there could be a "window of opportunity" to call a referendum in the autumn of next year but those close to Mr Brown, including Ed Balls, the Treasury's chief economic adviser, have suggested a referendum would divide Labour and should be shelved while the party delivers its promised improvements to public services.

Another factor in the Government's decision is the Tory leadership election. Cabinet ministers believe Mr Blair would be more likely to call a referendum if Kenneth Clarke, who would campaign for a 'yes' vote, defeats Iain Duncan Smith, who has said would never vote to join the euro.

In his interview, Mr Hain also urges Mr Blair to pay more attention to his MPs and party. "To succeed, the Government has got to do more listening, engaging and working co- operatively. We will not win the European argument unless we engage party members and trade unionists and you can't do that by staying aloof."

But he warns the unions that their campaign against plans to give the private sector a bigger role in running public services is "playing into the hands" of Blairite modernisers who want to break the party's link with the unions. In an attempt to reassure the unions, he says: "Wholesale privatisation is not proposed. The final plan will be far more modest."

[Dragon Revisited]

He says public opposition to euro entry will diminish. "Next year is going to be very important as people will have new notes and coins in their wallets when they go abroad. Companies trading with Europe will start to deal in euros. Some are already considering paying their British staff in euros, while shops are talking about displaying prices in euros."

As the moment draws nearer is this coming to pass?

[RandBlade]

We have real news(unfortunately), and no William Hague(fortunately), so the euro is no longer an issue in the news.

I still support it as much as I always did, don't know if others are becoming more or less convinced, as its no longer discussed at all in the news.

Once the euro is real, and people start going on holidays and using it in multiple nations, I believe they will start to be convinced of the practicle advantages.

Shame that the economic conditions aren't improving at all AFAIK.

[Hazir]

Originally posted by Dragon Revisited


As the moment draws nearer is this coming to pass?

1. dealing in €uro

There is no way they could avoid it, so yes, in two months from now most trade between the continent and the UK will be done in €uro.

2. payment of staff in €uro

There has been talk about it, but only in the car industry, which has had a very hard time because of the strength of Sterling.

3. use in shops of €uro

Not yet, because the €uro still only is a virtual currency. Most big chains have decided to accept payment in €uro, probably you will be able to pay with them where many tourists come. In many places they will display prices in both Sterling and €uro. I expect the effect to be less strong in the UK than in Switzerland or Denmark by the way. If you want to know how it will work, think Canada.

[RandBlade]

Yeah, I imagine the £ v € will be a lot like CAN$ v US$

Although Britain relative to the rest of the EU is much more powerful than Canada relative to the US, so until it becomes clear to the plebs that we will join, I imagine we'll be somewhere between the status quo, and Canada's situation.

If I can get my student loan in time, I really want to start a bank account in Europe, transfer all my money there, until say early February, then transfer it back. Playing under my expectation that the € will rise, I want to make a bit of a profit on the back of that :)

Hazir, do you have any idea whether I could start a European account online or anything?

[Dragon Revisited]

Originally posted by RandBlade
...I really want to start a bank account in Europe, transfer all my money there, until say early February, then transfer it back. Playing under my expectation that the € will rise, I want to make a bit of a profit on the back of that :)

Hmmm ... is Switzerland switching to the Euro? ;)

[Hazir]

Originally posted by RandBlade
...Hazir, do you have any idea whether I could start a European account online or anything? Probably not, AFAIK know they nowadays want you to open a bank account in person so they can verify your ID. But you should be able to open a €uro account with a British Bank too.

[Hazir]

Originally posted by Dragon Revisited


Hmmm ... is Switzerland switching to the Euro? ;) As long as it's money the Swiss don't give a damn. :D

PS. no they are not a member of the EMU. but they're landlocked in E(M)U territory so they were already used to accept Deutschmarks, French Franks, Italian Lire and Austrian Schillings in hotels, restaurants etc.. So in a way things are getting less complicated for them.

[RandBlade]

Switzerland is the most neutral country in the world. The only country in Europe, and one of very few in the entire world to stay neutral in WWII. It will be one of the last countries in Europe to join the EU/EMU, if ever.

I'll have a look with Barclays(my bank), see if its possible to create one with them.

Basically, I think that although the euro has fallen since its creation, its stopped now, and (even when it was still falling), I've always thought that over the period where it becomes a real cash-in-hand currency, people will convert to/from it, causing a change in its value. I'm predicting a rise. Would you agree with that logic?

[Zman]

I would agree with that logic. Though I am not very familiar with the new EMU system I do think that with people converting the currency is in high demand which will cause the conversion rate to rise. The real question is in the future if they have to print or stamp more currency will they have the gold or colateral to back this currency system with a fluctuation of units of currency on the market...

[Hazir]

Originally posted by RandBlade
Switzerland is the most neutral country in the world. The only country in Europe, and one of very few in the entire world to stay neutral in WWII. It will be one of the last countries in Europe to join the EU/EMU, if ever.

The Swiss federation is about to enter in a series of treaties with the EU which will make the Swiss federation a de facto member of the EU. The Swiss federation is also considering entering into the Schengen Treaty, and during the next parliament will consider the application for EU membership. Since the EMU is part of the acquis communitario new memberstates have to enter into it when they fulfill the conditions (unlike the old memberstates UK, Sweden and Denmark that negotiated opt-ins/opt-outs)..

I'll have a look with Barclays(my bank), see if its possible to create one with them.

Basically, I think that although the euro has fallen since its creation, its stopped now, and (even when it was still falling), I've always thought that over the period where it becomes a real cash-in-hand currency, people will convert to/from it, causing a change in its value. I'm predicting a rise. Would you agree with that logic? The biggest difference with the change-over will be that people will change their legacy denominated €uros notes and coins into €uro denominated €uro notes and coins.

There is no reason why this change over in itself will cause a rise or drop in the value of the €uro. Financially the change is the same as if a person changes his quarters into dollars.
The psychological side effect of this change over will be though that people will start to see the €uro as a real currency which could help to build trust in it, which will be good for the value. I personally think that the introduction will cause the €uro to take a role similar to the dollar in Latin America and Asia in the countries of Eastern Europe and North Africa, where it will start to serve as a shadow (safe haven)currency.

Meaning Randblade, that I think your plan may work out or not, if you change your sterling into €uros you may win a lot of money, you could also loose a lot. What you can expect though as has been clear over the last 3 years is that the moves are much more volatile than in the old situation without the €uro.

[Hazir]

Randblade, some new figures:

Three years (pre-€) ago the UK attracted 28% of all FDI into the EU.

During the first 6 months of this year that percentage had gone down to 21%

Maybe wait and see isn't such a wise approach ?

[Dragon Revisited]

Hmmmm ... might have to enquire at my neighborhood bank about converting some currency ... just for fun ... so when the Euro crashes next Spring I'll have a valid excuse to come here and gripe about it. ;)

[Hazir]

Yeah, that should be fun DRev, just like I was really pissed off when the dollar started dropping early this year. And I couldn't even get at my money since it was in a bank in Turkey.

[Hazir]

Randblade,

Today all of a sudden I realised how big a load of crap the British Government's claim that it wants to take the UK into the EMU when economic conditions are right. At first it looks sensible to wait till the right moment. Untill you stop to think about it.; the economic situation is not static. The economy changes day in day out. So they say they're going to push for a referendum when the economic conditions are right. It will take them at least 3-4 months to organise the referendum and have a vote. In that period things could change in such a way that the conditions are no longer right. Then if there is a yes vote, the situation could change during the run up to membership to one where it is no longer right. And of course in the very long period after accession there will be periods that the economic conditions don't fit the criteria. With other words, the economic tests are totally arbitrary.

The Conservatives are right in one thing, the real issue is; do you want to hand over control of your monetary policies to a supra national body or don't you.

[RandBlade]

New Labour is full of ****, just like any other political party. And most of the stuff they say is crap. But the "wait until the time is right" view that I prescribe to is IMO a valid point.

Things do change, and thats a serious question as to whether it would ever be appropriate to join. But I disagree with that. Things do change, but not normally drastically in a short period of a few months, once things are generally right, they will be for a while. It doesn't need to be perfect, just not precarious. And I'd say that it is too risky at the moment. Especially when we're all in a downturn, as we have been facing for the entire duration of this thread. Once thats all over, and the world - economically and now politically - has settled down, if the conditions are generally right, it will be appropriate.

But at a time when either we or Europe could enter recession, with America possibly in recession (before Sept 11, haven't seen figures since), it would not be the right time to enact such a drastic change. Don't rock the boat when you're struggling to keep it afloat already.

[Hazir]

Sure, things usually don't change dramatically over a short time. But after accession they will certainly change, it's quasi forever, isn't it ? So that leaves you with the certainty that at some point after you have said it's appropriate to enter you will encounter a moment where it no longer is.

It wouldn't surprise me if at that time in the good old English fashion people will start to whine about the fact that they were lured in on economical arguments when they were really taking a political decision to hand over monetary policies.

[RandBlade]

Imagine this analogy ...

Changing currencies is a major decision. Compare it to walking across a very busy road to the other side of the street. You need to time it well, so that the change goes smoothly. Once you're at the other side, you'll be safe. But cross at the wrong time, and you'll be hit by a car.

[Hazir]

Twelve others made it accross the road without trouble, and since they went in a group they didn't have to worry too much about oncoming traffic.

[RandBlade]

Germany definitely didn't make it across unhurt, so thats not true.

[Hazir]

Germany's trouble has got nothing to do with the €uro. The monetary policies of the ECB are identical to the monetary policies of the old Bundesbank.

The economical trouble Germany finds itself in are due to :

1. costs of unification
2. lack of economical reforms
3. dependency on exports and global downturn

[RandBlade]

And those problems have been exaggerated by their inability to lower their interest rates.

[Hazir]

No, because their inflation rate was above target the interest rate couldn't be lowered. And since the German economy makes out more than 30% of the entire €uroland economy that was an important factor in the ECB policies. Like I said, the Bundesbank would not have lowered interest rates with an inflation of 3%. That's something that seems to be very hard to grasp for anglo saxon economists; the ECB has a mandate that precludes any activism as long as inflation is too high.

[RandBlade]

Not true, there were many Germans complaining that a cut was desperately needed a few months ago, including ex-Bundesbank members.

Why did you make up the idea that Britain wouldn't try to control inflation? Thats one main reason for staying out, is that it would cause high inflation like that now in many Euroland countries, but perhaps thats too difficult for overly-hateful anti-UK members to realise.

[Hazir]

There are always Germans whining about interest rates being too high. There have always been Germans whining about interest being too high ever since they founded the Bundesbank.

And NEVER EVER has the Bundesbank listened to those people in the setting of the interest rate. And with 3% German inflation is too high according to German standards. In the present situation you can't listen to Bundesbank board members any longer when monetary policies are concerned. Since they are no longer part of the decisionmaking process they can afford to speak their mind more on the interest rate than they would have in the pre-€uro time.

Anyway, are you changing your mind about entry ? Because the basis for this is your typical 'one rate fits all' critisism of anti-€uros.

[Hazir]

This is what the president of the Bundesbank thinks about the remarks you referred to. He thinks they are damaging for the Bundesbank rather than for the ECB. Welteke says Buba's standing has been hit by council members' comments on ECB
FRANKFURT (AFX) - Bundesbank president Ernst Welteke said recent comments by Bundesbank council members on the European Central Bank's monetary policy have damaged the standing of the Bundesbank.


Some presidents of Germany's regional central banks, who also have a seat on the Bundesbank council, have attracted attention recently by making comments about when the ECB may cut interest rates.

"This does not help the standing of the Bundesbank," Welteke told reporters on the sidelines of a conference. "The regional governments must take this to heart and press ahead with reform of the Bundesbank," he added.

Welteke had said in an interview with the Die Welt daily released last night that he has even been presented with lists at ECB governing council meetings on which Bundesbank council members have spoken out of turn on monetary policy.

He went on to tell reporters at the conference: "Only the president of Bundesbank is on the ECB governing council and only he takes part in the monetar y policy decisions."

Welteke has been pressing for a more centralised Bundesbank structure, but this has been fiercely resisted by the local state governments.

[Hazir]

2 months to go to €-day

[RandBlade]

Originally posted by Hazir
Anyway, are you changing your mind about entry ? Because the basis for this is your typical 'one rate fits all' critisism of anti-€uros.

Which is a very serious problem, I have said that all along.

You have never said why one rate fitting at least 15 very different nations, with different governments, taxations, elections, languages etc is not a problem.

[Hazir]

Which is what will happen all the same if you enter. And if you are for entering you can't be against a one-rate system. You either have your cake or you eat it.

Which brings me back to my original point, on economic arguments you can never make a decision about the €uro. All you can do is make a political decision. Following that you accept the economic effects. Wait and see doesn't bring you anything if you want to join in the end, just that you have waited longer.

[Hazir]

December 1 all people over the age of 6 living in the Netherlands will get a voucher for a free set of €uro-coins
December 15 these vouchers can be redeemed at banks and a number of major chains, from the same day on the banks will start selling 'starter packs' of €uro-coins worth about $ 10 so that people can have enough small change before januari 1.
December 31 midday all ATM's will be taken out of service.
December 31 midnight ATM's that have been fitted for €uro-notes will start dispensing €uro-notes, ATM's that have not been fitted yet will stay out of service.
January 1, the €uro becomes legal tender in the Netherlands, the Dutch Guilder keeps that status alongside the €uro. During this period you will still be able to pay with Guilders, but you will get change in €uro only.
January 6, all ATM's should be back to normal service, dispensing €uro-notes only. By this time it is expected that there will be very few people still using left over Guilders.
January 28, the Guilder no longer is legal tender in the Netherlands, the coins and notes can be converted into €uro up till the then of march at commercial banks free of Charge.
April 1, Dutch Guilders can be converted up till december 31st 2029 at the Central Bank of the Netherlands and its branches free of charge. Commercial banks may charge a fee for conversion.

[Hazir]

It seems that the €uro is having the desired effect on harmonisation of prices accross €uroland, maybe the citizens of Rip Off Brittain have a good reason to vote yes in a €uro referendum no matter what the outcome of the 'economic tests'.
Euro widens Continent's price gulf with rip-off Britain

Robert Winnett, Consumer Affairs Correspondent




BRITAIN'S status as Europe's rip-off capital is being worsened by the European single currency. A survey shows that as European price differences rapidly narrow before the introduction of euro notes and coins in January, British consumers are still paying through the nose. The study by the European investment bank Dresdner Kleinwort Wasserstein (DKW) says goods including clothes, electronics and CDs cost 16% more in the United Kingdom than on the Continent.

Leo Doyle, chief economist of DKW, said there was little incentive to lower prices in Britain: "Big brands are moving to euro-wide prices on the Continent because they can't get away with different prices after January. In Britain costs cannot easily be compared."

This trend is widening the gulf between the cost of shopping in Britain and in France, Germany and Spain. For example, an Ikea Sorum bed costs £311 (€503) in Britain, but £186.36 (€302) in Spain and £184.50 (€299) in France. Levi's 501 jeans are between £45.66 (€74) and £46.89 (€76) on the Continent but £55 (€89) in the United Kingdom.

Prices are being harmonised because under the single currency shoppers in different countries will be able to compare prices directly — and firms want to prevent them flocking to the cheapest shops. Harmonisation usually means raising prices in cheaper places such as Spain and Ireland while cutting them in more expensive nations such as Germany and France so that, across the Continent, profits are maintained.

British prices will not change even though they are on average higher than in eurozone countries. British stores, including WH Smith, Safeway and Next, will accept euros from January but few are likely to give prices in euros. Shop assistants will convert pounds into euros.

DKW found prices vary by less than 8% between countries signed up for the euro. In Amsterdam, Frankfurt and Paris, prices are within 2%, but in London they are 16.5% above the eurozone average. Electrical items, clothes and CDs are most likely to have eurozone-wide prices already. Last week a CD of the Moulin Rouge soundtrack cost between £10.12 (€16.3) and £11.22 (€18.1) in Paris, Frankfurt, Madrid and Rome but £13.99 (€22.5) in London.

The cost of groceries and other cheaper goods still varies widely on the Continent, although Doyle says this will soon change: "Consumers won't shop in another country for groceries, but wholesalers will if savings are there."

The benefit to consumers is one of the strongest arguments for joining the euro. Richard Hyman of Verdict Research, a market research firm, said: "You can compare the cost of a television set in Madrid and Berlin, which makes the market far more competitive."

Despite its "rip-off Britain" campaign to investigate supermarkets, cars and banks, the government has done little to cut prices to European levels.

It has also been criticised by the European commission for tough customs rules aimed at curbing the amount of tobacco and alcohol smuggled in. According to DKW, alcoholic drinks cost 70% more here than the European average.

Additional reporting: Turna Ray

[RandBlade]

One main reason why I want to join the euro. :(

[Hazir]

That and that french couture is better of course :) . I was surprised at how big the price difference is for some items. In a table that came with the story a Compaq laptop (no specs) was 800 GBP more expensive in the UK than in Germany. You could fly to Germany buy one, fly back and still make a killing if that's true.

[RandBlade]

French couture better?

Depends where you look for the PC price. Some stores can charge twice for PCs/Laptops as others. You might find that £800 difference between 2 stores in the UK.

[Hazir]

Well, 5 more weeks to go before €-day, 3 more weeks before the coins go into circulation and only 5 more days before I get a coupon for a free starterset of coins (oh well, free, it's paid from the taxes I've paid, so I just geta tiny bit of that back).

It seems there are less and less percieved catastrophes pending so I'm pretty confident it will all go relatively smooth. All I've got to do is get rid of my last hoard of coins.

Yesterday the OECD in Paris published a report that the UK is actually more alligned to the core of the €urozone than some of the countries that are members of the €urozone. To me that seems an endorsement for membership of the UK ASAP. The economics tell us the time is right. So how about U Randblade ?

PS. It's funny how the Times newspaper claims the UK is outperforming the €urozone consistently while the OECD tells us that out of 3 years the UK has only once outperformed the €urozone and even then only marginally. Maybe somebody should tell the people at the Times that the €urozone is a tad bigger than Germany ?

[RandBlade]

Originally posted by Hazir
Yesterday the OECD in Paris published a report that the UK is actually more alligned to the core of the €urozone than some of the countries that are members of the €urozone. To me that seems an endorsement for membership of the UK ASAP. The economics tell us the time is right. So how about U Randblade ? Or that the time was not right for some of the nations that did join.

A lot of the economics is right. There is one major factor that isn't, and hasn't been for months. The entire world is facing recession, America is in recession now, its hardly the right time to make sudden changes. But no, the UK is by GDP growth outperforming every single other nation in the G7, and nearly all other nations in the eurozone (maybe all) and the world.

PS. It's funny how the Times newspaper claims the UK is outperforming the €urozone consistently while the OECD tells us that out of 3 years the UK has only once outperformed the €urozone and even then only marginally. Maybe somebody should tell the people at the Times that the €urozone is a tad bigger than Germany ? [/B]Can you show me a link to those figures, because the last ones I saw showed us consistently outperforming.

[Hazir]

Nope, don't have a link, didn't read the report itself, just quotes from the author in online media. But you should be able to find the report at the OECD site.

The fact if the economy is growing or in recession has never been a factor in the weighing process. It doesn't really matter either unless the growth in one of the areas is seriously out of step with the others. Which is not the case obviously. The 'outperformance' is only marginal, and it's not very difficult to be the best if everybody is doing poorly.

So my question to you would be :Why do you bring up a new 'test' ? Are all British 'economists' turning Brownesque ?

[Hazir]

Hey, I'm waiting for an answer Randblade.

Just one more month to go.

[Hazir]

Yes, I got 2 coupons today worth € 3,88 that I can redeem next saturday. :)

[Hazir]

My first real €uros, € 15,23 in coins.

http://www.xs4all.nl/~halarona/euro.JPG

[1+1=11]

didnt read the thread 250 odd posts but all i have 2 say is

euro stinks
Sterling owns

having a unified currency sux, if the country u live in as a good economy u get more 4 ur money, but if u use the same money theres no benifite

[Hazir]

It shows you didn't read any of the posts.

[1+1=11]

well i clearly stated i hadnt

[Hazir]

Originally posted by 1+1=11
well i clearly stated i hadnt And I said it showed.

[Hazir]

One of the side effects of the €uro is that people all of a sudden start to spend special coins. Like today I got 2 fl 2.5 coins back that were minted to commemorate special occasions. A year ago it was something special if you would get one in a month or so. And now all of a sudden 2 in one night. Looks like people are really emptying out their piggy banks.

[1+1=11]

Originally posted by Hazir
And I said it showed.

well i did post sayin that fact twice:confused:

[Hazir]

Originally posted by 1+1=11


well i did post sayin that fact twice:confused: Let's just 'wait and see' if the projections for growth for next year come true. And what happens to Sterling if they don't.

[CitySlicker]

There was pretty much similar conversations and arguements before we introduced Pounds and Pennies.

This is one of the fears (mostly from the older folke) in the UK. When decimalisation was brought in, a large number of people lost money simply because shop keepers didn't understand it and some that did, took advantage and short changed customers.

This was also the fear, initially, when weights and messures went metric and there's still people going to court to fight for the right to sell in pounds and ounces.

The general concensus is that "Europe" is telling the UK what to do, even if that's not true. That is the image that is always being portrayed by the media and "garden-fence chat".

Long gone are the days of the British Empire (thankfully) and it is time that is reflected in our approach to Europe. Some say that we should fight Europe. The way I see it is this:

If people disagree with "all things Europe", instead of fighting with policy, why not work to change policy from the inside?

The simple fact is that the Euro is here, it was here a couple of years ago (albeit on paper only) and trying to ignore it or fighting against it will only cripple the UK economy.

[Hazir]

Makes sense CitySlicker, € 6 billion a year in revenues from tourism will also speak a lot louder than any yes or no campaign ever could.

Still can't help but thinking the UK government still has a problem with the truth about the EU. I am getting the impression that Blair came back and made it look as if he won a decisive battle against federalism. On this side of the channel we see the Declaration of Laeken and the Convention as a decisive step towards federalism.

Something very remarkable said by Jean Luc De Haene in an interview with Flemish television was that 'maybe the Union needed a real crisis to get out of the present situation'. From the rest of the interview it was quite clear that what he really meant was that if there is a majority consensus the countries (or more precisely the UK) not willing to go along could be left out altogether.

[CitySlicker]

Originally posted by Hazir
Makes sense CitySlicker, € 6 billion a year in revenues from tourism will also speak a lot louder than any yes or no campaign ever could.

I s'pose if we look at it from one point of view and see what could be beneficial by keeping the UK pound:

Car manufacturers could still sell their cars, Sometimes up to 10-20% more expensive in the UK.

Travel Agents will still make commision on currency sold.

Pretty poor excuses I know.. but some think it's important.

Losing control over our money?
Hmm... well, the way I see it is this. The average man/woman in the UK has no say what-so-ever over our internal/external exchange rates, interest rates etc etc etc... So what's the big deal if our government doesn't have "supreme powers" over it?

Might be interesting to see what organisations have been donating to the party's fund recently :rolleyes: :rolleyes:

Well, as good an idea as any I s'pose ;)

[Hazir]

I started to notice that no matter what they write, the newspapers The Telegraph and The Times always have headers over articles on Europe and the Euro with a negative slant. Very often it's harder to find the bad news in the article itself though.

[Lord Perrin Aybara]

You crazy European folk, always bein' backwards.

[Hazir]

Originally posted by Lord Perrin Aybara
You crazy European folk, always bein' backwards.
You be right. So tell me... what was your exact reason for getting rid of the Brits ?

[Hazir]

Only one week to go.

[RandBlade]

I started to notice that no matter what they write, the newspapers The Telegraph and The Times always have headers over articles on Europe and the Euro with a negative slant. Very often it's harder to find the bad news in the article itself thoughThats because the media is rediculously biased. No reason what-so-ever to expect otherwise, you should know that by now. Especially the Torygraph, its always been biased. The Times is fairly neutral, although still eurosceptic. The Tabloids are ... well I never read them, if you're dumb enough to think they're journalism, you deserve to be fooled.

So my question to you would be :Why do you bring up a new 'test' ? Are all British 'economists' turning Brownesque ?Why shouldn't I bring up a new test? And is it really a new one? I'm neither a labour member, nor a labour supporter, and I've not once supported the so-called 5 tests. They're typical labour spin if you ask me.

All along I've had one test, and one test only: 'Will it harm or help the British economy'.

Thats my only test. But its a bloody big one, and any honest economist will tell you that its nearly impossible to answer. Its possible to guess using a series of other tests, but I've never limitted myself to the famous five, and neither has anyone else other than Brown.

But the fuss about the euro is all smokes and mirrors. Frankly its not that important!

Real changes are needed, and this has taken the headlines for the last decade, but that doesn't remove the need for genuine change. January 1st will come and pass. You'll start using new notes and coins, and we won't. But its not that significant. It is important, no doubt about it, but not as important as you or the media pay attention to it.

The new year will pass, you'll still be heading towards recession. We'll still be performing nicely. Changing a currency won't be that big a catylyst for change.

Pretty poor excuses I know.. but some think it's importantThey're reasons for making the change, not avoiding it. Never seen anyone name them for keeping it, not even the most ardent (read: stupid) eurosceptic (read: stupid;))

Losing control over our money?
Hmm... well, the way I see it is this. The average man/woman in the UK has no say what-so-ever over our internal/external exchange rates, interest rates etc etc etc... So what's the big deal if our government doesn't have "supreme powers" over it? Actually the government doesn't have power over it, hasn't since '96, and of course the average person doesn't. It is very important however as it is set according to the needs of the UK at the moment, not the needs of the entire EU, and those needs are very different, and they have been all year, as we're in a better point of the economic cycle than the EU.

Nope, don't have a link, didn't read the report itself, just quotes from the author in online media. But you should be able to find the report at the OECD site.I can't debate with an article you've read, haven't ever seen anything posted by you to show why we're not performing better than you either. Also, I have seen OECD figures, and they just confirm AFAIC my POV. GDP growth higher, unemployment significantly lower. While inflation is low. These are the most important factors, and just confirm to me what I've been saying. I've not just claimed we're economically doing better, but given the evidence to say why. If you want to deny it, or state otherwise, then I'll need some reasons to either try to debunk or accept.

Hey, I'm waiting for an answer Randblade.Hey, I'm on holiday :p

[Hazir]

Actually, Randblade, I think the coming of the actual notes and coins is more momentous an occasion than you say it is. The change over from the old coins and notes at this point will be a merely technical matter, but the ?uro will make itself be felt a lot more clearly than now.

At this moment I still have my own national coins and bills, in 4 days time I will be using different ones; I will also be able to use them in 15 other countries as legal tender (not a mistake) and in the countries around those 15 I will probably be able to use them as well. A change from my present situation, in which I would not automatically expect, for example, a Turkish shopkeeper to accept my dutch guilders (as opposed to German Marks or Dollars). The same will happen to a Greek taking his money to Germany, or a Belgian using his in Spain.
In a couple of weeks I will be at a bar, or a supermarket or a bakery and with my change I will get a French coin, or one from Luxemburg.

I have little doubt that these things will have an impact on the way I feel about being European. Under the surface of simple monetary transactions every time the fact that I am part of something bigger is being underlined.

[Hazir]

Less than one day to go, actually, 20 hrs 44 minutes.

[Hazir]

I just counted my dutch cash, all in all I've got fl, 1.35. Two quarters, 7 dimes and 3 nickles. Which is about the price of a Mars bar. I don't think the change over will give me any headaches.

[Hazir]

Well I bought a battery for my car € 64,- (paid for with plastic) a bread € 0,90 and a newspaper € 1,05 today. Didn't see anybody use guilders. The girl at the bakery seemed to lack any training in using the new coins, because even the fact that I gave exact change didn't really speed things up.

I suppose for me this euro thread is a part of history now.

[Hazir]

Hehehehe.. :) today the British Governments policy on the euro fell to pieces. A highranking Treasury official said that the decision was essentially political. And that's from the ministry that claimed for 5 years it was a decision ruled by economic considerations. :D

[Trip]

Boy, looks like we've been carrying on a discussion about this Euro thing for a while with ourselves, haven't we? :D

[Hazir]

Originally posted by Trip
Boy, looks like we've been carrying on a discussion about this Euro thing for a while with ourselves, haven't we? :D Yeah Randblade let me down. :cry:

[Trip]

Awww it's okay. *Pats you on the back and gives you a pack of those ramen noodles*
I'm sure he'll be back.

[RandBlade]

I'm sure he'll be back eventually too ... ;)

[RandBlade]

Looks like my fears for the harms of the EMU are coming true for Germany.

Germany has really hit recession now, and the unemployment rate is going up badly. And thanks to the economic straightjacket that the euro has forced upon Germany, they're really struggling now. Both normal responses to kick a nation out of recession have been cut away from Germany.

They can't lower there interest rate, as they're trapped into the single rate caused by the EMU.
And they can't spend there way out, as they're not allowed to go over 3% deficit and yet are already running at a 2.7% deficit, and as the economy continues to fall apart, that deficit can only get bigger, even though there's no room for it to.

Recessions are the one time when governments are right to spend lots, but Germany can't at the moment.

I was worried about the affects of the loss of control over monetary policy, and my fears are coming true for Germany. But they've also now lost fiscal as well as monetary policy.

[Timbuk2]

Originally posted by RandBlade

[snip]

They can't lower there interest rate, as they're trapped into the single rate caused by the EMU.

[snip]

:eek: Any idea what the EU interest rate currently is?

I'm looking to get my first mortgage at around the end of feb / beginning of march as the UK has a very low rate of around the 4% mark at the moment, so its a very good time to buy property.

Now that you've mentioned this about Germany, suddenly got scared :eek: about the future of interest rates if/when UK joins EMU.

[RandBlade]

Actually, although thats the lowest rate we've had for a very long time, because the eurozone is really struggling, they're rates are even lower than ours. The eurozone base rate set by the ECB is 0.75% lower than the British base rate set by the BoE. But due to the problems of Germany, they need an even lower one, but can't get it.

So if we were to join at the moment it should mean a reduction overnight of 0.75% in your mortgage rates. However that would be very inflationary at the moment for us, as the BoE is in fact considering ours to now be as low as it will get. We're not at risk of recession any more, despite post-Sept 11 fears.

[Hazir]

Randblade, who's going to turn off the light in the last British factory after Eddie raises the UK rate?

[RandBlade]

Why do you keep prattling this doomsday nonsense!?

The rate will be raised if it is, not because its being forced on us, but because its judged best. And its not seriously going to happen for many months, half a year I bet. Its just something that was mentioned, which makes sense, to let people know that yes we're not in trouble, and don't plan on any more cuts. Only if needed will we have a rise. I trust the ECB. Unlike 'Dim' Wim, the people in charge of the ECB like Eddie have shown themselves to be competent. And thats not euroscepticism that makes me say that, Wim really has performed badly at the job, making serious mistakes.

We're not performing badly, and yet you still are preaching that we're going to suffer. Even when I show the statistics.

Wake up and face the real world.

We're fine. Totally. We're in growth. Our budget is in surplus. Overall, our unemployment is very low.
OTOH, in Germany, they're in recession. A very serious budget deficit. High and increasing unemployment.

Can't you see the real world any more?

****

And going on about Germany still. The collapse in value of the euro is now also making things worse. A devaluation in your currency normally helps, it makes homemade produce cheaper, foreign goods more expensive. Increasing your GDP and making you more competitive overseas.
However when you're in debt like they are, a collapse in the currency which occured within the euro rather than the mark has made there repayment costs much higher.

[RandBlade]

My views of the euro have now changed.

I was politically in favour, economically uncertain, with on overall view of "yes, when the times right."
After the experience so far gained over the last few years, the economics is becoming clearer, and the picture is not good. The loss of control over monetary policy in such a diverse aread as Europe looks to be much more serious than I hoped, though to be honest I'm not too surprised, just disappointed and concerned for the nations now trapped in it. I now doubt the economic credibility of the euro.

I therefore now state, that until the euro can prove itself, I now oppose British membership of it outright. The euro is looking like a failed experiment unfortunately.

[Trip]

Unfortuneatly (dang it, I use that word too much don't I? :p), it's another one of those well-intentioned-we're-moving-into-the-future kind of attempts, but maybe the world really isn't ready to move towards unity yet...

[RandBlade]

Politically, I think it is. But currencies should never be treated as the toys of politicians.

Monetary policy is an incredibly important part of economic policy for a nation. Sacrificing it was potentially a big loss. Only if the nations were incredibly similar should it not be a loss. Of course they're not.

[Trip]

I don't think there's any area in the world so small, and yet so different in that space than Europe. Quite a blend of culture and people going on there. Hopefullly one day such a movement will truly succeed.

[RandBlade]

Its just a case of getting there one step at a time. The single currency is something I've supported for a very long time, and politically still do. But sadly it was a move taken too soon. And if this fails, it will significantly set back progress.

There have been calls within Europe to further merge the economies, as a single economy is needed for a single currency. Well if this was the case, it should have been done before the single currency was launched, not after. And just because it has, is no reason to force the nations of the EU to move any further without proper discourse. If a different economy was needed, then the euro should not have been launched.

[Trip]

Originally posted by RandBlade
Its just a case of getting there one step at a time. The single currency is something I've supported for a very long time, and politically still do. But sadly it was a move taken too soon. And if this fails, it will significantly set back progress.

There have been calls within Europe to further merge the economies, as a single economy is needed for a single currency. Well if this was the case, it should have been done before the single currency was launched, not after. And just because it has, is no reason to force the nations of the EU to move any further without proper discourse. If a different economy was needed, then the euro should not have been launched. Politicians probably didn't think it would be truly possible to combine the economies of the EU into one. Even now, the economic workings of the EU are much more fragmented and difficult than a standard national economy such as the US's. They wanted to show they could achieve something towards unity, that wasn't as radical as fully merging every country's economy. If it were possible, then I would support as much unity as possible within Europe, since that would bring us one step closer to global unity. Of course I'm just a dumb American, so I can't really speak so much on the position of countries within Europe to merge. ;)

[RandBlade]

Oh no, I'm not saying there should be a single economy - I'm opposed to unified taxation. Just that things should proceed one step at a time, and the euro was too big a step (although hindsights a wonderful thing). Smaller steps towards as much integration within the economy that we want should have been done before merging the currencies, if it was believed that it was needed then.

The problem is, I'm not sure that they did believe it was necessary, and that its just a combination of an excuse to extend the powers of the EU, and an excuse for the failings of the euro combined. However given the failings of the euro, how can we now know that there's competency up top that should be given even more powers.

[Trip]

Originally posted by RandBlade
Oh no, I'm not saying there should be a single economy - I'm opposed to unified taxation. Just that things should proceed one step at a time, and the euro was too big a step (although hindsights a wonderful thing). Smaller steps towards as much integration within the economy that we want should have been done before merging the currencies, if it was believed that it was needed then.

The problem is, I'm not sure that they did believe it was necessary, and that its just a combination of an excuse to extend the powers of the EU, and an excuse for the failings of the euro combined. However given the failings of the euro, how can we now know that there's competency up top that should be given even more powers. Very true. The leaders of the EU probably established the Euro soley to extend their power, and show that they could influence things, instead of being just talk, and an excuse to send national delegates to meetings. I don't think real steps can be taken by any European organization unless that organization truly wishes to advance Europe, instead of put itself ahead. At this point, the EU isn't really looking at all at the true goals of it's creation, and that's a very upsetting point. I'm not so well-informed on the European countries' situations, tendancies, positions, etc. so what would you propose as steps that could be taken to provide for a more unified Europe short of combining currency, economy, or even borders themselves? I've never really had to think about the issue. :p

[Hazir]

Originally posted by Trip
Very true. The leaders of the EU probably established the Euro soley to extend their power, and show that they could influence things, instead of being just talk, and an excuse to send national delegates to meetings. I don't think real steps can be taken by any European organization unless that organization truly wishes to advance Europe, instead of put itself ahead. At this point, the EU isn't really looking at all at the true goals of it's creation, and that's a very upsetting point. I'm not so well-informed on the European countries' situations, tendancies, positions, etc. so what would you propose as steps that could be taken to provide for a more unified Europe short of combining currency, economy, or even borders themselves? I've never really had to think about the issue. :p
Well it shows you are not informed from any other source than the British media, the syndicated stories by the Guardian and Independent newspaper hardly will tell you what people in the rest of Europe really think. And there people (ordinary people) don't see the euro as a 'too big step' at all. Randblade loves to jump at every signal of 'eurosceptic' behaviour he can find to as evidence that there are others supporting the British position but in reality they are nearly always in a 1 against 14 situation when the fundamentals of the Unions are debated.

The typical direction of the debate on Europe between citizens on the continent is that the integration process is going much to slow. People are concerned about the Union becoming ungovernable with 25 members in the future under the system that was designed for 6 countries. But as the leaders of Europe would like to keep the continent together while making steps they are holding it back rather than walking ahead of the general public. In Nice it was with reluctance that they finally accepted the principle that 'certain countries' could decide to integrate faster than other countries.

[Hazir]

Oh and economically the euro is definately a big succes, the mere existence of the currency has protected europe and the world against the chaos that could have followed the september 11th attacks. With the euro it was just a matter of talks between Greenspan and Duisenberg to stabilize the financial markets, before the euro such decisive action on the european side would have been impossible.

[RandBlade]

The US is in recession, as is much of the eurozone. How can you say that it stabilised the markets, and was a big success?

And yes, decisive action was possible when the euro didn't exist. If the US, UK and Germany all lowered there rates, as they did, the others would have followed suit.

The euro has caused Germany to get trapped into a recession. How can you call that a success? Also, when have I jumped at euroscepticism? I think eurosceptics are idiots.

[Hazir]

You're talking bull now, the monetary system would have been ripped apart before they could have moved. The BoE and Buba could never have pumped the kind of money into the European markets needed to stabilize them like the ECB could.

There is not a single serious economist who would say after you that the euro has trapped Germany in recession. The problem Germany has is an extremely restrictive labour market which HAS to be reformed. I am coming to the point of accusing you of blatant stupidity for not seeing the fact that the ECB is pursuing the exact same policies the Bundesbank would have pursued in the present situation. I know you are full of the superiority of the BoE, but that also seems to make you blind to the fact that the world does not stop at the M25. The Bundesbank would have strangled the German economy just as easily because it had the role of safeguarding the INTERNAL value of the DM, and if that would be threatened they would NOT lower interest rates, however much the economy would need it. And inflation also in Germany was too high to be able assume that the bundesbank would have behaved differently.

Which explains why serious analysts focus on the need for reforms in Germany as the solution to the problem.

[RandBlade]

THURSDAY JANUARY 17 2002

Euro hits Schröder poll hopes

FROM ALLAN HALL IN BERLIN

GERHARD SCHRÖDER’S hopes of winning Germany’s general election looked bleak yesterday as opinion polls put his newly selected conservative opponent in the lead.
The Chancellor’s falling ratings reflect concern over rising unemployment which, the Federal Labour Office said yesterday, could reach 4.3 million this month. The news comes days after measures were announced to create low-paid jobs in an apparent attempt to win back blue-collar voters.

The unemployment figures coincide with the first opinion polls to be published since Edmund Stoiber, Bavaria’s Premier and leader of the Christian Social Union, sister party of the Christian Democrats, was chosen to oppose the Chancellor in September.

Official figures put unemployment at 3.96 per cent in December but according to Bernhard Jagoda, president of the Federal Labour Office, “4.3 million would be no surprise”.

Amid the concern about the economy, Herr Stoiber kept up his anti-immigrant rhetoric, vowing to keep foreign workers out of the country. The leading Forsa opinion poll put him five points ahead of Herr Schröder. “With 4.3 million unemployed, we can’t have more foreign workers coming to Germany,” he said. Since his nomination last week Herr Stoiber has said that he will reverse the phasing out of nuclear power, scrap rises in energy tax and bring forward tax cuts.

Commitment to the euro forbids a budget deficit of more than 3 per cent, preventing the Government embarking on lavish public spending to relieve unemployment. Herr Schröder has tried to create low-paid jobs by promising government help in paying workers’ dues to insurance and health funds. Many see the package as a panic measure. He came to power four years ago pledging to reduce unemployment significantly but it has climbed as the economy stagnates.

The government proposal to take up the bulk of employee contributions for workers earning £220 to £600 a month seems too little too late. Contributions can account for up to 20 per cent of a worker’s pay packet so there has been little incentive for the unemployed to give up substantial benefits for the sake of meagre wages.

German employers have urged the Government to liberalise the tightly regulated labour market which makes companies reluctant to hire because it is costly to dismiss workers. Archaic labour laws, high costs and red tape have deterred foreign companies from investing in Germany.

Herr Schröder rejected a US-style labour market, however, and instead put forward plans last autumn to give trade unions more power within big corporations. That was when he was ahead in the opinion polls. No longer. With the damage of the Kohl financial scandal laid to rest and a respected figure in opposition, the conservatives have been running equal to him in the polls at about 38 per cent, a 6 per cent drop for the Government in recent months.

Herr Schröder’s failure to deliver on his central promise at the 1998 election — to reduce unemployment significantly — could cost him victory second time around. Laurenz Meyer, general secretary of the Christian Democrats, said: “Germany needs a Government that cares, especially about the economy and the labour market. This Government doesn’t and people are beginning to see that this old socialist style doesn’t work.” Annual growth in Germany has slowed to 0.75 per cent, which Herr Schröder attributes to the repercussions of the September 11 terror attacks but which industry leaders say is mostly his fault.

Another blow to the Chancellor’s chances is the low standing of the Green Party — the coalition partner of Herr Schröder’s Social Democrats — which did badly in recent regional elections and now rates just 5 per cent in polls, close to the margin at which it would be denied seats in Parliament. The Free Democrats have risen in the polls, making them a likely choice as a coalition partner for the conservatives should they win in September.

Herr Schröder’s attempts to frighten voters with the spectre of the Right are seen as a sign of desperation. “Schröder is obviously nervous because there has been such a big swing in the opinion polls,” Dietmar Herz, a political scientist at Erfurt University, said. “Stoiber has toned down his rhetoric and will also try to attract the middle-of-the road voters. He’s dangerous for Schröder.

“The election is going to be fought over the economy and it doesn’t look good for Schröder. On the other hand, Stoiber doesn’t have any national experience and has never had to face a strong candidate.”

Trapped in an economic straightjacket

At Germany’s own insistence, the 12 eurozone countries long ago adopted a fiscal straitjacket called the “growth and stability pact” that obliges them to keep their budget deficit beneath 3 per cent of gross domestic product.

Germany is already close to breaching that limit, with the European Commission predicting a budget deficit of 2.7 per cent this year, meaning that Herr Schröder has absolutely no room to increase public spending or cut taxes.

If Germany breaches the ceiling, it could be fined as much as 0.5 per cent of its GDP by the Commission. Even more seriously, the world’s financial markets may conclude that the eurozone is not serious about financial discipline and send Europe’s new currency into another tailspin. That is why Pedro Solbes, the Monetary Affairs Commissioner, recently insisted that the pact was “untouchable”.

The problem is that if Europe’s largest economy goes into reverse, the euro will probably fall anyway. Ironically, it was Germany that originally insisted on the pact, to ensure that the euro commanded the sort confidence that the mark had enjoyed. At that time nobody foresaw that Germany would become one of the eurozone’s weakest economies.

The pact also obliges Germany to balance its budget by 2004, a target that looks increasingly unattainable. Failure to meet that rule carries no financial penalty.Written the same day as my post.
Written the day after my post:FRIDAY JANUARY 18 2002

Leading article: Thanks, but no thanks

Germany's experience should make Britain wary of the euro

The advice of Hans Eichel, the German Finance Minister, to the United Kingdom on the euro is not quite as misplaced as that suggested by France in 1940, when she recommended that Britain sue for peace, but it is almost as inappropriate. Herr Eichel offered a eulogy to the single currency in an interview on Wednesday and insisted that if Britain did not sign up to it soon both the domestic economy and Europe as a whole would suffer.
His words will be ridiculous to those who are swelling Germany’s lengthening unemployment register. It is all but certain that many more than four million of Herr Eichel’s fellow citizens will be jobless soon, as he himself may be by September. Unemployment in Britain remains below one million. The Finance Minister is outlining less the path to a Promised Land than the solidarity of shared misery.

The current German economic dilemma can be summarised in a single world, uncompetitiveness. The exchange rate at which the mark was locked with other eurozone members was simply too high to support its exports. The present interest rate set by the European Central Bank, 3.25 per cent, might appear low but it is at least half a percentage point higher than it should be to inspire a dynamic economic recovery. And there is little that the country can do to stimulate demand via tax cuts or spending increases because it is constrained by the strictures of the inappropriately named Stability Pact. These are all consequences of euro membership and none of them can be altered by German politicians or voters.

An economic downturn will still have significant political implications. For a long time, Gerhard Schröder seemed set to win a second term as Chancellor. His assets were, not unlike Tony Blair in this country, a benign economy coupled with a divided, apparently hopeless, Opposition. A surge in unemployment will obviously undermine him on the first front while the emergence of the charismatic Edmund Stoiber, Prime Minister of Bavaria, as the candidate of the conservative Opposition could prove fatal on the other. The polls, like the economy, are turning against the Social Democrats.

If Herr Stoiber is to make the most of his chance, however, he needs to appreciate that the economy, not immigration, is the central issue. The German system of proportional representation renders politics a form of poker. The Christian Democrats will need a political partner if they are to form an administration. An alliance with either the PDS (the former Communists) or the Greens is out of the question and a “Grand Coalition” with the Social Democrats is improbable. The logical suitors for Herr Stoiber are the Free Democrats, but they are as passionately liberal on matters of nationality and immigration as he can be conservative. If he wants to be Chancellor then his slogan will have to be the German equivalent of the famed Clinton approach: “It’s the economy, stupid.”

The outcome of the German elections is of considerable importance to Britain. But even if Herr Schröder survives on the basis of Free Democrat backing, as he may well do, Mr Blair needs to consider why his Social Democratic colleague has run into trouble. Herr Eichel dismissed British opposition to the euro as a “national eccentricity” which would harm its own interests. Yet for a nation to enter an economic arrangement which is palpably at odds with its own interests, simply for political reasons, is surely the height of eccentricity.Show me a serious anylyst who denies that Germany's being trapped by euro membership is not at all a problem in gettin git out of recession.

And yes, there is a need for structural change, but you'd be stupid if you said that you should leave a nation in recession until the structural change is over. The kind of changes Germany needs will take many years, action is needed now though to get out of recession, and thats not possible thanks to euro membership, as explained by me, and these two articles above.

Inflation only takes priority over growth during normal times. During times of recession, inflation is less of a concern than recession. Inflation needs to be prevented as it causes problems, recessions need to be stopped, as it is a problem. The Bundesbank would not be leaving Germany to continue sinking without action.

Instead of calling me names, how about showing some economics if you disagree with me. Call me an idiot if you want, but at least have the guts to back it up, as I am, with logic and evidence. Although I highly doubt now that you will. There's economics and arguments as to why its having an impact, I'll be amased if you do more than just dismiss it, without saying why its wrong.

[Hazir]

Yeah rite, another piece of rubbish from an english newspaper. Where I live I can receive 3 German channels, and not a single German on them is making the connection between the euro and the state of the economy.
They couldn't even because Bavaria, the part of Germany where Stoiber is from is booming.

I haven't forgotten yet that British newspapers only a couple of weeks ago were trying to make us believe the Germans wanted to stick with the D-Mark, which they subsequently ditched so fast it was difficult to follow it with the naked eye. Or how happy they were to jump at the bickering in the Italian as a sign things were going wrong in the EU. Of course they never bothered to mention that an anti-EU government in Italy does not have a chance of surviving because the Italians look to Brussels, not to Rome for good governance.

The only thing you show is ignorance at the way things are on the continent combined with typical British egoism and arrogance.

[Hazir]

From Le Monde of Paris, to show how much the UK is admired from the continent. It is fairly typical of how we see 'the new Jerusalem' Brits think should be our shining example.

Sur le plan des soins médicaux, une enquête de l'Organisation mondiale de la santé place le Royaume-Uni en queue de l'Union européenne. Les inégalités entre les plus riches et les plus pauvres ont augmenté. Plus de cinq millions de Britanniques se trouvent dans un état de pauvreté absolue. Près de la moitié des femmes sont salariées à temps partiel. Un quart des enfants vit en dessous du seuil de pauvreté. La Grande-Bretagne compte le plus d'enfants pauvres de tous les pays industrialisés (7)...

translation On the matter of health care, research by the WHO places the UK at the bottom of the European list. The inequalities between the richest and the poorest have risen. More than 5 million Britons find themselves in abject poverty. Close to half of women have salaries based on part time jobs. A quarter of children are living under the poverty line. Great Britain has more poor children than any industrialised country.

Just a tiny piece, and unlike the superficial rubbish British newpapers write about Europe all based on hard figures. So bask in your pride about having the highest growth rate in Europe Randblade, I think it's not such a pretty sight if you look at the reality of poverty in your country. Even stagnating Germany is still a much better place to live.

The UK is unique only in that it has combined the worst services of the socialist state with the harshness of ultra-liberal capitalism.

[Hazir]

From UPI today, another piece about how frail the British economy actually is Especially the title should be noted, as soon as people stop borrowing the steam starts escaping from the 'buoyant' economy. And Unlike the US, the UK can not depend on other countries to help it refinance.

Global View: Britain top -- on credit<

By IAN CAMPBELL, UPI Economics Correspondent
QUERETARO, Mexico, Jan. 18 (UPI) -- The British economy is top of the class. In 2001 it grew by 2.4 percent, faster than any other of the big (G-7) economies. As the United States and the euro-area struggle, Britain excels. But is its success false? Is its resilience to slowdown misleading, or even dangerous?
Britain's economy is an economy divided. Manufacturing output is down; consumer spending is up. The consumer is keeping the economy strong. Sound familiar? In the United States the consumer is also the bastion, but there he keeps the economy from deeper recession.
The statistics show the division in the U.K. economy clearly. The U.K.'s National Institute for Economic and Social Research is an authoritative source on the U.K. economy. This week it estimated that U.K. industrial output fell by 2.3 percent in the fourth quarter of 2001. Monday the U.K.'s Office for National Statistics confirmed the weakness of industry, reporting that industrial output fell by 2.0 percent in the three months to November compared with the three preceding months. The fall is steep. British industry is deep in recession.
Statistics on consumer spending show the other side of the divide. Thursday the Office of national Statistics released data for retail sales in December. Even though December's spending was 0.3 percent down on November, the volume of retail sales was up by 6.2 percent in the fourth quarter of 2001 compared with the fourth quarter of 2000. Britons have been spending.
Where does the money come from? Where is it going? On both scores there are grounds for concern.
Take the second first: where the money is going. Strong spending and falling U.K. production mean that U.K. imports are rising fast. The trade deficit, a traditional harbinger of trouble for the U.K. economy, is rising, and is now close to 4 percent of gross domestic product. Measured in dollars, it is likely to have ended 2001 close to $48 billion, a record figure and only the second occasion on which the deficit has exceeded $40 billion. The first occasion was in 1989. It was followed by a lingering recession.
How is it that British growth has avoided a slowdown that has pulled down almost every other economy in the world? Where is the spending power coming from? Though Britain is outperforming the United States at present, the tale has a bubbly American ring.
In the first place, unemployment is low, and has, unlike in the United States or euro-land, fallen in the past year: to 5.1 percent in November, from 5.3 percent a year before. Job creation is good despite recession in manufacturing because services dominate the economy and they are benefiting from Britons' spending power.
There are several founts of this spending. One may immediately sound familiar to Americans: Britons are saving less of their earnings and spending more. The household savings ratio has dropped from an average of approximately 10 percent of income in the first half of the 1990s to just 4.2 percent in 2000 -- which was also the level of saving at the latest reading, in the third quarter of 2001. Britain, then, emulates the U.S. fall in the savings rate, though in the United States it has gone still further, taking the rate down to only 1 percent of disposable income in 2001.
The other source of strong consumer demand is debt. According to the Bank of England's latest data, consumer credit was up by 13 percent in November, compared with a year earlier, while lending secured by property (mortgage lending) was up by 10 percent on a year earlier. These are high rtes of growth in debt, especially in a recessionary world. But when the figures are aggregated things look still worse. Total net lending to individuals amounted to 6.4 billion pounds in November, an increase of 31.5 percent on November 2000. In a year, Britons have increased their level of debt by almost a third.
Yet the phenomenon is not one confined to the past year. Go back to December 1998 and total lending was well below 4 billion pounds. Private debt has risen by three quarters in less than three years.
Is the Bank of England not concerned? It is. Eddie George, the governor of the bank, said this month that something would have to be done if consumer credit growth did not ease. Presumably the something he had in mind was an interest rate increase. But the bank spurned an opportunity to raise rates a week ago. Its reluctance is understandable, though not necessarily correct. Debt in Britain has exploded. What could be more implosive for the British economy than an interest rate increase?
And so Britain has a divided economy and one that stands out from the rest of the world. Britain's manufacturing recession reflects the depressed global economy while high retail spending (and growth) in Britain reflects economic policy in the U.K. that has been engineered to offset the global slowdown. Perhaps that engineering has gone too far.
The U.S. engine suddenly died late in 2000 and the U.K. looked for a little gas of its own. The Bank of England cut rates pre-emptively to prevent a slowdown that would have emanated from the suddenly depressed United States. U.K. interest rates -- the base rate is now 4 percent -- are higher than for the equivalent rate in the euro-zone and more than twice as high as the Fed funds rate in recession-hit United States. But, nonetheless, British interest rates are very low and, like U.S. ones, at a 40-year low. Britons, never reluctant to spend, have been profiting from the opportunity they present. And so, while U.K. inflation is below 2 percent, house prices were up by 11.5 percent in November on a year earlier, according to Halifax Bank of Scotland, which tracks them; and this having risen by 9.8 percent in 2000 (compared with 1999). Do we hear "asset price inflation?" Sold to the keen buyer on my left!
Fast-growing Britain is top of the class, taking the place of the U.S. economy. But the echoes of the United States -- fast debt growth, low personal savings, rising house prices, large trade deficit--might give us all cause for concern. In Britain, as in the United States, there are signs of excess. The trends in debt and personal savings and trade are unsustainable. Britain's vulnerability to higher inflation and interest rates is huge; but higher inflation seems unlikely. The world is on a deflationary trend. The more likely danger is that, as in the late 1980s and early 1990s, debt proves a drag on the U.K. economy and recovery from slowdown--which, in the U.K.'s case, may not arrive before 2003 -- proves slow and painful.
In the United Kingdom, as in the United States, monetary policy seems to have got it wrong. In the United States in the late 1990s an unchecked stock market fostered a consumer boom that has distorted the U.S. and global economies. In the United Kingdom it is the attempt since 2000 to avoid participating in the global slowdown that appears to have let debt and house prices get out of hand.

The financial markets are looking for swift recovery, for a return to the heyday of the second half of the 1990s. But in both the United States and Britain the problems that have built up remain untackled.
A return to swift growth and buoyant stocks? Not so fast! In the United States and its British cousin the debt and asset price boom of the past few years may cast a pall for years to come.

[1+1=11]

Bah! is this thread still going?:mad: Stupid Euro

[RandBlade]

I agree with quite a lot of the logic in there. It was mountains of debt within the US that I pointed out a year ago as to why the US would be in recession soon, and now we have high debt and are in a similar position. However things aren't totally bad. As was conceded in the article savings in the UK are 4 times what they were in the US. Debt on the other hand is not as high, and certainly not as sustained either. So our net debt that we need to worry about is not at the same sort of stratospheric levels.

Although, you're right. If this were to continue into the medium-long term it would most definitely be a cause of concern. It was higher debts than this, for a very long time, with much less savings that caused the problems in the US. In the very short term, its not too much of a problem.

Regarding the BoE, thats exactly what I pointed out ages ago to you. But I disagree about the nature of the concern. I don't think they're as concerned as this article has been making out. Afterall the warning was that if things continued to be so high, then they'd act. Not that they were going to act within the week, you can't suddenly do a reversal like that.

As this is a thread about the €uro, lets look at how the €uro could affect all this:
The blame for our problems is put directly at the feet of the BoE for the lowering of interest rates in our monetary policy. Apparantly we should not have cut them so much, according to this author.

And yet, what was the ECB's monetary policy over the last few months? Yes, they've been cutting rates. By how much? The same amount. We've still got that 0.75% difference we were talking about months ago.
So, if we were within the eurozone, surely the problems would be just as bad, as the monetary policies that are to blame have been the same? But wait, the €urozone rates lower than ours, by 0.75%!! We're in trouble supposedly, because we've cut our rates too low - a 40 year low as is pointed out - and yet the €urozone rates are significantly lower. 3.25% to 4% is a big difference.

So, we're being criticised for lowering our rates by the same as the ECB to a point where they're still significantly higher, but supposedly too low. As this article so clearly points out, if we were in the €urozone now, our problems would now be much worse.

What does the future hold for monetary policy now then? British rates are now on hold, we're not expecting them to be lowered again, or maybe just one last time. This is exactly whats needed according to this. Yet €urozone rates dropping off shows no signs of abating. Haven't heard from anyone in the ECB that they're not going to be further lowering yours.

So it looks like a bloody good job that we're out of the €uro at the moment. If we were in, our interest rates would be much, much lower, causing a very big rise in our debt levels compared to now, and we wouldn't be able to stop them, or even raise them, as we now face the options to.

[Hazir]

You can not tell what the interest rate would have been with a UK inside the eurozone based on information with the UK outside of the Eurozone. The British economy would be good for somewhere between 16 and 20% of the total economy, and as such would have had a significant impact on the basic data the governing council of the ECB uses to set interest rates.

A UK inside the EMU creates new realities that make all predictions about it based on the present situation pretty moot.

[RandBlade]

Not really. The question is that since we've supposedly cut our rates too far, would you have made us cut ours less? And the reality is that no, you'd have made us cut ours more.

And yes, us being in would make a difference, as it would pull the ECB rate closer to what we need rather than what Europe needs without us. Eg, you might now have 3.5% rather than 3.25%, but thats still a .5% difference for us, and a .25% difference for you.

There's only been three years of there being a eurozone, so we can make comparisons. A UK within the EMU would make differences, as the average rate needed by the eurozone would be higher than it is without us. But it would still be lower than what ours is outside. And as ours is supposedly too low, it would definitely be making that problem worse.

You're the one who chose to print that article on this thread, what was the point you were trying to make with regards to the euro? How could it have been helped with us not being in there. Supposedly we've made this huge mistake, but it'd only have been made for us, and worse, if we were in.

And of course, conversely, our being in would've by itself made things worse for Germany as they'd be getting an even higher rate than the one thats already to high for what they need.

[Hazir]

The cutting of rates is not just something of the absolute height of the rate but of the right rate at the right moment. And like I said, I can't tell what the required right rate would have been for a Britain inside the EMU or a Germany with Britain inside the EMU.

Britain in the EMU could have eased the pressure on the exchange rate with the dollar, making inflation less of an issue in Germany, so that rates could have been cut earlier to the 'right rate for Germany', which could have resulted in a lesser slowdown, making for more convergence between Britain and Germany THUS making the right rate for Germany a lot closer to the right rate for Britain than currently.

As you are now, you're out on your own, so far your overal economy hasn't been doing too bad, but the underlying data is reason for concern. If you can't keep up the present pace, your economy could get in a slump as well with the disastrous side-effect of a nose-dive by the pound and the ensuiing much higher inflation, just when you didn't need it.

[RandBlade]

Hazir, can you think of anything at all that suggests that economically we made the wrong decision by not joining immediately?

[Hazir]

Yes,

You went for short term security and in the short term it has paid off. However, as has been pointed out before the bomb under your economy is the current account deficit. That means you are living with a big risk of a monetary shock that coult throw you in a deeper depression than that of the US or EU. Your external exposure is much bigger than either of the two and if your currency falls as a result of this shock you will see this in your inflationfigures immediately. Since your economy at the moment is booming because of retail it could turn into reverse overnight (granted, the manufacturing that survived the present situatie could benefit). The freedom of the BoE as of then consists of making the choice between two impossible choices. Raising rates would dampen inflation but harm the economy, lowering rates would fire up inflation and also harm the economy. You could find yourself in a situation of stagflation.

If you were to be inside the EU your external exposure would be reduced significantly (look at an average inflation of around 3% despite a drop of the value of the euro against the dollar of close to 30%). Subsequently your current account deficit would become irrelevant and your flourishing economy would be based upon a somewhat more sound basis.

Of all European countries the UK should know what a monetary shock can cause in the economy.

Being outside the EMU for now also bears the risk that should the above scenario evolve, that your entry into the system will be made near impossible because you couldn't qualify for membership any longer. So you even run the risk of having missed an opportunity of shaping the EMU and having to enter only after you place yourself into the ERM-2 effectively ceding control without getting a vote in the governing council.

PS. this is why Eddie George prefers to see the euro rise against the dollar rather than having sterling make the move down against the euro, because that way you would get all the inflationary pressure I described, with none of the protection of EMU membership.

[RandBlade]

Firstly, don't forget the Britain can't really enter the EMU even we wanted to today, unless there was a drop in pound:euro of at least about 1/3.
Inflation is relatively high in Europe, especially given the low growth, for today's standards. 10/12 countries in the EMU have higher inflation than the UK. This is despite our higher growth (high growth causes high inflation)

You keep warning about what happens if there was a drop in the value of the pound, but we can't enter the EMU unless there is a significant drop anyway.

[Hazir]

Yep, you have locked yourself out effectively for a number of years. So you are extremely vulnerable in a forex situation that by nature is more volatile than before the euro came about (the buffers that the ERM provided by having margins between the EU coins have disappeared).

You're overestimating the percentage by which the pound will have to go down by the way. What you roughly need is a 5-6% change.

So in my eyes you have set yourself up for big trouble ahead, trouble big enough to make you forget the present boom.

[RandBlade]

I disagree that our currency is extremely at risk and volatile, I see no reason at all to believe that.

Pound Sterling is the fourth most powerful currency in the world, its not a flimsy weak one. What reason do you have to think we're extremely volatile? We haven't been in the past, and I see no reason for us to be now. Do you think all other nations in the world are also at serious risk? Should the Canadians panic and join the US Dollar?

In 1992 we had serious problems, but that was due to the idiocy of the ERM. Thats not scepticism btw, its foolish to try to ever lock your currency against others, when they're different currencies. There was a serious correction then, because the currency was artificially very high.

You keep speaking as if the pounds as volatile as a leaf in a strong breeze, but you forget, even on our own, we've still got the fourth strongest currency in the entire world.

Btw, yesterdays Item Group report has called strongly for the BoE to sell sterling to lower the value of it.

[Hazir]

Sigh, here we go again, the 4th position for world currencies doesn't exist.

1. The dollar is the only world currency
2. The euro and the yen are the only 2 serious regional currencies
3. The rest are funny money, sometimes good, sometimes bad but with ample room from moving from bad to good and back again according to the taste of the day.

The fact you were forced out of ERM had actually one reason; you couldn't muster the support of the other EU countries for your pound. The Bundesbank DID support the french franc and that didn't fall out of ERM. It's no coincidence that this happened after the Maastricht Treaty and the opt out of the UK from the euro.

PS the item group proposal looks a bit strange, it would make more sense if the government AFTER deciding to enter starts borrowing money in euro. That would drive down demand for sterling, and it would enable to to gently let the currency decline in value.

[RandBlade]

It was in the end a very good thing that we left the ERM as far as I'm concerned, so it doesn't matter that it was forced. If the euro had been in an ERM with the dollar from 96 onwards, it would've been forced out by now. And you're right, it is no coincidence that we didn't get support, if we were staying in we could have.

Back to the state of the British economy, the things that you like to point out as not doing well, manufacturing and a CAD.

British manufacturing is in recession. That not questionable, it fell by a significant 5.5% in 2001. However whats the cause for this? Is it due to a serious problem in the British economy itself? A global problem? Being too strong against the euro? Strength against the euro is the normal culprit mentioned in the media here by europhiles.

Compare British manufacturing to other nations, and an interesting picture appears. 5.5% is normally large, but in France and Germany, the fall was much worse than that. And in Japan, industrial output fell by 14% - despite a fall in the strength of the Yen. Despite a weak Yen and Euro, British manufacturing is doing well compared to our partners.

Next, our Trade Deficit which you're also pointing out.

If a currency is strong against another, that should make it harder to export, and more spent on imports. So whats happened in Britain since the launch of the euro on 1/1/99, and the strength of sterling against the euro?

Our Trade Deficit against the eurozone has shrunk from £6.5bn to £2.5bn. Thats a fall of nearly 2/3!! Since the launch of the euro, our exports to the eurozone have grown at twice the rate as our imports. So much for a large trade deficit or failing manufacturing. And this again is despite the fact that Britains performing well (which increases imports) and eurozone isn't (should decrease exports).

Manufacturing is in recession, but thats a global recession due to the global slow-down, its not a British problem. And compared to our trading partners, our manufacturing is healthy. And our trade deficit is very small compared to what it was, not a problem.

Those are the two key complaints you've had against the British economy, which I've not been able to rebut without the statistics, but there we go. All things considered even our worst points are healthy.

EDIT: Oh, and another recent statistic. Once more, Britain has been confirmed as the most popular place in the world after the US for inwards investment. Statistics released this week show that Britain received more than France and Germany combined (who are 2 and 3 after us) over the last decade. Despite a supposed collapse in industry here and the inability to trade with the eurozone.

[Hazir]

Originally posted by RandBlade
It was in the end a very good thing that we left the ERM as far as I'm concerned, so it doesn't matter that it was forced. If the euro had been in an ERM with the dollar from 96 onwards, it would've been forced out by now. And you're right, it is no coincidence that we didn't get support, if we were staying in we could have.
You're dodging the real issue here, which is that you got a devaluation forced upon you from outside against which you had no resort whatsoever. And you are ill-informed about the correlation between staying in and getting support. You HAD to leave because you didn't get support. You make it sound as if you didn't get support becase you didn't stay in.
Back to the state of the British economy, the things that you like to point out as not doing well, manufacturing and a CAD.

British manufacturing is in recession. That not questionable, it fell by a significant 5.5% in 2001. However whats the cause for this? Is it due to a serious problem in the British economy itself? A global problem? Being too strong against the euro? Strength against the euro is the normal culprit mentioned in the media here by europhiles.

Compare British manufacturing to other nations, and an interesting picture appears. 5.5% is normally large, but in France and Germany, the fall was much worse than that. And in Japan, industrial output fell by 14% - despite a fall in the strength of the Yen. Despite a weak Yen and Euro, British manufacturing is doing well compared to our partners.
Figures for Germany and France are ?
Next, our Trade Deficit which you're also pointing out.

If a currency is strong against another, that should make it harder to export, and more spent on imports. So whats happened in Britain since the launch of the euro on 1/1/99, and the strength of sterling against the euro?

Our Trade Deficit against the eurozone has shrunk from £6.5bn to £2.5bn. Thats a fall of nearly 2/3!! Since the launch of the euro, our exports to the eurozone have grown at twice the rate as our imports. So much for a large trade deficit or failing manufacturing. And this again is despite the fact that Britains performing well (which increases imports) and eurozone isn't (should decrease exports).
[quote]Your total trade deficit is around € 51 bln for the first 11 months of 2001, quite a bit more than the intra EU deficit you focus on. [quote]
Manufacturing is in recession, but thats a global recession due to the global slow-down, its not a British problem. And compared to our trading partners, our manufacturing is healthy. And our trade deficit is very small compared to what it was, not a problem.
True, it's not a typical British problem, but the combination of factors IS typical British, and it makes that you're at a greater risk than either the US or euroland.
Those are the two key complaints you've had against the British economy, which I've not been able to rebut without the statistics, but there we go. All things considered even our worst points are healthy.
One does not complain against economies. I merely pointed out that the 'health' of the UK's economy is that of a person with a reduced immunesystem. You may not catch a cold, but when you do, you're up for a fullblown pneumonia.
EDIT: Oh, and another recent statistic. Once more, Britain has been confirmed as the most popular place in the world after the US for inwards investment. Statistics released this week show that Britain received more than France and Germany combined (who are 2 and 3 after us) over the last decade. Despite a supposed collapse in industry here and the inability to trade with the eurozone.
And your source for these figures is ?

[RandBlade]

Originally posted by Hazir
You're dodging the real issue here, which is that you got a devaluation forced upon you from outside against which you had no resort whatsoever. And you are ill-informed about the correlation between staying in and getting support. You HAD to leave because you didn't get support. You make it sound as if you didn't get support becase you didn't stay in. Did we already have the opt-out at this point?
Figures for Germany and France are ?
Will have to find them.
Your total trade deficit is around € 51 bln for the first 11 months of 2001, quite a bit more than the intra EU deficit you focus on.
Concentrated on the intra EU deficit, as thats the one thats important with relation to the euro.
True, it's not a typical British problem, but the combination of factors IS typical British, and it makes that you're at a greater risk than either the US or euroland.
What combination of factors? Our manufacturing is in fact doing better. The rest of the economy we already knew is doing better.
One does not complain against economies. I merely pointed out that the 'health' of the UK's economy is that of a person with a reduced immunesystem. You may not catch a cold, but when you do, you're up for a fullblown pneumonia.
Why? Whats so much worse with the British economy than that of others?
And your source for these figures is ?The Times.

[Hazir]

Originally posted by RandBlade
Did we already have the opt-out at this point?
The ERM was a mere arrangement, it didn t know any formal entry or departure rules.
Concentrated on the intra EU deficit, as thats the one thats important with relation to the euro.
I wasn't only talking in relationship to the euro, but the general risk to your economy
What combination of factors? Our manufacturing is in fact doing better. The rest of the economy we already knew is doing better.

Why? Whats so much worse with the British economy than that of others?
The Times. The combination of factors :

1. shrinking manufacturing
2. a huge current accounts deficit
3. a booming services and retail economy based on a lower savings ratio and higher credit.
4. a minor currency.

There is no denying that you are outperforming both the EU and the US at the moment. But any of the above factors could lead to a destabilising effect on your economy.

For example, your BoE decides the economy needs to be slowed down a bit and raises interest rates. The effect would hit an already ailing manufacturing which could drive up unemployment so much that the steam is let out of the rest of the economy. The UK becomes just a tad less interesting for foreign investors and the CAD becomes an acute concern. Pressure on the Pound rises and can easily lead to downward overshooting because the Poun is not a widely held currency. Inflation shoots up, the BoE faces the choice between raising rates again and control inflation or lowering them to encourage local producers to start producing again. Either way, the entire economy is in a deep mess.

And this is just one of the scenarios I could think of that could easily come true for the UK. The US for the time being is immune because its currency is the most widely held currency in the world and it's not very likely that it's going to be offloaded on a massive scale unless some major disaster develops. The EU is protected by it's low external exposure and CAD.

As far as the euro membership is concerned, I am in doubt if you will be able to get in even if you wanted at the moment.

[RandBlade]

Originally posted by Hazir
The ERM was a mere arrangement, it didn t know any formal entry or departure rules.I mean, did we already have the opt-out from the EMU?

"1. shrinking manufacturing" - Better than most nations
"2. a huge current accounts deficit " - Not above critical levels, especially when compared to other factors
"3. a booming services and retail economy based on a lower savings ratio and higher credit. " - Our level of savings is lower, but there's an interesting change. Investment in pensions has never, ever, been higher. While our levels are much higher than when nations are accused normally of being in bad debt.
"4. a minor currency." - Our currency has never, ever, been a minor one.

Your points in italics, mine in italics and green too.
For example, your BoE decides the economy needs to be slowed down a bit and raises interest rates. The effect would hit an already ailing manufacturing [a manufacturing that is doing much better than most nations]which could drive up unemployment so much that the steam is let out of the rest of the economy. [Except as has already been shown, manufacturing employment is not that important. And a cut in manufacturing has already been shown not to let the steam out of our economyThe UK becomes just a tad less interesting for foreign investors and the CAD becomes an acute concern. The CAD thats at record lows as far as the euro's concerned you mean?Pressure on the Pound rises and can easily lead to downward overshooting because the Poun is not a widely held currency.While if this happens, it means that its possible for the value due to overshooting to be prevented, as the governmental banks have enough power to intervene, as they didn't as far as the euro was concerned, precisely because its not widely held Inflation shoots up, the BoE faces the choice between raising rates again and control inflation or lowering them to encourage local producers to start producing again. You mean we might lose our position of having the lowest inflation rate in all of Europe!? We might no longer have less than half the inflation the eurozone has!? Oh shock, horror, however could we cope :rolleyes: Either way, the entire economy is in a deep mess. Nope, nothing in that would make our economy a mess

As far as the euro membership is concerned, I am in doubt if you will be able to get in even if you wanted at the moment.Europeans whether from the ECB, EU or European nations have been trying to convince us to join ever since the launch of the euro many years ago. What reason at all do you have for doubting we could join if we wanted to?

[Hazir]

Originally posted by RandBlade
I mean, did we already have the opt-out from the EMU?

No, the Maastricht Treaty was finalised at the end of that year.

"1. shrinking manufacturing" - Better than most nations
"2. a huge current accounts deficit " - Not above critical levels, especially when compared to other factors
"3. a booming services and retail economy based on a lower savings ratio and higher credit. " - Our level of savings is lower, but there's an interesting change. Investment in pensions has never, ever, been higher. While our levels are much higher than when nations are accused normally of being in bad debt.
"4. a minor currency." - Our currency has never, ever, been a minor one.
<snip>You are stuck in a comparison between the eurozone and UK. That is not he only thing that matters if you want to evaluate the robustness of the UK's economy. What does matter is that your external exposure is very big, like your total CAD and that this makes you vulnerable. I also see you are trying your 'but we 're not as small as you say' routine again when it comes to sterling. I can't repeat this often enough: sterling is NOT in the same class as the euro, just as little as the euro is in the same class as the dollar. If you apply the term 'not widely held' to sterling it meanst that it simply hardly counts at all as a reserve currency and that it has no prospect of becoming a serious reserve currency. That s not the case for the euro, that only comes off as small compared to the dollar and it does have the potential in the longer term to become a serious contender.

As far as central banks being able to keep an exchange rate up against the market, that's something you should explain to central bankers worldwide. They would love to be able to work that magic.

Europeans whether from the ECB, EU or European nations have been trying to convince us to join ever since the launch of the euro many years ago. What reason at all do you have for doubting we could join if we wanted to? [/B]

My first reason is the one I mentioned in the last few posts; can you manage your monetary policies in such a way that you don't sustain damage on the way to EMU.

A second reason lies in the duplicity of politicians; yes they all say they want the UK in when you ask them. But at the same time what I as a continental european notice is that the debate on the euro has closed. Mention of opinion polls on the euro in the UK, Sweden and Denmark are page 3+ stuff, if they make it to the newspapers at all. Television news tends to ignore the issue of euro/UK at all. That means politicians can say whatever they want about the matter, even if they don't mean to live up to it. Britain has made itself not loved by its 'wait and see' policies, people overhere see it as 'you take the risks, and we come in once you've secured the grounds'. There are people in EU capitals who would gladly block entry at the moment that 'you' say you want to get in. Just to get even. And don't say that's impossible or unlikely, because there are these tiny jabs at the UK all the time. The commission official who said Britain should enter ERM-2 before it could get into EMU probably didn't say that before he knew there was political sympathy for that POV.

PS. about size, do you realise the euro is the currency or underlying currency of 30 countries already? And that figure excludes the candidate EU members and countries that have a partial peg to the euro.

[RandBlade]

Thought you might be interested in this: http://news.bbc.co.uk/hi/english/business/newsid_1785000/1785429.stm

[Hazir]

Originally posted by RandBlade
Thought you might be interested in this: http://news.bbc.co.uk/hi/english/business/newsid_1785000/1785429.stm I was aware of that. The only dutch coin I still have is a 10c (dime) which I have always liked a lot because it was small but manageable.

I'm surprised you didn't pick up on these stories though : http://www.afxpress.com/afxpress2/afx/story_34342.xml.html

http://www.thetimes.co.uk/article/0,,5-2002043654,00.html

[RandBlade]

Never read the AFX, and The Times article is for todays paper, which hadn't been published/put online when I last went to the site. Look at the date of the article I linked to, it was the latest days article when I last posted.

I'm pleased with both those articles. I 100% support the idea of an open and frank debate. Thats why I'm interested in this thread, we can both have it, and yes - of course its important to have a full debate amongst those who matter up top.

[Hazir]

Originally posted by RandBlade
Never read the AFX, and The Times article is for todays paper, which hadn't been published/put online when I last went to the site. Look at the date of the article I linked to, it was the latest days article when I last posted.

I'm pleased with both those articles. I 100% support the idea of an open and frank debate. Thats why I'm interested in this thread, we can both have it, and yes - of course its important to have a full debate amongst those who matter up top. Well especially the article about the debate in the BoE seems to indicate there were some people not at all interested in an open debate. AFAIK George never tried to rectify the impression that the entire BoE was eurosceptic. Now that seems to be not quite true.

[RandBlade]

Yeah, maybe not, and thats a bad thing as I said. I agree with you here.

[RandBlade]

And now the guilder is history.

Found this article from Dec last year about the Netherlands.. Thought is was interesting, especially the comments regarding Britain: http://news.bbc.co.uk/hi/english/business/newsid_1456000/1456613.stm

[Hazir]

Originally posted by RandBlade
And now the guilder is history.

Found this article from Dec last year about the Netherlands.. Thought is was interesting, especially the comments regarding Britain: http://news.bbc.co.uk/hi/english/business/newsid_1456000/1456613.stm Don't mistake Dutch ways of looking at your Brits for the way the Germans and French see you. In many ways Dutch and British culture are compatible so that's why it's good for us when you're in on the deal. It's not so good for us if you try to defy the entire purpose of the project.

[RandBlade]

No-one's trying to defy the euro. Everyone whether europhile, eurosceptic, pragmatic (what I'd class myself as) or indifferent wants it to succeed for you. Just some want it to be for you, and some although wanting it to succeed don't believe it will.

[RandBlade]

I don't understand why people can be fined for accepting guilders now though. Sure its not your legal tender any more, but the euro's not our legal tender, yet it can be used in certain stores. Just like the dollar can too in some stores here. So whats the difference?

[Hazir]

Originally posted by RandBlade
I don't understand why people can be fined for accepting guilders now though. Sure its not your legal tender any more, but the euro's not our legal tender, yet it can be used in certain stores. Just like the dollar can too in some stores here. So whats the difference? Oh, I missed that one, it's a load of crock, you couldn't be fined for accepting polished shells for payment. The only difference between yesterday and today is that people are no longer obliged to accept guilders in payment, so when you try to settle a bill in guilders you may find out you haven't paid at all (and you would be liable).

[Hazir]

Originally posted by RandBlade
No-one's trying to defy the euro. Everyone whether europhile, eurosceptic, pragmatic (what I'd class myself as) or indifferent wants it to succeed for you. Just some want it to be for you, and some although wanting it to succeed don't believe it will. Like I said before, the euro is a success already, the external value is relatively unimportant. I can understand it's of a bigger concern to an economy with a minor currency with more external exposure.

PS. at this point I remember the words of an financial analyst on CNBC this morning. He was concerned that the average debt-level in the UK at this moment stands at 118% or after-taxes income. He also said this wasn't sustainable, because it means that the UK is living above its means.

[RandBlade]

The euro's not a success yet. A currency can only be a successful one if it can withstand a crisis without cracking. Something like the Oil shock of the 70's, but a severe recession nonetheless. Until something serious happens, the success of the euro can never be judged.

[Hazir]

Originally posted by RandBlade
The euro's not a success yet. A currency can only be a successful one if it can withstand a crisis without cracking. Something like the Oil shock of the 70's, but a severe recession nonetheless. Until something serious happens, the success of the euro can never be judged. So you call a global recession, the monetary and economic aftermath of september 11th not a major test? Without the euro we would still be picking up the monetary fall out of all that. As is we (in euroland) were barely touched.

[RandBlade]

There has been a global slow-down, not a global recession. The economic fall-out from 11/9 has not been that great - although it is a good excuse. It is a test, but no, not a serious enough one.

And I don't see how you can claim that the euro meant you were hardly touched by it. Gerhard Schroder is trying to blame the fact unemployment in Germany is skyrocketting on it. The fallout has certainly not been prevented there. It has in the Netherlands, but thats not thanks to the euro. Has the eurozone been less affected than any other nation? I don't believe it has.

[Hazir]

Originally posted by RandBlade
There has been a global slow-down, not a global recession. The economic fall-out from 11/9 has not been that great - although it is a good excuse. It is a test, but no, not a serious enough one.

And I don't see how you can claim that the euro meant you were hardly touched by it. Gerhard Schroder is trying to blame the fact unemployment in Germany is skyrocketting on it. The fallout has certainly not been prevented there. It has in the Netherlands, but thats not thanks to the euro. Has the eurozone been less affected than any other nation? I don't believe it has. If we would still have had the ERM rather than the EMU it would have broken apart, and that would have caused major instability in Europe. Something that was prevented by the mere existence of the euro. As for your monetary situation, the sterlingzone is untill further notice simply seen by the financial markets as an appendage of the eurozone. Sterling tracks the euro a lot closer than it follows the dollar.

As for Schröder blaming the euro for unemployment, do you have a source for that? I haven't seen anything to that effect. And even if I would have, politicians love to blame things beyond their control for their own shortcomings, ignore just as keenly that successes very often aren't theirs either.

[RandBlade]

Sterling tracking the euro? Erm, in one word ... no. Why do you think that the euro is now under-valued so much? Since there was that collapse in your currencies value in '99, which did not happen to sterling. Claiming that sterling tracks the euro is simply not true at all.

The alternative to being in a single currency is not just being in the ERM, its having freely floating exchange rates. And until there's a serious test, we won't know which is better.

Schroder has blamed the unemployment on 11/9, not the euro. Which is just nonsense.

[Hazir]

Originally posted by RandBlade
Sterling tracking the euro? Erm, in one word ... no. Why do you think that the euro is now under-valued so much? Since there was that collapse in your currencies value in '99, which did not happen to sterling. Claiming that sterling tracks the euro is simply not true at all.

The alternative to being in a single currency is not just being in the ERM, its having freely floating exchange rates. And until there's a serious test, we won't know which is better.

Schroder has blamed the unemployment on 11/9, not the euro. Which is just nonsense.
Well, on the euro/sterling link you disagree with about 9 out of 10 financial analysts I have heard about the subject in the last year.

Why do I think the euro is undervalued? If I would be able to answer that question I would be a very rich man. After reading a shítload of articles and opinions on the matter I can only come to the conclusion that the undervaluation is mostly about perception, not economic grounds. Otherwise you could never explain that even though none of the positivism about the US economy in 2001 came true and still the dollar remained overvalued on expectations the US economy would do better. People want to believe the dollar should be higher and by believing that in big enough numbers they drive it up.

PS. how much did sterling loose against the dollar over the last 3 years? (*12%) And did sterling recover significantly in 2001 on the basis that the UK economy was the strongest grower in the G7 ? (*no it was entirely flat)

*Data from BoE Quarterly average

PPSS. as I was typing this I got the latest info on the exchangerate euro down on the dollar 0.28% but 0.1% up on sterling. Given the present situation there is NO rational explanation for that.

[RandBlade]

How much did euro lose against the dollar in the last 3 years?

Although normal rational expectations would say that the sterling would be rising in value, exchange rate are also dependent upon expectations. And the expectation of Britain joining the euro has increased as the change-over was approaching and now passed. The view is however that sterling would need to be devalued in order to join the euro (even though sterling isn't over-valued compared to the rest of the world). Therefore more people thinking Britain will join euro = more expectations that sterling will be devalued = lowering in value of sterling.

[Hazir]

Originally posted by RandBlade
How much did euro lose against the dollar in the last 3 years?

Although normal rational expectations would say that the sterling would be rising in value, exchange rate are also dependent upon expectations. And the expectation of Britain joining the euro has increased as the change-over was approaching and now passed. The view is however that sterling would need to be devalued in order to join the euro (even though sterling isn't over-valued compared to the rest of the world). Therefore more people thinking Britain will join euro = more expectations that sterling will be devalued = lowering in value of sterling. Devaluation ? Nobody expects a devaluation, for starters there is no reason why the present members of the EMU would allow the UK to devalue its currency in order to enter. So the lower value is dictated ONLY by the market.

This is not changed by the fact that a lower rate would be desirable for entry of the UK into the EMU.

[RandBlade]

No, here a devaluation before entry is highly expected. Although probably not immediately before - a devaluation and then a referendum probably, meaning that by the time the process is finished, the devalued rate is the market rate. Fiddling with interest rates etc can also 'naturally' devalue sterling.

Expecting a fiddle basically, and quite possibly for it to happen before there's even been a vote.

You didn't say, how much did euro lose against the dollar?

[Hazir]

Originally posted by RandBlade

You didn't say, how much did euro lose against the dollar? An economist who can't find the BoE site ? :D

[RandBlade]

Originally posted by Hazir
An economist who can't find the BoE site ? :D I could and have now:p

Using the month averages (which are a small period of time, but account for daily volatility) for Jan '99 (start of euro) to Dec '01 (last month, latest), these are the figures for how many euro's/dollars one pound equals, and also the euro to dollar rate at the end.

€:£ $:£ €:$
Jan '99 1.4236 1.6509 0.8623
Dec '01 1.6151 1.4409 1.1209
Change +13.5% -12.7% +30%

Since the launch of the euro, to the end of last year, in a period of just under three years, the euro has lost 30% of its value relative to the dollar. Sterling on the other hand has lost merely 12.7%. A massive difference there.

The plain simple fact is, sterling and the euro have of course been diverging. During the life span of your fledgling currency, the euro has lost 13.5% of its value compared to sterling. 13.5%!! Thats a lot.

In fact at only (?) a 12.7% change, sterling has been tracking the dollar more than the euro.

If 9/10 financial analysts disagree with me in saying the sterling has not been tracking the euro, then 90% of the financial analysts you've heard should be sacked, or you shouldn't listen to them any more.

Looking at the statistics shows a blatant truth. There has been a major change between sterling and euro, a massive change. Economically speaking, 13.5% is no small number at all. If you call that tracking, then sterlings been tracking nearly every currency in the world.

Quite clearly, sterlings not been tracking the euro (whatever 9/10 analysts say, must remember never to listen to the analysts you do!), so what has it been tracking? Its obviously not the dollar either. That leaves only one currency bigger than sterling itself - the Yen - so out of curiousity, I checked the figures between the two. Jan '99: 187.07; Dec '01: 183.55; Change = -1.88%. Thats much closer, incredibly closer, sterling has lost a mere 1.88% of its value in 3 years compared to the Yen. Compared to the ludicrously big numbers we're dealing with regarding the dollar and euro, its very close.

But sterlings not trailing the Yen now, is it? The fact of the matter is, pure and simply, that despite your protestations otherwise, the fourth biggest currency in the world sets its own exchange rates.

Sterling doesn't trail the euro, not unless you can explain a 13.5% divergence as being part of trailing, and it doesn't trail the dollar either obviously. The value of sterling is based upon factors which affect it, not forced upon it by the others.

Oddly enough, only because of your bringing it up did I research the full stats here to show exactly what I've been saying all along. The figures well and truly back me over 90% of your analysts etc

[Hazir]

1. make up your mind, is sterling tracking euro or not? This morning you explained one phenomenon by the 'devaluation-expectation' which is a clear indication of sterling tracking euro.

2. you are forgetting one very important step in the way the 'original value' of the euro was determined. It was done by fixing €1 at exactly 1 ECU. But however convenient that method was, it wasn't quite sound. Because as you probably will know ECU was a composite unit in which sterling was contained. The weight of sterling in the ECU on december 31 1999 was 12,45% . A mere 1% away from the 13,5% total loss against sterling. It seems that what has happened was mostly the reduction of the overvaluation of the euro that was caused by the absence of sterling.

Still claiming sterling sets it's own rate even though that besides this natural reweighing sterling floats in tandem with the euro against the dollar?

[RandBlade]

1: These two aren't contradictory. In fact the second causes the first. Its precisely because we've not been tracking the euro, that if we were to join, an unnatural adjustment would have to be made.

2: Will have to look into this, but I don't believe that it was just a re-weighting. Won't argue this until I've looked into it more.

[Hazir]

Originally posted by RandBlade
1: These two aren't contradictory. In fact the second causes the first. Its precisely because we've not been tracking the euro, that if we were to join, an unnatural adjustment would have to be made.

2: Will have to look into this, but I don't believe that it was just a re-weighting. Won't argue this until I've looked into it more. Fiddlesticks* you can't say the overall movement is based on the underlying economics, then pick out a particular move and say it's based on political expectations.

[RandBlade]

No, there's a mix of the two.

Currencies will change from 2 different means. Underlying economics and expectations.

If there's a sudden change in expectations, then that will explain a sudden change in the rates. However underlying economics forms most of it normally.

There's a difference between the Short Run (SR) and Long Run (LR). The recent events of the transaction causes more of an SR change, a sudden swing of rates due to a sudden change of expectations. In the LR, over the years however, its underlying economics that causes it.

Its entirely consistent with economic theory, in anything, to state that LR is caused by underlying economics, and SR is caused by political expectations and other things.

[RandBlade]

BUMP. Do you understand that Short Run v Long Run explanation? Do you agree?

Btw, just started my new semesters module on the European Economy. First thing we're studying is the structural changes, in regards especially to a change from a manufacturing economy to a services economy.

Basically, as I thought, the fall in manufacturing is universal, and is not a critical cause for concern. In fact as early as 1935, the three stage economic growth idea was pointed out (didn't think that was known until much later). In case you don't know what that is, there's three stages for an economy. Agriculture, then Industry (Industrial Revolution), then Services (now).

Between 1970-90, every single nation in the EU (apart from Greece) had a fall in their level of employment in the manufacturing sector.

In the UK now(2001 stats), employment in the manufacturing sector is at the rate of 14%, or 3.7million. This is compared to 21% in '90 or 35% in '70.

We have gotten through the transition of a manufacturing economy, to a service economy, without having mass unemployment at the moment.

In fact, we now have less people working in manufacturing, than the Germans have unemployed.

Further falls in manufacturing employment are hardly critical to our economy now.

[Hazir]

Originally posted by RandBlade
BUMP. Do you understand that Short Run v Long Run explanation? Do you agree?
Do I understand? yes. Do I agree? I can't say untill I know what short term/long term means in your equation.
Btw, just started my new semesters module on the European Economy. First thing we're studying is the structural changes, in regards especially to a change from a manufacturing economy to a services economy.

Basically, as I thought, the fall in manufacturing is universal, and is not a critical cause for concern. In fact as early as 1935, the three stage economic growth idea was pointed out (didn't think that was known until much later). In case you don't know what that is, there's three stages for an economy. Agriculture, then Industry (Industrial Revolution), then Services (now).

Between 1970-90, every single nation in the EU (apart from Greece) had a fall in their level of employment in the manufacturing sector.

In the UK now(2001 stats), employment in the manufacturing sector is at the rate of 14%, or 3.7million. This is compared to 21% in '90 or 35% in '70.

We have gotten through the transition of a manufacturing economy, to a service economy, without having mass unemployment at the moment.

In fact, we now have less people working in manufacturing, than the Germans have unemployed.

Further falls in manufacturing employment are hardly critical to our economy now. That is a much too optimistic statement because you can get a feeding in of the decline of manufacturing into services if you can't re-employ people made redundant from manufacturing. People with a job generally consume more than people out of a job. But I agree that there are changes that could harm your economy significantly more than the further decline of manufacturing.

Still having said that, there is no theory on how sustainable the - manufacture-free economy is. And of course there is the question if wealth generated through services is real wealth (e.g. the dot.bomb)

[RandBlade]

Just heard that Dim Wuisenberg is retiring. Wonder if his replacement will be any better?

Sounds like that Frenchie can't get it afterall though . . .

[Hazir]

Originally posted by RandBlade
Just heard that Dim Wuisenberg is retiring. Wonder if his replacement will be any better?

Sounds like that Frenchie can't get it afterall though . . . Well, if there's one thing you Brits have made certain it's that no Brit is going to get in that position untill 2011 at the earliest.

[RandBlade]

Well there's a suprise :rolleyes:

I've got nothing against any member of any nation. I don't like Dim because he screwed up too many times, although the transition went smoothly. Don't think I'm attacking him because he's Dutch, only found that out today.

And the reason I mentioned the Frenchie is because I don't remember his name, but he was the guy expected to take over, except for the fact he's now being investigated for possible fraud.

[Hazir]

Originally posted by RandBlade
Well there's a suprise :rolleyes:

I've got nothing against any member of any nation. I don't like Dim because he screwed up too many times, although the transition went smoothly. Don't think I'm attacking him because he's Dutch, only found that out today.

And the reason I mentioned the Frenchie is because I don't remember his name, but he was the guy expected to take over, except for the fact he's now being investigated for possible fraud. The fact you didn't know his nationality is telling about the poor standards of journalism in the UK these days.

Otherwise, he didn't mess up at all, he just didn't play the game to the Anglosaxon rules, but that is not the same as messing up. He has made it very clear the ECB isn't going to be pushed around by politicians from ANY country and he did what he had to do, keep eurozone inflation in check. Because unlike what you seem to think it is NOT the job of the ECB to stimulate the economy. That job belongs to the governments of the memberstates. And some of those governments delivered where some others (most clearly the Germans) failed to deliver.

[RandBlade]

He made it clear he wasn't going to be bossed around, he made it clear he wasn't going to lower interest rates, despite the recommendations he was getting.

The next day in the monthly assessment, eurozone rates were announced to have been cut by 0.25%.

Sorry, I've never forgiven him after doing that. You don't mess around with markets like that. If you're in such an important position, then you don't back down like that in less than 24 hours. You lose all credibility, and I lost all credibility for him. He backed down, at the worst time, ever imaginable. The day after he'd said he wouldn't. You can't respect a Central Bank chief who does that. And thats when I decided to call him Dim Wuisenberg btw.

How can you say he wouldn't back down under pressure after he did that? Don't you remember. For its growth rate, inflations rather high btw, but inflation shouldn't be the primary target when the area's suffering a down-turn. If thats what he's been bound to do, then there was a design flaw in the instructions given to the ECB.

And thats just one thing, but the most important.

And his nationality would've been reported plenty of times. I didn't really care. I judge people by how they perform, not where they're from.

[Hazir]

Here we go again, judging the entire world by your local standards. We don't care too much about what you think is the right way of doing things. As far as we are concerned the ECB is sticking pretty much to the same set of rules the Bundesbank stuck to and we're quite happy with that.

[RandBlade]

You're happy with him losing all personal credibility?

You're happy that he backed down, within 24 hours of saying no?

[RandBlade]

Says something about Dim Wim's credibility, that the markets reaction to his announcement was for the value of the euro to rise!

The ECB is set for 15 months of instability. With France still insisting that the replacement should be French, regardless of qualities, and the potential replacement being investigate for fraud, you'd think the market would be concerned about the instability this'll cause.

Far from it though. Dim Wim had so little credibility left after his backing down in such a poor manner, and his various other gaffes, that the value of the euro rose following the announcement. Seems like the market agrees with me too.

[Hazir]

Somebody ever told you it's kind of risky to predict the future? With his announcement yesterday Duisenberg has created a very clear situation for the next few upcoming appointments. As for Trichet, it's far from certain he was involved in the CL affair at all, so if he's cleared from that he'll definately be one of the better choices. Noyer, the number two on the French shortlist is quite an impressive central banker too. So I wouldn't say with these two names we have embarked into 'regardless of qualities' terrritory yet.

As for the external value of the euro, that was more affected by the lack of attraction of US equity the last few weeks than anything else.

[RandBlade]

You didn't answer my question.
You're happy that he backed down, within 24 hours of saying no?

[Hazir]

Originally posted by RandBlade
You didn't answer my question.
He never backed down, it was part of the agreement that he would retire before the end of his term. Not the most elegant of agreements, but nonetheless it was made, and he stuck to it. Nothing surprising about it, and certainly not a sign of him backing down.

[RandBlade]

Ack, no thats not what I was saying. I was talking about what I said earlier was one thing I didn't respect him for.

When he said that Eurozone interest rates wouldn't be cut, even though lots of people were saying they should be, and then the next day they were cut.

[RandBlade]

And now its over. 12 nations currencies gone, one new one remains. Glad it went smoothly. Btw, there's some talk about I believe May '03 for our referendum.

[Dragon Revisited]

Wow ... thanks to how active this discussion has stayed, this thread survived The Pruning. Not only is this the oldest thread in the CC forum, and the largest unlocked thread ... it will be one year old in only 10 days!! :eek:

[Hazir]

In a way it's really too bad the topic is a bit obsolete from where I stand.

We had our change-over, everything went smooth, only foreigners still talk about the old currencies and/or entering into the euro. Even discovering 'non-dutch' coins in my change has worn off a little bit, though I still routinely check my notes for non-dutch serial numbers. Paying with euros in Turkey was also frightfully uneventful; they named their price in liras, I converted to euro (€10) and handed over a red €10 note for my busticket, which was accepted and put away without any special attention. I could have survived without ever changing any money at all since they would have their euro and dollar conversion rates posted pretty much everywhere (no sterling Randblade).

I understand the debate still rages on in the UK, might be that in the end they will be the only European country left outside of the eurozone, but in the long run I see them joining too. That would be once they realise they have to make a political decision to be a full member of the EU.

[Dragon Revisited]

It's very interesting on a thread this old to read the latest entries and how things turned out vs the first entries and the concerns and debates at the time.

[Hazir]

According to an article in the Guardian today the UK's portion of inward investment into Europe went down from 26% to 19%. Of course it's difficult to say what exactly caused that, but it IS a coincidence that it happens at a time that the UK keeps giving off mixed signals about joining the EMU or not.

[Hazir]

Wow, today I found a coin from Finland. Makes you wonder how it got from there to the small town in the Netherlands where I live.

[Merlin]

Bah, the UK will join just as the pound looks headed toward recession.

[RandBlade]

Originally posted by Kolbeinn
Bah, the UK will join just as the pound looks headed toward recession. Currencies don't have recessions. And since '99, euro-land countries have performed much worse than the UK. Point is that its the countries, not the currency though.

Hazir, I wouldn't expect to pay in sterling in Turkey, nor would conversion bother me.

400 replies now on this topic. Not bad going for a debate thats remained on topic.

[Hazir]

Originally posted by RandBlade
..
Hazir, I wouldn't expect to pay in sterling in Turkey, nor would conversion bother me...Conversion doesn't bother me either. But for a different reason :D

[RandBlade]

Would you be interested in resuming the debate as to whether Britain should join or not? I would be if you are. Btw, I'm going to be studying the euro in even more depth soon, I've decided to write my dissertation on something on the topic.

[Hazir]

Originally posted by RandBlade
Would you be interested in resuming the debate as to whether Britain should join or not? I would be if you are. Btw, I'm going to be studying the euro in even more depth soon, I've decided to write my dissertation on something on the topic. Well, what do you think will happen to the political situation in the UK so that euro-entry becomes feasable ?

[RandBlade]

Its weird. And the politics doesn't interest me as much as the reasons for and against. But I think that people are set against, a vote today would get a no vote. But I don't think that opinion it to set in stone. If the government said "the economic conditions are now right, we should now join because ..." then I think that would get a yes vote. On 2 criteria: (1) No-one can launch a convincing case that the times not right. (2) The government still has credibility on the issue; they'd lose their credibility if they were actively campaigning for a long time, before the timing was right etc

But thats not definite. Its really uncertain. In general, I don't think most plebs care too much either way. The only public opinion stated normally apart from Lib Dems and Labour people without credibility is that it would be harmful, so people go along with that. Once it becomes a genuine debate, then the side which has the best case ought to win.

OTOH, I'm a europhile, and I'm not entirely convinced about the benefits of joining the euro. Note on a seperate but relevant issue, the highest complaint with the EU is not that its getting too much power, making bad decisions etc ... its that its not democratic. The EU is rightly seen here as an undemocratic body.

[Hazir]

I know I must be sounding like a broken record, but there is no unambiguous answer on the question if it economically benefits the UK to enter into the EMU. That is what I have got against the socalled tests, they imply there is such an answer possible.

There are some arguments that support the entry, there are some arguments that speak against it. The truth of the economics are that you can't calculate the effects of entry because the reality changes through the entry itself. The old models don't apply any longer. So in the end the real question you have to answer is; what do you want? Do you want to be outside or not?

[RandBlade]

Hang on, it was me who was saying that its ambiguous :p

Anyway, what reasons are there do you think, to be inside?

[Hazir]

Originally posted by RandBlade
Hang on, it was me who was saying that its ambiguous :p

Anyway, what reasons are there do you think, to be inside? Lesser exposure to exchangerate risks, bigger distance between the Monetary Policy makers and politicians. And for Britain specifically, less risk of being marginalised in the long run.

The economical side is ambiguous, so it's not very useful to insist on making a decision on economical considerations only. Which leaves you with the real question; do you have the political desire to become part of the Union for real.

Actually I think the Americans who read about the EU must feel like they are reading about their own history.

[RandBlade]

Exchange rate exposure can often be a good thing, it works to help fix cyclical problems. Eg, if the UK was in a recession and the world wasn't, then the value of sterling would fall, this in turn makes imports more expensive, exports cheaper, which helps improve AD, which helps kick the nation out of the recession. The recession gets solved, because of exchange rate fluctuations. It is said that Australia never enterred into a recession in '97 when the rest of Australia did, in part because of such a collapse in the Aussie dollar. Exchange rate fluctuations are very important in economics, and they typically work to benefit, not harm, the economy.

Secondly, there is no evidence that the BoE MPC is influenced by the politicians. If you assume that central banks can be influenced, then at least our government is democratically accountable.

Thirdly, bigger distance regarding the central bank is the chief economic reason not to join, as it means that the interest rate is set according to European, not British needs.

If you think of it as a political question, well we've not really discussed the politics yet, so what political advantages do you think there are?

[Hazir]

You mention a one off situation where devaluation had a good outcome. The usual picture is a lot less rosy, because devaluation does not only make exports cheaper, but also the imports of raw materials priced in different currencies more expensive. (One of the big goals for the EU should be to change the pricing of the oil it buys from dollars into euros to reduce the risk even more).

Also does massive devaluation of one coin make it attractive for governments to devalue their currency also (as happened in the thirties).

On your MPC, the fact remains that the government has established it and can abolish it just as easily, especially in your system where you don't need coalitions to govern. Taking away the independence of the ECB would require 12 memberstates to agree with such a change. Something that is close to impossible.

On rates set according to 'British' needs. What 'British' needs? Those of the south or the north? Those of the booming part of those of the declining part of your economy?

The political gains are very obvious; at the moment the UK is a member of the EU that is not quite as important as it would be as a full member. I know that sometimes your government and certain newspapers will write glowing stories of how your government formed a 'coalition' with this or that country and achieved something. The fact of the matter is that those occasions are rare exceptions, and that other countries have to make a much lesser effort to build such coalitions because they feel more naturally bound together. If Germany and France want something, then you need an awful lot of effort to even slow them down, let alone stop. If the UK wants something it has to make a major effort to start things moving, if at all. The main reason for all this is that the UK makes the mistake of thinking that by keeping one foot our and one foot in it can have it both ways. But of course all it means is that they get stuck in the doorway.

[Hazir]

Randblade, 0,1% first quarter growth? Not exactly in cycle with the US are you? What's happening to the successtory?

[RandBlade]

http://news.bbc.co.uk/hi/english/uk_politics/newsid_1989000/1989327.stm

It really looks like the timeline for the euro campaign has been settled now.

There probably won't be too much going on until the end of this year, because there's so many continental elections going on this year, ending with Germany's, which like tonights Dutch election, looks set to end in a change of government so far.

After the political scene settles down, there won't be too long, before the campaigns truly begin in earnest here, with the economic tests being taken before June next year (guaranteed), and a final vote on membership next year.

[Hazir]

We'll see what it comes of it. I hope this really means the one step forward, two steps back period is over.

[RandBlade]

If joining the currency is a step forward.

I want a single currency, but if it means we must have the same tax rates or labour regulations as the French and Spanish ... then no thanks, I'd rather change my currency over.

[Mehrunes]

Originally posted by RandBlade
If joining the currency is a step forward.

I want a single currency, but if it means we must have the same tax rates or labour regulations as the French and Spanish ... then no thanks, I'd rather change my currency over.

Is there something unusual about French and Spanish labour regulations?

[Hazir]

Originally posted by Mehrunes


Is there something unusual about French and Spanish labour regulations? Hardly, and there are 12 different sets of labour and tax legislation in the eurozone. But the Brits have this obsession with the EU which makes them think that if we have one currency that automatically changes all the rules of their economy.

People who actually think will realise that it's the economy that forces you to change the rules. If such changes are going to occur at all. I live 50 km from the German border, I don't see any proof that German and Dutch taxation or Labour rules are being unified.

So basically what Randblade is doing is throwing unrelated issues together on one heap that are not related.

If anybody can make a solid case for the EU not having a single currency should submit it to the FED ASAP, because such a document would be evidence that the US immediately needs to abolish the American dollar.

[RandBlade]

US is a single nation, all the states have the same language, pretty much the same labour laws, pretty much the same taxes, pretty much the same economies.
EU is multiple nations, different languages, very differing labour laws, widely varying taxations, and very different economies.

Yeah, great comparison there :rolleyes:

Is there something unusual about French and Spanish labour regulations?Depends if you count things such as high unionisation, strong 'rights' for workers - anti-dismissal laws etc, 35 hour working week and many other things different to our system.

Its Chancellor Gerhard Schroeder who keeps saying he wants an economic union. Chirac and Jospin had their own versions they wanted. Many Europeans have now said that a single currency must have a single economy.

I don't think it must. I'd support being within the currency (probably, if the timing was right) ... but not a single economy. I don't want an economic union, and if it must progress there if we're in the currency union, then I don't want to enter the currency union.

[Hazir]

Randblade, you really should try to read up a bit on the US before you make all sorts of wild claims about it. The US does have a federal government, but that does not take away from the fact that the states have far reaching powers in a lot of fields.

Which means that it is up to the state to have income tax or not, property tax or not, sales tax or not. I have very little doubt that the states have their own social systems and labor legislation too. There are some sections in the US economy where the unions have more power than the employers.

You can't make sweeping remarks about US legislation that is not regulated on the federal level based on the fact they speak english only.

[RandBlade]

I'm not saying the US is the same. Compared to the EU they are pretty much the same though.

Anyway, the question is do the federalists within Europe want to use the euro as an excuse to make taxes more level across europe, or not?

[RandBlade]

http://news.bbc.co.uk/hi/english/uk_politics/newsid_1990000/1990610.stm - 1 May is being touted as a date for the referendum.

The interview of Blair that has shown this change: http://news.bbc.co.uk/olmedia/cta/progs/newsnight/02/blair_paxman15may.ram (long, contains other issues)

[Hazir]

Originally posted by RandBlade
I'm not saying the US is the same. Compared to the EU they are pretty much the same though.

Anyway, the question is do the federalists within Europe want to use the euro as an excuse to make taxes more level across europe, or not? Federalism, wouldn't it be nice if you Brits learn the true meaning of that word? Federalism does not mean a totalitarian central government set on stamping out local differences. The average American should be able to set you straight on that one.

[RandBlade]

Originally posted by Hazir
Federalism, wouldn't it be nice if you Brits learn the true meaning of that word? Federalism does not mean a totalitarian central government set on stamping out local differences. The average American should be able to set you straight on that one. I know what Federalism means. I have lived in a nation with states and a federal government.

However, if there is a federal economy in the future, as prominent continental european politicians have asked for, then how similar will it be? What sort of tax regimes?

These are questions that need answering. Or do you not expect any sort of harmonisation of tax rates?

[Hazir]

Originally posted by RandBlade
I know what Federalism means. I have lived in a nation with states and a federal government.

However, if there is a federal economy in the future, as prominent continental european politicians have asked for, then how similar will it be? What sort of tax regimes?

These are questions that need answering. Or do you not expect any sort of harmonisation of tax rates? No, I do not expect harmonisation of tax rates because of a stronger federal government (which I noticed is what Blair promotes too now). If there is going to be harmonisation of tax regimes it will be because the 'market' demands it.

There are people who travel from Manhattan to Jersey city to avoid high New York sales taxes. This phenomenon has been around for decades already. I don't see Washington DC stepping in to force either Jersey or New York to adjust their sales taxes.

[RandBlade]

Then what do you think of people like Schroder whom say that with a single currency, more harmonised tax rates should flow?

[Hazir]

Originally posted by RandBlade
Then what do you think of people like Schroder whom say that with a single currency, more harmonised tax rates should flow? That he is a politician in one member-state who tries to push his agenda.

[RandBlade]

So just to finish off this bone of contention. You do think that if Britain were to join the euro, we wouldn't have to move towards unifying tax rates in the future, due to being in the euro?

[Hazir]

Originally posted by RandBlade
So just to finish off this bone of contention. You do think that if Britain were to join the euro, we wouldn't have to move towards unifying tax rates in the future, due to being in the euro? Not due to being in the euro. The EMU does not create a situation in which the EU gets the powers to levy taxes or force systems of taxation on the memberstates.

I can not predict what will happen in all of the 15 memberstates of course, but that is where changes, if any, will originate. And those changes will be dictated not by Brussels, but by economical necessity. Experience learns that states feel they have to gain more by having differences in taxation than the same rules.

Or with a few words less; the EU does not have the power, the states don't have the desire; it won't happen.

[Mehrunes]

Originally posted by RandBlade
US is a single nation, all the states have the same language, pretty much the same labour laws, pretty much the same taxes, pretty much the same economies.
EU is multiple nations, different languages, very differing labour laws, widely varying taxations, and very different economies.

Yeah, great comparison there :rolleyes:

The US is a single nation made up of multiple states. From state to state economies vary widely. Within certain states economies vary widely. I live in New Jersery, with an aging industrialized north and a relatively young agrarian and tourism based south. This, however, doesn't lead me to believe the New Jersey should be divided.

Is their something wrong with a unified federal tax system?

Or rather, does Britain stand to lose more from unified tax rates and/or labour laws than it would from being economically removed from it's closest neighbours?

[RandBlade]

Originally posted by Mehrunes
The US is a single nation made up of multiple states. From state to state economies vary widely. Within certain states economies vary widely. I live in New Jersery, with an aging industrialized north and a relatively young agrarian and tourism based south. This, however, doesn't lead me to believe the New Jersey should be divided. Are there restrictions on how long people can work (35hours) in one state, 40 hours in others, and no limit in some?

Yes, there are differences, but they're not as marked as they are within Europe. And by that, I don't mean what people do, thats not so relevant to being seperate or apart. I mean widely varied laws.

Is their something wrong with a unified federal tax system?Depends on the political reality of the federation.
Or rather, does Britain stand to lose more from unified tax rates and/or labour laws than it would from being economically removed from it's closest neighbours? Yes.

[Alaster]

I was in Germany when the change over happened, and I saw lots of people pleased with how smooth it was in the beginning. Although older folks didn't like it because they lived through the currency of the Reich and then the Mark, now the Euro ;)

I really haven't researched it all that much but from what I understand, Britian has thought about it, and might join if the Euro proves to be stable later on? And I guess that prices were higher(still high?) when the Euro was first used. Until the different countries start marketing the same product at competitive rates, I guess they might remain higher for some time.

I wonder though if prices would drop if you bring in an indust/post-indust nation like Britian. Britian being a powerhouse in Europe would definately bring in the competition.

[RandBlade]

Due largely to Britain's financial markets being so strong - more of the euro is traded in London, than any city in the eurozone, even Frankfurt - the pounds always over-valued.

This means that things are more expensive in the UK than anywhere else apart from Japan pretty much.

[Mehrunes]

Originally posted by RandBlade
Are there restrictions on how long people can work (35hours) in one state, 40 hours in others, and no limit in some?

Yes, there are differences, but they're not as marked as they are within Europe. And by that, I don't mean what people do, thats not so relevant to being seperate or apart. I mean widely varied laws.

I've never heard of a restriction on the number of hours people are allowed to work like that. These things are handled more by union contracts and set standards and specifications and vary a great deal between trades. A driver can only drive for so many hours straight to avoid fatigue, a cook on the other hand can work 80 hours a week if they want. It's between the employer and employee, and specs are open-ended enough to allow a wide degree of flexibility.

About the "yes". Is that a short-term opinion? Is that assuming that another country's laws will become your laws and not the other way around? Is your answer based in any way on the idea that, however likely or unlikely, Britain will become more involved with socialist policies?

[Hazir]

The 'yes' is based on the mere fact that the UK has got the lowest tax-pressure of the entire EU. Which may sound like a wonderful deal to Americans, but not so to a lot of Brits when they start to think about it.

Because they do like low taxes on the one hand, but on the other hand they also want decent public services. Which they haven't had for a very long time because they didn't pay the kind of taxes they need to pay to get the services they want. It has been recognized by the three main parties in the country that the party that wins the sympathy is the party that increases spending in public services. Or in other words, the party that increases taxes.

The UK does quite well in the statistics, and on a macro-economic level they are doing quite well. On a micro-level however, that is to say, the level that matters to ordinary people, with a family, a job, a house and a car, they lag behind most of Europe. Quality of life in France for example is much better than that in the UK. Yes, vilified France is a considerably better place to live than the UK, notwithstanding the economic data. Brits work harder and get less.

What Randblade also always conveniently forgets to mention when he talks about the position of London as a financial market, is that it is the biggest (international) market for euros, but that the trading is done by American and European (mainland) banks. The 'city' also does not have a great effect on the value of the pound. What does, is the tendency of the Brits to spend more than they earn. Making investment in their economy attractive for the time being. Pretty much how the US economy is driven by consumers. It's a worrying habit, since the UK economy is much smaller than that of the US, and there is no vested interest in propping up the pound outside of the UK because of this. Any slowdown in the economy (for example if the destruction of their industrial base starts to seep through into consumption figures) could cause the UK to return to a cycle of boom and bust.

[Hazir]

Well well well, Fidel Castro has decided to use the euro as a weapon against the dollar :D

source ('http://famulus.msnbc.com/FamulusIntl/reuters05-24-095921.asp?reg=AMERICAS')

[earthJoker]

BTW, the tax and credit system are one of the major reason why switzerland isn't in eu. Here you got around 3% on a hypotec for a house in the whole EU its way higher...it would couse a majer problem for all housholder if we would get the EU credit system, wich means if we ever wanne join it we would have to restructer our sysem first in a way that doesn't make everone loseing their houses.

Hmm cuba...I wan't to make holyday there...maybe next spring would be nice :D

[Hazir]

Originally posted by earthJoker
BTW, the tax and credit system are one of the major reason why switzerland isn't in eu. Here you got around 3% on a hypotec for a house in the whole EU its way higher...it would couse a majer problem for all housholder if we would get the EU credit system, wich means if we ever wanne join it we would have to restructer our sysem first in a way that doesn't make everone loseing their houses.

Hmm cuba...I wan't to make holyday there...maybe next spring would be nice :D Sounds like a Brit-type scare story they are telling you in Switzerland EJ. Your central bank in reality is trying to keep the Franc in a certain range with the euro. Which with the speculative moves into the Franc at the moment means lowering prime rates. But that doesn't necessarily mean that the consumer gets lower rates for mortgages (hypothek). The rate you get for that depends on how competitive the banking system in your country is.

On taxation, I have already answered Randblade, we have the euro for almost 3.5 years now, and there is not a single sign that there is pressure on the memberstates to bring their tax-system in line. Simply because there is no line.

What I can imagine IS a serious problem for Switzerland is the bank secret, because you earn so much money by attracting flight capital from around the world. But on the other hand, Luxemburg is a EU and euro member and that has managed to keep its banksecret pretty much intact too. It all depends on the aptitude of your negotiators I suppose.

[earthJoker]

Nono we get lower rates on montages. I know it my parents got hypotek too, everyone got them because they are so damn cheap. In switzerland the banks give the rates to the consumer, witch means we actually get those low rates.

BTW austria also has bank secret in the constitution but they never get that big as the schilling isn't as strog. The franc always goes up when some country has problem as it seems that investor but they money in francs when they but it out from a "critical" country.

Putting down the sectet would probably mean that alot of money would go away from swiss banks of course a thing that the rest of the eu would like to see, the swiss banks fear it, but it wouldn't hurt the people in a way like a higher rate for mortages.
Of course the central bank is trying to lower the value of the franc...if not we would go into deflation and that would be a catastrophe.

[Hazir]

The Schilling no longer exists :D

I think in the long run it's inevitable you become members of the EU after the bilateral treaties come into force you actually are already members but for the fact you don't have voting rights. And paying SFR 650 mln a year to the EU without the ability to have a say in how the money is spent makes no sense whatsoever. Especially not when the same treaties give EU citizens free access to the Swiss capital and job market over the next few years.

About the low mortgage rates I think that must be a combination of cheap money flooding your country when there is a crisis and low interest because the Swiss Central Bank tries to keep the value of the SFR lower.

BTW : how does the euro work in practise in Switzerland? I know you're not part, but the reports on use of the euro are a bit confused. I was told that it is mainly in use in touristic centers and that at some banks you can even get them out of an ATM. But then I started hearing things like that you can even use euros in parking meters, ticket machines and that most supermarkets also accept them.

[earthJoker]

I know that the schilling doesn't exist anymore, but a half year (or actually 2 years) are a too short time to build up a finitial center.

Those rates are as you said a result of these, export is very important to switzerland as well is tourism...the results of a too hight franc are very bad for the economy. As my fathers company has most of the clients in germany I know this by myself. We also have a good economy witch is normaly needed for a stable money.

I don't have too mutch experience with the euro, I know the bakns accept it and the tickets and parking automats are getting changed so they can use euro too. I saw some banks automat where you can get euros (with your ec card). I am not shure about supermarkets, anyway you would get your return money in swiss francs.


About the billaterals, they make switzerlannd equal to a eu country in I think 6 or 7 parts. All those parts work in both direction so I can now(in 4 days) without a problem work in every eu country. For my its ok, a friend of my that came here from austria has now way better chances to get a job.
There are some points that arent in the billateral like the finantial system and of course we are still political indipendent.

[Hazir]

Originally posted by earthJoker ... we are still political indipendent. [/B]So are EU members.

[earthJoker]

Originally posted by Loki


Just wondering if you would rather have political and economic independence or political power and a better economy. I know that a lot of third-world countries would rather be independant.

By the way, since Switzerland wasn't really allied to the US or to the USSR during the Cold War, that makes it a third-world country. Anyone who was allied to America is a first-world country (even Pakistan), anyone allied to the Soviet Union is a second-world country (like Poland, Czechoslovakia, Yugoslavia), and everyone else is a third-world country (like Switzerland, Nigeria, Tunisia). Be proud that you belong to a third-world.:)

Thats the strangest thing I ever heard!

I think you mean this ironical, don't you?

Well...I know that every eu country is political indipendet but that wasn't the thing I meaned.

BTW Switzerland has one of the strongest economy(per person) of the world. (of course because of it size if you don't look at it per person it a very small economy)

[earthJoker]

Well after the end of cold war that definition doesn't make any sence anyway IMHO.

[Hazir]

Randblade,

Isn't the present slide of the pound a bit untimely for the UK government? To me it seems arkward for them that the exchangerate seems to move towards the desirable level when they have not made any move towards massaging the idea of EMU entry in.

I have always been puzzled by the reluctance of the government to make the case for the euro, but aren't they running the risk of missing the tide on this ?

[Halfsteel]

argh, cant you people in this forum ever agree on anything, this thread like 445 posts long.

[RandBlade]

Originally posted by Hazir
Randblade,

Isn't the present slide of the pound a bit untimely for the UK government? To me it seems arkward for them that the exchangerate seems to move towards the desirable level when they have not made any move towards massaging the idea of EMU entry in. Erm, you must have missed UK politics over the last few weeks. Starting with an interview Blair had with Newsnight a few weeks back, the government has made a lot of pro-euro statements.
I have always been puzzled by the reluctance of the government to make the case for the euro, but aren't they running the risk of missing the tide on this ?If we waited til the next parliament, what'd be the problem? Its not as if the EU will ever not want us in, is it? Having the worlds fourth largest economy in will only strengthen the euro, and make it much stronger in its rivallry to the US, and besides we're still going to be members of the EU regardless, so we've always got a chance if the times not yet arrived.

Strong roblems with the euro at the moment:
1: Interest rates - 0.75% lower in euroland. We're definitely not going to have ours put down again, and it will be going up later in this year. Cutting the rates would be dreadfully inflationary.
2: Exchange rates - 10-30% to high at the moment. Going in too high would be disastrous. Having a sudden (or even smooth but quick) reduction by that much would again be highly inflationary.

[Hazir]

Originally posted by RandBlade
Erm, you must have missed UK politics over the last few weeks. Starting with an interview Blair had with Newsnight a few weeks back, the government has made a lot of pro-euro statements.
That was just a new installment of the good cop bad cop series. Treasury people lost little time telling everybody they were in no hurry.
If we waited til the next parliament, what'd be the problem? Its not as if the EU will ever not want us in, is it? Having the worlds fourth largest economy in will only strengthen the euro, and make it much stronger in its rivallry to the US, and besides we're still going to be members of the EU regardless, so we've always got a chance if the times not yet arrived.
You're mistaken if you think the UK will be able to sail in no matter what. The psychological effect of UK membership may be there, but it would be negated if we let you in on terms that are too generous. You must have noticed the message to Sweden that they were not yet ready for EMU membership, even though their polls tell us that 50% of people there want to go in. That also was a message to London. And in a way a repetition of what happened first time round when London didn't get involved in the EC when that got started.

Strong roblems with the euro at the moment:
You mean problems with the pound.
1: Interest rates - 0.75% lower in euroland. We're definitely not going to have ours put down again, and it will be going up later in this year. Cutting the rates would be dreadfully inflationary.
The effect of cutting rates would depend wholly on the exchangerate you can go in with.
2: Exchange rates - 10-30% to high at the moment. Going in too high would be disastrous. Having a sudden (or even smooth but quick) reduction by that much would again be highly inflationary. You're the first who puts a number higher than 10% to the overvaluation of the pound in the three years this debate has been going on.

Generally economists say that the pound has to fall to a level of €1.50, which is €0.0578 down from the present €1.5578. Which in my head adds up to roughly 4%. You may be confusing the rise in the value of the pound against the euro with that of the dollar. The dollar went up 30% over the period the euro existed (and lost around 9% of that by now), but the pound never reached more than 15% up on the euro, and has by now shed a good part of that already again.

So the question remains, what will the UK government do now the circumstances they can't influence are getting closer to right but they have let the public opinion be worked against the euro?

[RandBlade]

Originally posted by Hazir
That was just a new installment of the good cop bad cop series. Treasury people lost little time telling everybody they were in no hurry.No it wasn't like that. The political movement is clearly there now. There will be a referendum next year, thats virtually been decided now it seems. The expectations have certainly changed.
You're mistaken if you think the UK will be able to sail in no matter what. The psychological effect of UK membership may be there, but it would be negated if we let you in on terms that are too generous. You must have noticed the message to Sweden that they were not yet ready for EMU membership, even though their polls tell us that 50% of people there want to go in. That also was a message to London. And in a way a repetition of what happened first time round when London didn't get involved in the EC when that got started. Swedens currency has not been stable over the last few years, thats why they were blocked. If the EMU was trying to send a message, rather than decide based on economics, then that'd be an absolute disgrace.
You mean problems with the pound.No, we've got higher interest rates because our economy was more stable and didn't go into recession. And it was the value of your currency that collapsed, not ours that rose.
The effect of cutting rates would depend wholly on the exchangerate you can go in with.Cutting interest rates is inflationary. Lowering exchange rates is inflationary. Doing both at the same time, thats asking for trouble.
You're the first who puts a number higher than 10% to the overvaluation of the pound in the three years this debate has been going on. No I'm not.
Generally economists say that the pound has to fall to a level of €1.50, which is €0.0578 down from the present €1.5578. Which in my head adds up to roughly 4%. You may be confusing the rise in the value of the pound against the euro with that of the dollar. The dollar went up 30% over the period the euro existed (and lost around 9% of that by now), but the pound never reached more than 15% up on the euro, and has by now shed a good part of that already again. The euro was weak/pound strong before it was created. If we'd joined in Jan 99 we'd have gone in at a rate too high, just like Germany did do.

[Hazir]

:D for once I'll give you one :D Germany did go in with an overvalued DM. Or rather; the other members of the DM-block went in with undervalued currencies. For the Netherlands a 1:1 guilder: DM ratio would have been more appropriate. But we went in with the 1:0.89 ratio that had been around since the early 80s but which no longer reflected the real strength of the Dutch economy.

I don't know about Ireland and Spain, but I have got the suspicion something similar was true for them. If I am correct then inflation for this trio may be leveling out later this year to the eurozone average.

As for the message to Sweden, the pound has been pretty volatile too, so the same applies.

[Hazir]

The only country that qualifies fully for EMU membership in the EU that has stayed outside so far, Denmark is changing it's mind about the euro. The majority (60%) of Danes are now for EMU membership. A somewhat smaller majority (53%) wants to get rid of the special status that Denmark has under the Maastricht Treaty.

[RandBlade]

Well I've just got my first euro's :D :). €220 from just under £150.

Anyway, I'm greatful that the euro exists within europe now. I've lost my debit card, and two weeks on, I've still not got my replacement, the bank screwed up somehow. So I'm going to europe without my plastic which I normally rely on. I've got absolutely no idea how much I'm going to spend or need, and I'll have no chance really of getting more money if I run out. So I've got more money than I think I'll need, under the idea that "its better to be self than sorry" (also my finances are not so bad for the first time in a year, so I'm splashing out a bit, will stop within a fortnight I suspect, good timing at least;)).

However pre-euro, I couldn't have done that. I doubt I'd go to the netherlands for a very long time, so I wouldn't want to get more guilders than I needed. Now though, I'm not so panicky about bringing money back, in fact I full on expect to. I know that if I don't spend it then I can easily spend it again, I'll be going to europe again some time of course, and whether its france or wherever, I'll still be able to use the change from this.

So from the PoV of this tourist, purely looking at a self-interested non-economics PoV, I'm definitely glad of the changeover of the euroland.

[Hazir]

Yeah even from that perspective it's good. You can spend those euros outside the eurozone also, and not everywhere they will rip you off as bad as in the UK when you pay them in euro.

BTW. Am I the only one who thinks that poll that is being quoted all over the place now is a bit fishy? I mean, a company that provides for foreign currency for tourists establishes that Brits are more against the euro than before? That's a bit like tobacco companies telling that smoking is good for you isn't it?

[Hazir]

Randblade,

I just noticed that sterling has dropped to the level of € 1.5358, which means that it stands at the pre-euro level of DM 3,00 right now. It kind of took me by surprise because the market didn't seem to have much direction today.

On the dollar parity is within reach now the difference has become less than 2 cents (both € and $)

What do you think? Will Brown move before we have reached parity between sterling and euro?

[Hazir]

Randblade, in trade the euro is above the $1 mark today, you think this will affect the psychology of the debate in the UK ?

[Hazir]

Originally posted by Loki
Hazir, you have made 229 posts in this thread so far. You deserve some kind of a prize. Maybe I'll get RB to concede that Euros are better than pounds, for you.:) It looks a bit like Randblade is too busy elsewhere.

[Edgewise]

From a US perspective, the Euro is better than the Pound. From the British perspective, the Pound is clearly better. It might not be better for Hazir and his country, but the UK should be making its' decisions based on its' own interests.

[Hazir]

Originally posted by Edgewise
From a US perspective, the Euro is better than the Pound. From the British perspective, the Pound is clearly better. It might not be better for Hazir and his country, but the UK should be making its' decisions based on its' own interests. There is no single British perspective on the euro, so how can you assert that from 'British perspective, the Pound is clearly better' ?

[earthJoker]

Originally posted by Hazir
There is no single British perspective on the euro, so how can you assert that from 'British perspective, the Pound is clearly better' ?
You didn't know that Edgewise IS the british perspective?? ;)

[Edgewise]

Originally posted by Hazir
There is no single British perspective on the euro, so how can you assert that from 'British perspective, the Pound is clearly better' ?
The 'average' British perspective. There is never any singular universal perspective, but the 'average' Brit is happier leaving the national currency in place. Why? I have no idea. Well, I have some idea, but you'd be best off hearing a Brit say that. I know Hazir, you hate the pound, you have stated as much many times already. 8) Being as how almost half (or perhaps over half?) of the posts on this thread are yours, you have made your opinion VERY clear on this matter.

[RandBlade]

Originally posted by Hazir
It looks a bit like Randblade is too busy elsewhere. Yes, I wasn't online.
Originally posted by Hazir
Randblade, in trade the euro is above the $1 mark today, you think this will affect the psychology of the debate in the UK ?Since its primarily the result of failure's in the US stock market, and not the result of successes in Euroland, no I doubt it. If the euro was to make big sustainable gains against sterling, then yes that might change things.

Euro didn't go over the dollar today. The dollar fell below the euro. And you shouldn't in any way feel glad about it. Had it happened due to Europe starting to recover, I would have been happy about it. But when we're facing possibly an utter disaster here in the worst case, when so much value of the worlds stock markets have been wiped out in a week, anyone who feels happy about these circumstances is a fool.

[earthJoker]

not always for example my father is in the electronic/computer buisniss and he ws very happy when the new tech marked broke away as most of those companies weren't well based and only made workers for companies with good fundation unnaturally expensive. I don't think speculative investemnt do only good.

[Edgewise]

Companies operate largely on the free market system in the US. When a company does well, it grows. If it does poorly, it shriks, or goes bust. This is normally a pretty gradual process, and employees can see this type of thing comming, unless they are blind. The problem we are experiencing in the US market today is very different. Here we have CEOs and other top executives defrauding investors deliberately for personal profit. This has caused market values to drop, as investors are pulling out all their investment capital, waiting for companies to make their financial reports more transparent.

The companies have not stopped making things, and people haven't stopped buying the things they make. Overall, the economy has hardly felt any of the market problems. Investors on the other hand have not been so lucky. The upside to this is that panic selling will bottom out (perhaps already did) and then people will jump back into the market to buy up all the undervalued stock. While the market is down, housing costs will remain low, so if you want to buy property, now is the time. Oddly, this will cause far more chaos for foriegn economies than it does for our own. Weird how the market works, but there it is.

[Hazir]

Originally posted by RandBlade
Yes, I wasn't online.
Since its primarily the result of failure's in the US stock market, and not the result of successes in Euroland, no I doubt it. If the euro was to make big sustainable gains against sterling, then yes that might change things.

Euro didn't go over the dollar today. The dollar fell below the euro. And you shouldn't in any way feel glad about it. Had it happened due to Europe starting to recover, I would have been happy about it. But when we're facing possibly an utter disaster here in the worst case, when so much value of the worlds stock markets have been wiped out in a week, anyone who feels happy about these circumstances is a fool. Nonsensical blabber again, but you read your eurosceptic newspapers I can see.

The whole rise of the dollar against the euro was based on a bubble economy that is being deflated at the moment. What is happening right now is that the market is being restored to a more normal situation, which in the long run is a good thing. Good for Europe, because a higher euro means lower costs for imported oil and commodoties, which will result in lower inflation and less incentives for the ECB to raise interestrates which in the long run will be better for the eurozone economy.

Good for the United States because trying to spend your way out of a slump only will land you with a bigger bill in the end. The US was going full speed into a dead end, and now gets the chance to retreat and try a better and more sustainable road.

[Edgewise]

Originally posted by Hazir
Nonsensical blabber again, but you read your eurosceptic newspapers I can see.

The whole rise of the dollar against the euro was based on a bubble economy that is being deflated at the moment. What is happening right now is that the market is being restored to a more normal situation, which in the long run is a good thing. Good for Europe, because a higher euro means lower costs for imported oil and commodoties, which will result in lower inflation and less incentives for the ECB to raise interestrates which in the long run will be better for the eurozone economy.

Good for the United States because trying to spend your way out of a slump only will land you with a bigger bill in the end. The US was going full speed into a dead end, and now gets the chance to retreat and try a better and more sustainable road.
Heh, funny. 8) In 6 months, the US economy will be smoking again, and the EU will be about where it is today, a relative mess. Like I was saying in my last post, the market drop really doesn't reflect a change in our economy, just a change in investor confidence. The sales of our biggest companies haven't changed regaurdless of the market value of their stock. Anyone wanna make a prediction here? I'm betting the Euro will be worth 75 cents on the dollar or less in 1 years time.

[Hazir]

Europe is not in a mess at all, Germany has had a bad period. But by the end of the year they too will have moved out of their present slump. European and American capitalism are somewhat different where Europe strives for a optimal rather than maximal growth and the US has a preference for maximalization in the short term. Both systems have their merits. As for the rate of the euro in one year, you are assuming too easily that foreign investors will come back once they have burnt their fingers like they did over the last year.

The rise of the dollar had very little to do with real strength of the US economy and very much with a hope for the US doing better and delivering better returns on investment. Now that that has been proven not to be so, investors may be less happy about investing in the US again in the near future.

Anyway, these swings in the exchangerate are nothing new, over the period that we had the ECU (precursor of the euro) we have had times that the dollar stood much higher and much lower than any of the levels we have seen over the last few years. I personally feel quite content because I expected the changes to be more volatile after the introduction of the euro, and it seems that that is what we are seeing right now.

[Edgewise]

Originally posted by Hazir
Europe is not in a mess at all, Germany has had a bad period. But by the end of the year they too will have moved out of their present slump. European and American capitalism are somewhat different where Europe strives for a optimal rather than maximal growth and the US has a preference for maximalization in the short term. Both systems have their merits. As for the rate of the euro in one year, you are assuming too easily that foreign investors will come back once they have burnt their fingers like they did over the last year.

The rise of the dollar had very little to do with real strength of the US economy and very much with a hope for the US doing better and delivering better returns on investment. Now that that has been proven not to be so, investors may be less happy about investing in the US again in the near future.

Anyway, these swings in the exchangerate are nothing new, over the period that we had the ECU (precursor of the euro) we have had times that the dollar stood much higher and much lower than any of the levels we have seen over the last few years. I personally feel quite content because I expected the changes to be more volatile after the introduction of the euro, and it seems that that is what we are seeing right now.
Germany is (or at least should be) the driving engine in the EU economy. The slowdown here has held several other nearby economies in check. I'm not as optimistic about Germany comming out swinging in a year or less, as the slump they are in is connected to the investment in East Germany, which has a long way to go yet.

As far as foriegn investors driving the dollar up and down, I think you are very off here. The vast majority of investment in the US is internal investment, and those investors have not put their money into overseas markets, they are sitting on it in there bank accounts. I know, as I am such an investor. I just placed an order for 400 dollars worth of stock today, buying back the same stock I sold a year ago for 650. I've netted about 1600 this year from buying and selling stock. I expect that 400 dolars to be worth about 700 by this time next year, but one of the companies I purchased is a bit risky. In the US, it is extremly easy to buy and sell stock. We have several internet stock trading companies that are aimed at individual investors like myself.

I also disagree with your assesment of the way the US economy works. Look at the economic growth curve of Europe and the US over the last 200 years, and I think you will see a definite pattern. Our economy doubles about twice as fast as the European economy, and I think it will continue to do so for all the same reasons. You make it sound like this economic slowdown will be different for the US, and we won't get up and start running again as we have every other time in history. I hate to disapoint you, but we won't be down for long.

[Hazir]

Originally posted by Edgewise

Germany is (or at least should be) the driving engine in the EU economy. The slowdown here has held several other nearby economies in check. I'm not as optimistic about Germany comming out swinging in a year or less, as the slump they are in is connected to the investment in East Germany, which has a long way to go yet.
I'll let this rest for now.
As far as foriegn investors driving the dollar up and down, I think you are very off here. The vast majority of investment in the US is internal investment, and those investors have not put their money into overseas markets, they are sitting on it in there bank accounts. I know, as I am such an investor. I just placed an order for 400 dollars worth of stock today, buying back the same stock I sold a year ago for 650. I've netted about 1600 this year from buying and selling stock. I expect that 400 dolars to be worth about 700 by this time next year, but one of the companies I purchased is a bit risky. In the US, it is extremly easy to buy and sell stock. We have several internet stock trading companies that are aimed at individual investors like myself.
That's all very nice and dandy, but your investments in the US do not have any bearing on the value of the dollar in the foreign exchanges. All your transactions are from A-Z quoted in dollars. The transactions of foreign investors into the US however at one point or another mean they have to buy dollars and sell their own currency to invest. That type of transaction DOES have a real impact on the external value of the dollar.

By the way, all it takes for me to buy or sell stocks is to make a call to my broker or go online. I can't see how that is much more difficult than in the US.
I also disagree with your assesment of the way the US economy works. Look at the economic growth curve of Europe and the US over the last 200 years, and I think you will see a definite pattern. Our economy doubles about twice as fast as the European economy, and I think it will continue to do so for all the same reasons. You make it sound like this economic slowdown will be different for the US, and we won't get up and start running again as we have every other time in history. I hate to disapoint you, but we won't be down for long. No, you misunderstood me altogether. What I said was that the US goes for maximalization of returns on investment, which means that your economy is prone to a boom and bust cycle. That shouldn't upset you because it is a perfectly normal capitalist mechanism at work (the bust taking care of a shake out of the bad apples), and in the long run it does deliver. It also seems to suit the American psyche quite well.

The European system is geared towards a more gradual adjustment to market conditions, which means that peaks are lower and the lows are not as deep as in the US. That makes for a more stable economy, which suits European social conditions better than a boom and bust cycle.

[earthJoker]

Originally posted by Edgewise

Heh, funny. 8) In 6 months, the US economy will be smoking again, and the EU will be about where it is today, a relative mess. Like I was saying in my last post, the market drop really doesn't reflect a change in our economy, just a change in investor confidence. The sales of our biggest companies haven't changed regaurdless of the market value of their stock. Anyone wanna make a prediction here? I'm betting the Euro will be worth 75 cents on the dollar or less in 1 years time.
I would think this is quite scary if I didn't already heard it 6 months ago.

[RandBlade]

Originally posted by Hazir
Nonsensical blabber again, but you read your eurosceptic newspapers I can see.You're an utter fool :rolleyes:

For one thing, and I don't know how many times I've told you this now, I don't read the Tabloids, I read The Times, which yes its opposed to the Euro, but its not badly biased. I look down on the idiocy of The Sun etc. For a second thing, I wrote this before reading any headlines, it was bloody obvious. For a third, each day the BBC's Digital Text has a round-up of the main headlines of major European and British papers. No British papers even mentioned it, it wasn't important, two European papers did, and both said that it was of course due to the US scandal, which of course it was.

The US stock markets were plummitting because of scandals, and that sent the dollar falling against everything, leading to it crossing parity, but the cross was not because of the most important news article of the time, it wasn't because of the collapse of the dollar against everything? Excuse me, but I'm not the one talking nonsensical blabber :rolleyes:
The whole rise of the dollar against the euro was based on a bubble economy that is being deflated at the moment. What is happening right now is that the market is being restored to a more normal situation, which in the long run is a good thing. Good for Europe, because a higher euro means lower costs for imported oil and commodoties, which will result in lower inflation and less incentives for the ECB to raise interestrates which in the long run will be better for the eurozone economy. The collapse of the dollar was caused by a temporary collapse in the confidence of the US relative to the rest of the world. How long did it last? I was totally right of course, parity swung back and then we saw resumption to the strength being on the American side almost immediately, which is great news for Europe.

Of the meagre 1.3% growth that Europe got in 2001, and the meagre 1.3% growth it seems to be on course for again this year, how much of it is internal growth, and how much is export-driven? Europe relies on exports even more than Taiwan does!

While America, the UK and Japan are bouncing back from the lows we saw, Europe is not only not doing that, domestically Europe is in a recession. Not just that, but its getting worse not better. Only exports are keeping Europe going at the moment, and exports could be devastated by higher exchange rates.
Good for the United States because trying to spend your way out of a slump only will land you with a bigger bill in the end. The US was going full speed into a dead end, and now gets the chance to retreat and try a better and more sustainable road. Spending is the best method for growth. I buy from my neighbour, and he buys back from me, I buy back from him. The more we do this, the better we become. And so long as debts are built up too badly, then there's little problem. Relying on others buying from you is hardly the best way to grow.
Edgewise
I'm betting the Euro will be worth 75 cents on the dollar or less in 1 years time.Nah, thats a bit too low. $1 = €0.90 is a bit more realistic IMO. And as this thread will probably still be going by then (well it is 1.25 years old already) we might be able to tell if anyone remembers to check who's right.
Hazir
Europe is not in a mess at all, Germany has had a bad period. But by the end of the year they too will have moved out of their present slump.Being internally in recession is a bit of a mess IMO. Also, I'd feel incredibly more optimistic about America's future than Germany's, I'd be unsurprised if much of the Eurozone is still in recession by March 2003. Especially if the ECB continues to be as destructory as it is at the moment and doesn't start slashing interest rates.
Hazir
No, you misunderstood me altogether. What I said was that the US goes for maximalization of returns on investment, which means that your economy is prone to a boom and bust cycle. That shouldn't upset you because it is a perfectly normal capitalist mechanism at work (the bust taking care of a shake out of the bad apples), and in the long run it does deliver. It also seems to suit the American psyche quite well.

The European system is geared towards a more gradual adjustment to market conditions, which means that peaks are lower and the lows are not as deep as in the US. That makes for a more stable economy, which suits European social conditions better than a boom and bust cycle.Which explains why in the long-term, the US always out-performs continental Europe. Boom and bust is the best way to perform real growth. Sometimes the busts can be too deep, so active monetary policies trying to prevent the destruction by helping the market to get back on its feet is a good idea, but boom and bust is very good IMO.
earthJoker
I would think this is quite scary if I didn't already heard it 6 months ago.6 months? Do you mean last September? Because its just as true now, as it was last September.

[earthJoker]

6 months? Do you mean last September? Because its just as true now, as it was last September.
No I mean 6 months, I would have written September if I would mean it.

[Hazir]

Randblade it may have escaped you that there was and is no recession in Germany or the Eurozone (unlike the US I might add according to revised American figures). What I see is a tendency to talk about the US economy AS IF it is outperforming the eurozone or that it is SET TO outperform the eurozone, but in reality the performance of the US isn't really that much better than that of the eurozone (an entity that came into being only 3 years ago).

The performance of the USD vis-a-vis the EUR has been based on this 'AS IF' and 'SET TO'. A lot of investors have burned their fingers on the assumption they would get better ROI on their US investments. What we are seeing now is merely the deflating of an overpriced dollar, it has got very little to do with actual, underlying strength.

As for 'spending your way out of a slump' that only works if everybody does it and economical growth outruns the growth of personal and national debt. Which is not the case at the moment. As things are all you do when you try to spend your way out of the slump is building up a huge burden for the future. If you want to see an example of the destructive forces of such a policy all you have to do is look at the Labour tax-and-spend policies in the UK in the pre-Thatcher period or the similar Social Democrat policies we had at the time here in Holland. It took you - and us - well over a decade to bring economy back to an acceptable state of health.

[RandBlade]

Originally posted by Loki
Got my first pound and euro today, and I must say that the euro looks ugly. It is made of plain paper, and the designs are not very creative. The pound looks somewhat better, but still can’t compare with the dollar. I feel sorry for you people who have to use that money everyday.:) At least two and a half thousand years of history since the Greeks (and more before), and the best that they could come up with for the Euro notes is bridges? Thought we could have a few famous and great people, like we have on ours (Dickens etc), or at least if its got to be buildings then the Eiffel Tower etc, but obscure buildings. Its not an economic argument, so thats why I haven't brought it up, but yeah the euro is ugly.

At least its not mono-colour though. :p

[Hazir]

The only note I think is real ugly is the €5 note, the others are ok to nice. EYRO is euro in the greek alphabet. As far as coins are concerned I think I like the €1 from Greece best.

Loki, the notes are not printed on paper but on cotton.

As for putting landmarks or people on them, the coins fullfill that purpose. The country minting them can put whatever they want on them. The notes shouldn't be different from country to country because that would make passing off counterfeits very easy (and judging by the figures published by the ECB that's quite difficult right now). And then of course you have the problem of which people or landmarks you would place on the notes. There are 8 different notes, there are 12 eurozone nations at the moment, with at least 2 of the three outs going to be in over the next few years. So what does that leave us with? A puzzle that can't be solved. It won't harm us to use neutral designs untill we have European symbols rather than national ones. Pretty much everything on the notes of the US is from AFTER the republic was founded.

[RandBlade]

Originally posted by Hazir
As for putting landmarks or people on them, the coins fullfill that purpose. The country minting them can put whatever they want on them. The notes shouldn't be different from country to country because that would make passing off counterfeits very easy (and judging by the figures published by the ECB that's quite difficult right now). And then of course you have the problem of which people or landmarks you would place on the notes. There are 8 different notes, there are 12 eurozone nations at the moment, with at least 2 of the three outs going to be in over the next few years. So what does that leave us with? A puzzle that can't be solved. It won't harm us to use neutral designs untill we have European symbols rather than national ones. Pretty much everything on the notes of the US is from AFTER the republic was founded. Are people so petty that they'd argue over which nation's symbols to use? I'd rather have all 8 being famous French symbols alone than the status quo of them being nothing at all.

There doesn't need to be one per nation, just do something to get 8 really good one's selected, and use them. Instead, for what seems to be simply a sort of Political Correctness, the designers went for bland nothings.

I've got a few of the €5, €10 and €20 and of the three the €5 certainly is the worst I agree. But the others are nothing special either.

The designs of the €uro are to notes, what the design of Birmingham is to cities.

[Crazy_Ivan80]

doesn't really matter what's on the coins, the only thing that matters in the end is that said money pays the bills.

[RandBlade]

As someone who at the moment spends 35 hours a week handling cash, it does interest me a bit what it looks like. Clearly being different between the lot being most important.

Yeah, money's money and in itself its meaningless. But like anything that you handle in daily life, then being purely superficial I'd rather have things that look good.

[Hazir]

Originally posted by RandBlade
Are people so petty that they'd argue over which nation's symbols to use? I'd rather have all 8 being famous French symbols alone than the status quo of them being nothing at all.
You should know they are, one of the first objections heard in Britain against the euro was that they queen wouldn't be on it. And in pretty much every country you have that kind of sensitivity.
There doesn't need to be one per nation, just do something to get 8 really good one's selected, and use them. Instead, for what seems to be simply a sort of Political Correctness, the designers went for bland nothings.
I could have accepted that, but to a lot of people the loss of their old notes and coins was big enough. For now the compromise will do. You also shouldn't forget that on these designs the decision was taken by the Ecofin (politicans). If there will be new designs the decision will be taken by the ECB.

Actually in the Netherlands we didn't have national landmarks or famous people on our money, but we did have what was considered very pretty money by a large number of people (Our fl 50 was by far the prettiest not on the planet, with a big sunflower and a little bee on it). So non-controversial doesn't have to mean bland necessarily.
http://www.xs4all.nl/~halarona/zon.jpg

I've got a few of the €5, €10 and €20 and of the three the €5 certainly is the worst I agree. But the others are nothing special either.

The designs of the €uro are to notes, what the design of Birmingham is to cities. Eh.. I suppose that means something to you.

[RandBlade]

As far as having the Queen is concerned, I'm sure you know my opinion by now, but no thats by far the worst thing to do with our currency IMO.
Originally posted by Hazir
So non-controversial doesn't have to mean bland necessarily.Since one of the most memorable things about my weekend to Amsterdam was the Van Gogh museum, I'd say that the Dutch have sneaked in something of their own despite the ban ;)
http://www.xs4all.nl/~halarona/zon.jpg Now that looks nice:up:. Non-controversial doesn't have to mean bland, but the 5-20 most certainly are bland. Even trying to avoid controversy, there's no reason for that
Eh.. I suppose that means something to you. Sorry, didn't explain. Basically bland and lifeless. Birmingham is a city built based purely on politicial intervention, and political 'sensibilities'. It was built IIRC in the sixties, and is known as 'concrete-city' as thats all you can see in large parts - concrete. Its the ugliest city by far in the UK, as its simply so bland and life-less as far as the buildings go. I have to admit though that my extent of travelling there is sitting outside it on the motorway (all the northern motorways join there so its also the worst place outside London's M25 for congestion.)

[Hazir]

Originally posted by Loki
That 50 whatever you call it Dutch note looks nice.:)

What value euro notes are there (e.g. 5, 10, 20)? Our old currency was the 'gulden' or 'guilder' in English. Actually one of the subdivisions 'daalder' is supposed to be the origin of the American word 'dollar'.

We've got coins of 1c, 2c, 5c, 10c, 20c, 50c, €1, €2
and notes of €5, €10, €20, €50, €100, €200, €500

The system is very logical, but it drives people crazy. :D In most countries because there are too many coins, here in the Netherlands because our old system was based on 1/4 division mostly. One of the most used coins besides the guilder was the quarter, the most used note was the 25 guilder note. It's very annoying if you find yourself still thinking in quarters and 25s and there are none in your wallet. Luckily the €10 note is red, just like the old 25 which was worth roughly the same.

[earthJoker]

...

[earthJoker]

A few days ago I heard a interview with a man that can't see that good anymore and he said the euro was the best notes that was ever made for people that see bad or can't see at all. The sizes are in good difference, the numbers are big enought to read even if you can't see that good anymore, and (that is was he said) the most important point all notes have different colors wich makes it easy to see even if you can't read the numbers. Also the coins have all different borders with a very good systematic, you can test it yourself. Just go with the finger over the border of a coin.
I never thinked myself of this problem but the makers of the euro did, and its defentily a pro for the euro.

And the bridges should symbolice that the euro brings europe togheter.

[Hazir]

The thing about the coins is true, you can easily feel what coin you have in your hands. Actually feeling is easier that seeing it.

Don't know about the notes though, the dutch notes had little symbols on them you could feel because of raised print. Like the triangle you can see on the 50 higher up in this topic.

[RandBlade]

Once again the ECB has failed to do what it must, because of its insane addiction to tracking inflation and not look at factors such as economic growth. Just days after the Fed cut rates by 0.5%, the ECB as feared and expected has failed once more to do as it really must and lower interest rates. :down: :rolleyes:

[RandBlade]

I don't know, it defies all economic common sense, whether you're monetarist (right) or keynesian (left) :confused:.

It seems like a badly written computer program is behind the ECB. You mean for it to do one thing, but then it takes what you say exactly as you say it, and doesn't adapt when the situation changes, causing a crash. The ECB is causing a financial crash though.

Inflation is a bad thing, and so all central banks since the seventies when that was realised in an extremely bad way, have had targets for low inflation, but few dedicate themselves solely to it, that is exactly what the ECB seems to do, they're obsessed with inflation, beyond all else, and its having disastrous effects. If they're not careful, Germany may go through deflation, which is a much more serious problem.

[RandBlade]

Exactly. The fears about trying to force 'One size fits all' have come true. But going by the growth rate of the eurozone as a whole, interest rate cuts are desperately needed, especially following the American cuts.

Its a very good job that we're not in the eurozone at the moment. Safe bet now that there won't be a referendum to join the euro next year.

[RandBlade]

Other I think, not sure how. Hazir will know better.

[RandBlade]

Originally posted by Loki
Doesn't he always?:) http://www.tournament.com/forums/images/smilies/grumpy.gifhttp://www.tournament.com/forums/images/smilies/no.gif

[RandBlade]

Originally posted by Loki
http://www.gamers-forums.com/smilies/otn/funny/jump1.gif What a highly thought-out intellectual post for the 500 landmark for this thread :bulb:

[earthJoker]

Hey RandBlade!
Why di your independent british bank followed the europeen to not to cut rates and not the US?

They are indipendent, right?


Incredible bt the swiss also folowed the Eu and not lowered their rates :weird:

[RandBlade]

For the reason are interest rates are significantly different to those of the ECB, are economy is in a completely different state. We're not risking recession, in fact our growth the last quarter is about the same as the annual growth of Europe it seems. The eurozone desperately needs its interest rate slashed. We don't.

[earthJoker]

well we don't see recesion aswell, but our currency is too strong so a lower rate would still be usefull.

[Hazir]

Originally posted by RandBlade
I don't know, it defies all economic common sense, whether you're monetarist (right) or keynesian (left) :confused:.

It seems like a badly written computer program is behind the ECB. You mean for it to do one thing, but then it takes what you say exactly as you say it, and doesn't adapt when the situation changes, causing a crash. The ECB is causing a financial crash though.

Inflation is a bad thing, and so all central banks since the seventies when that was realised in an extremely bad way, have had targets for low inflation, but few dedicate themselves solely to it, that is exactly what the ECB seems to do, they're obsessed with inflation, beyond all else, and its having disastrous effects. If they're not careful, Germany may go through deflation, which is a much more serious problem. I am starting to feel like a broken record, but here I go again. The solution lies not in the ECB throwing all caution to the wind and lowering interestrates when inflation is still not other control, but in the government of Germany finally tackling the problem of its rigid job market. And of course the problem would have been much less if the governments of the EMU countries in 1998 had faced up to reality and had readjusted the conversionrates to the real underlying value of the joining currencies. If they would have done that, countries with an undervalued currency like Holland and Ireland wouldn't have had to go through the kind of inflation they went through pushing the average inflation over the 2% mark.

[Hazir]

Originally posted by Loki
How's this organization selected? Is it one person from each EU country, some kind of rotating system, or other?
There is a board of directors with 6 members and a governing board that consists of the board of directors and the presidents of the central banks of all memberstates of the EMU. the members of the board of directors are appointed by the European Council (with the consent of the European Parliament) for an 8 year term. The presidents of the central banks of course are appointed by their respective governments. In the governing board all members have one vote, rate decisions could be taken by majority vote, but in practise they are taken by consensus. Which means that there are no formal votes.

[Hazir]

Originally posted by RandBlade
For the reason are interest rates are significantly different to those of the ECB, are economy is in a completely different state. We're not risking recession, in fact our growth the last quarter is about the same as the annual growth of Europe it seems. The eurozone desperately needs its interest rate slashed. We don't. The Japanese and American economies are very good examples of how interestrates are not enough to kickstart an ailing economy. What is much more important for people at this moment in their decisions to spend is not if they will pay a little bit less on their debts (if at all because most Credit Card companies will not go below their minimum rates and simply pocket this cut themselves) but if they will be able to pay their debts at all. So to the average American this last ratecut will be relatively unimportant. Important question for them will be; will I be out of my job next year? And if they aren't certain they can't say NO to that question, they will cut back. Which is a harmfull thing in a consumerdriven economy.

As for the state of the British economy, it still eludes me how you can go on about the superior state of the British economy. when the difference in growth is pretty marginal, and almost exclusively driven by people spending the excess value of their property on consumer goods. People are simply eating up their savings and not investing.

[Loki]

Is the EMU doing anything to persuade Germany to change its policies other than forcing it into a severe recession?

[Hazir]

Originally posted by Loki
Is the EMU doing anything to persuade Germany to change its policies other than forcing it into a severe recession? They have no powers to do so, so it's up to the German government to start acting in a responsable way or bear the consequences. That's one of the reasons why it was such a bad thing that Stoiber didn't win the last eclections. With him at least there was a desire to reform labor legislation. It's near impossible in Germany to work part-time, to have temp workers or to fire somebody. All great ways to ensure high unemployment.

Actually this ECB - German government wrangling is a reproduction of the Bundesbank - German government infighting over interestrates. The Buba got under political pressure from the government every time the economy slowed down. It never gave in unless it deemed its prime goal of price-stability secured.

It is also a bit questionable if a lower interest rate would help the German economy as much as Randblade claims. The German economy is export-driven and not consumer-driven like the US economy. So to the Germans the biggest boost will come from the US pulling out of this present economical situation, that is, when you people start buying German goods again. They don't have to expect too much from their own population starting to spend themselves out of recession, like the Brits for example.

[Loki]

I realize Germany has some major problems. I've heard of some people in Eastern Germany who never worked since the reunification of Germany, yet received government benefits the whole time..:eek: But forcing Germany into a severe recession is not an effective method of making them change. They should give Germany some incentives to be less socialist. Needless to say, I didn't want Shroeder reelected for several reasons, and this was one of them. But since he was reelected, Europe should pressure him to change German policies; if he doesn't the German people might finally realize what a stupid leader he is, and elect someone more moderate.

[earthJoker]

I spoken with some east germans about this problem.
Its mostly so that people that are older than 40 aren't capable anymore to get into a capitalistic system.
They lived 40 years in comunism and used to the fact that the goverment makes everything for them.
Everyone that is older than 60 doesn't work anyway. But the slot between 40 and 60 makes a huge part of the east-german unemployement rate.

[Hazir]

Well, what other governments in Europe can do is put pressure on Germany to change its rigid labormarket. But since Germany is still a sovereign state it can not be forced into making these changes. However, Germany's refusal to tackle its real problems makes its calls for lower rates and lamenting about the Stability and Growth Pact (which was put in place on their own insistence by the way) not very convincing. All countries that have got their affairs in order and have seriously started to liberate their economies (like The Netherlands, Spain, Ireland) are fiercely against the changing of the rules.

We have very little desire to face overheating of our economies again just because mr Schröder is uncapable of implementing sound economic policies.

[Hazir]

Originally posted by earthJoker
I spoken with some east germans about this problem.
Its mostly so that people that are older than 40 aren't capable anymore to get into a capitalistic system.
They lived 40 years in comunism and used to the fact that the goverment makes everything for them.
Everyone that is older than 60 doesn't work anyway. But the slot between 40 and 60 makes a huge part of the east-german unemployement rate. Well, that of course is a problem of the making of a prior German chancellor, when Helmut Kohl decided to swap the old eastmark for the deutschmark on a 1:1 ratio, he signed the deathwarrant for the eastern german economy. With a more reasonable exchangerate (5:1 could have worked) eastern Germany would have had a chance to adapt to the new situation.

It's a bit as if all Germans are having to payback the money spent on buying mr Kohl votes in eastern Germany, with interest.

[Hazir]

*kick*