Merkel, Sarkozy, Propose Eurozone Government
- Thread starter CuttingEdge100
- Start date
The holocost is one of the things that Quark must pay every month.
antiSemites! - Sorry I meant "Nazis!"
Leaving the Nazi debate for just a moment...
I don't know what his assumptions are, but staying out the Euro has significant economic advantages almost irrespective of relative strengths of the individual national economies.
The most important of these has been demonstrated very clearly in recent months. If you have a Euro, you either need very significant fisal integration or you have a recipe for instability (monetary integration alone does not suffice).
Eventually, even the numbnuts running the various European national governments will come round to this truth and merge their economies fiscally to prevent a fragmentation of the Euro.
So if the UK was a member of the Euro, it would need to cede considerable fiscal autonomy to the EU. As a creditor nation in any such merger, yes, it would have significant say in the new rules, but still, national autonomy would be greatly abrogated. I prefer fiscal autonomy to remain within the UK, especially since the political centre of gravity of the EU (and therefore the centre of gravity of the new economic rules) is significantly to the left of the UK's political centre of gravity.
The other benefit to having a free-floating national currency is that in times of crisis, it devalues, automatically making exports more competitive and going some way to helping the economy rebalance. Related to this, monetary policy can be set to benefit solely the UK. With a Euro, monetary policy is set to benefit the entire EU (which may or may not coincide with the optimal position for the UK), and currency fluctuation moves in accord with the overall EU position (again, which may or may not coincide with the optimal position for the UK). If Greece and Italy and the rest all had their individual currencies, they'd have devalued sharply, and a lot of their recent problems wouldn't have manifested in the same way. They'd have other problems, sure, but it wouldn't be quite so damaging. Their national central banks certainly wouldn't have forced interest rate rises on their broken economies this year in the way the ECB did, for example.
In the end, it comes down to what you prioritise more - the UK's economic benefit, or the EU's economic benefit. To some extent, there's overlap. That's why having a free trade zone across Europe is such a necessary and brilliant idea and I support it wholeheartedly. But that doesn't mean that it would also be in the UK's best interests to be a Euro member. I think the flexibility and autonomy of staying out of the Euro, but still part of the EU, represents the best balance between these issues.
I don't know what his assumptions are, but staying out the Euro has significant economic advantages almost irrespective of relative strengths of the individual national economies.
The most important of these has been demonstrated very clearly in recent months. If you have a Euro, you either need very significant fisal integration or you have a recipe for instability (monetary integration alone does not suffice).
Eventually, even the numbnuts running the various European national governments will come round to this truth and merge their economies fiscally to prevent a fragmentation of the Euro.
So if the UK was a member of the Euro, it would need to cede considerable fiscal autonomy to the EU. As a creditor nation in any such merger, yes, it would have significant say in the new rules, but still, national autonomy would be greatly abrogated. I prefer fiscal autonomy to remain within the UK, especially since the political centre of gravity of the EU (and therefore the centre of gravity of the new economic rules) is significantly to the left of the UK's political centre of gravity.
The other benefit to having a free-floating national currency is that in times of crisis, it devalues, automatically making exports more competitive and going some way to helping the economy rebalance. Related to this, monetary policy can be set to benefit solely the UK. With a Euro, monetary policy is set to benefit the entire EU (which may or may not coincide with the optimal position for the UK), and currency fluctuation moves in accord with the overall EU position (again, which may or may not coincide with the optimal position for the UK). If Greece and Italy and the rest all had their individual currencies, they'd have devalued sharply, and a lot of their recent problems wouldn't have manifested in the same way. They'd have other problems, sure, but it wouldn't be quite so damaging. Their national central banks certainly wouldn't have forced interest rate rises on their broken economies this year in the way the ECB did, for example.
In the end, it comes down to what you prioritise more - the UK's economic benefit, or the EU's economic benefit. To some extent, there's overlap. That's why having a free trade zone across Europe is such a necessary and brilliant idea and I support it wholeheartedly. But that doesn't mean that it would also be in the UK's best interests to be a Euro member. I think the flexibility and autonomy of staying out of the Euro, but still part of the EU, represents the best balance between these issues.
Top Gear has taught me that the only thing the UK exports are shitty Vauxhall cars.
And of course... Top Gear.
that maybe so, but I think we have a better chance of rebuilding the £, by ourseles, than if we jump on the sinking ship that is the €.
Touché.
Before the euro, Portugal (and Greece) for example paid double digit interest rates on their debt, while the introduction of the euro slashed those rates way down. Now, it's probably not a good idea to spend those big savings* on a consumption/housing boom, but there were significant benefits to some of those countries upon joining the euro.
The problem in some of the cases (I wouldn't class Spain, Italy or Ireland among them), is that they didn't do anything productive with the windfall from reduced interest rates.
That said, I'm getting annoyed by people saying Germany et al is the big winner from the euro. Some people in Germany and elsewhere are big winners; stock owners, banks, rich people chief among them.
But you know, stagnant wages for a decade or more in Germany (falling in real terms) for most of the working class isn't exactly benefiting them, is it?
IMO, this euro crisis is generally being used (like the deficit debate in the USA) to shield the more wealthy from any downside and put all of the hurt on the poorer parts of society, everywhere in Europe.
Conveniently for the profiteers, much of the media tries to portray this as a struggle of North vs South (or periphery vs core, etc), when that's actually not the case at all.
* Which incidentally also went mainly to holders of their debt, ie not exactly the common working class people in any country.
Missing the point by a mile. As usual.
You don't think for us. Thankfully.
The Northeast Corridor and SoCal have a huge influence in guiding economic policy in the US, and yet I don't see you very concerned. You fail.
If DarthTom has a problems with Germans, he should at least be upfront about it, instead of hiding behind "lol just kidding".
If the net result of this crisis is a more fiscally integrated Europe,then I reckon that there are few better economies to emulate than that of Germany.
As for the proposed financial transaction tax..how will that play in the City of London?How will Europe stop a potential shift of business to somewhere like Switzerland?(these people would skin their mothers to save money and the Swiss will gladly accomodate them).
As for the proposed financial transaction tax..how will that play in the City of London?How will Europe stop a potential shift of business to somewhere like Switzerland?(these people would skin their mothers to save money and the Swiss will gladly accomodate them).
Actually, Switzerland has made a number of concessions as far as their banking sector goes over the last year. And while they aren't part of the EU, they're a signatory to the Schengen treaty and therefore integrated with the EU countries surrounding them in surprisingly many things.
London is the big deal breaker in this which is why everyone's trying to get them onboard with this. The idea of the financial transaction tax already failed shortly after the height of the financial crisis so I'm skeptical of its success now.
London is the big deal breaker in this which is why everyone's trying to get them onboard with this. The idea of the financial transaction tax already failed shortly after the height of the financial crisis so I'm skeptical of its success now.
I doubt that the Tories would introduce a bill to introduce a financial transaction tax -- it would be too likely to trigger a mass defection of its anti-Europe wing to UKIP and cause the ConDems to lose their majority.
I agree that lack of flexibility in interest rates and currency value can be a disadvantage (I lived through - and benefited from - runaway housing costs in California in the 90s due to a lack of state-by-state interest rate controls), but when times are tough the extra costs of doing business between UK and eurozone due to currency conversion does have an impact.
Toyota and Honda presently make cars in the UK, but that might not be for long as there's no domestic parts supply business to speak of meaning they need to source parts from continental Europe, which makes building cars in the UK less profitable/attractive for them. I expect it's a big part of why Peugeot stopped building cars here as well. Of course we could start making car parts here to support domestic auto production as well, but it's just a convenient example.
I'd also feel more secure being a part of a currency used in more than one country: sharing the risk and all that.
I certainly hope not, but if they do, I would want the UK to get some major concessions in return. Also, I hope it isn't just added to SDRT.
What you're really saying is that you believe the negative effects of currency fluctuation as well as the frictional costs of currency conversion itself outweigh the flexibility of an independent currency with a national central bank setting monetary policy for that nation alone. This is actually potentially true during relatively stable and/or good times, I agree.
However, in volatile or bad times, the benefit of being independent outweighs this. The ability of a currency to devalue actually makes the country more competitive in terms of foreign investment into the country, and net exporting to other countries, as pounds can then cost less, meaning costs (in terms of either wages being paid or product being sold) can be greatly reduced. This is precisely what needs to happen in, for example, most of the PIIGS, but the Euro's inappropriate strength doesn't let their currency devalue enough.*
There've been times in the past when the pound really needed to devalue significantly, and if it hadn't happened the economic damage that would have resulted would have far outweighed the effect of having fewer frictional costs in good/stable times.
One of those times is the current crisis that started in 2008; take the dollar/pound exchange rate as an example. Over a fairly short space of time, it went from over 2:1 to 1.3:1 before returning to about 1.6:1 these days. By contrast, the dollar:euro rate hasn't changed by nearly as great a percentage. The devaluation of the pound has certainly helped our exporters do a bit better than expected, which also helps the trade balance, as well as rebalancing the economy more generally.
Another time was in 1992, when sterling was forced out of the ERM. Actually that's a great example, because sterling was effectively in the precursor to the Euro, and massively overvalued relative to its actual economic position. The devaluation that occured when sterling was forced to exit the ERM and float led in a large way to the strong economic recovery that followed by boosting competitiveness.
Of course, to some extent, which position one adopts is down to personal interpretation of the facts, but for me, the case is strong in favour of net economic benefit over the entire economic cycle being in favour of an independent and floating national currency rather than a currency whose policy is set to benefit a wider entity rather than the UK specifically.
(*Incidentally, that's actually why fiscal policy needs to merge, to cancel out the inappropriate strength caused by the stronger countries by allowing subsidised borrowing from those stronger countries)
Wouldn't Parliament need to vote on such an increase like any other tax change? While increasing SDRT from 0.5 to 0.6% for buying might be accepted without much complaint, for selling it might need to be significantly higher than 0.1% to cover the admin costs. As it would be perceived as a new tax, there's no doubt that there would be rumblings of discontent. However, I guess the Chancellor could disguise the new tax as a measure to add a measure of inertia to automated dealing -- I doubt that he has any desire for further bans on short selling.
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