Euro Stuffed?

Discussion in 'Current Affairs, News and Analysis' started by OldAdam, Jun 2, 2005.

  1. More for your Money?

  2. Break Even?


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  1. From the Torygraph Business news:

    The euro plunged to eight-month lows yesterday after Germany's Stern magazine reported that top German officials had examined the possible collapse of the single currency at a secret meeting in Berlin.

    Traders were already on edge following the rejection of the EU constitution by French and now Dutch voters, but the extreme scenario examined in the Stern report sent further tremors through the markets.

    The euro closed at 1.223 against the dollar, down 9.7pc so far this year. The European Central Bank cut its 2005 growth forecast yet again from 1.6pc to 1.4pc as fresh data pointed to an industrial slowdown. The "spread" between German and Italian bonds continued to widen from a low of 0.09pc in March to 0.23pc as investors demanded a higher premium for riskier debt.

    In an unprecedented attack on monetary union from a major German magazine, Stern said it was time to break the "taboo" by admitting that Germany had been gravely damaged by giving up the Deutchesmark six years ago.
    Entitled "Der Euro macht uns Kaputt" - the euro is destroying us - the article called monetary union "one of the worst economic blunders made by Germany since 1945". Some 56pc of Germans now want a return of the mark, according to an accompanying poll.

    Critics say the eurozone system has had the perverse effect of tightening both fiscal and monetary conditions in the midst of the downturn, driving Germany deeper into slump.

    Stern, a Bertelsmann flagship, published extracts from an internal finance ministry document warning of "brutal divergences" in the eurozone's growth, credit and price levels.

    The text said lower interest rates had brought "enormous" advantages to Portugal, Greece, Spain and Italy as they enjoyed the windfall benefits of Germany's coveted credit rating in the form of much lower interest rates. But now higher inflation was eating into their competitiveness.

    "It is not clear that these problems are going to fade away in the foreseeable future. On the contrary: the gap risks getting wider, increasing the danger of an adjustment crisis," said the document.

    Alarmed by the findings, Hans Eichel, the finance minister, called a secret meeting in Berlin last Thursday, also attended by Axel Weber, the Bundesbank chief.

    Joachim Fels, Morgan Stanley's eurozone economist, briefed the group on the enveloping crisis in southern Europe, notably Italy, warning of a "meltdown" risk that could break up the euro-zone.

    He told them high-debt states were unlikely to leave the euro-zone by choice since the price would be too high. But a hard-core led by Germany might reap some benefit from breaking away. Mr Fels said yesterday that Europe was now "on a slippery slope toward disintegration and instability. The risk of a euro wreckage has risen significantly.''

    Stern advised readers to look carefully at their euro bank notes: the number series on German issue notes start with the letter "X", while Italian notes start with "S".

    The finance ministry admitted that the Berlin meeting had taken place but tried to play down the implications. "Mr Eichel believes that monetary union is a success," said a spokesman.

    The document suggested that Germany's slump of recent years was directly linked to the euro, which had fatally distorted "real" interest rates (after inflation) across the eurozone.

    1 June 2005: The euro is killing our economy, say Dutch

    A sticky end in sight, perhaps? :lol:
  2. Surely to blame a currency that is used as widely as the Euro is just covering for the inadequacies in how that currency is spent.

    The Germans have never been hapy that the DM went to the the Euro and all that changed was the lettering (ie the paper that cost 1DM on Monday cost 1 Euro on Tues) but even the Irish say the Euro is killing their economy - what's their export? (Apart from Spuds and Guiness :wink: ).

    If everyone is experiencing the same situation where is the money going?

    Whats the betting we don't get our referendum now?...
  3. Maybe I'm thick but I dont get your poll.
  4. There was a third option on the poll but somehow it got lost in translation :lol:

    It was;

    'Or Fecked-up Financial Finaegling'

    Naturally I favoured that one!

    Wonder why it didn't take? :?
    Perhaps it's late at night and there's an element of finger trouble on my part plus a generous slug of the Old Finest :lol:
  5. PS; tried 'Edit' but that didn't go for some reason :?
  6. Unknown_Quantity

    Unknown_Quantity War Hero Moderator

    When you edit in the last option for the poll add a 4th option, but leave it blank and submit it. It's a quirk of the system.
  7. The Eurocrats will not accept the facts of life.
    They will lie cheat and carry on stealing, to keep on the ultimate gravy train.
    A euro parliment that does nothing but gab and A Kommision of Euro has beens never where anythings who now have very highly paid jobs with ultamte pensions.
    The original Fat Cats.
  8. Hi all!

    Suppose that you was able to receive a short-term loan (something about 100mln. Euro). Then you could buy $130mln. Now you can sold $$, return money and enjoy about $7mln. without any trouble (if you was aware of course about 'secret' meeting).

    Then everybody knows about 'secret' of bankers it means that it could be true but more probably is too far from reality.

    One anecdote springs in mind (moreover, it is a military forum):

    If military man says YES, it means YES. If he says NO, it means NO. If he says MAYBE, he is not a military man.

    If diplomat says YES, it means MAYBE. If he says MAYBE, it means NO. If he says NO, he is not a diplomat.

    If girl says NO, it means MAYBE. If she says MAYBE, it means YES. If she says YES then (hard place for translation)... then ... er ... she is ... too experienced.
  9. The Govt's been very quiet this week hasn't it?
  10. Tough sh1t Europe :D

    Humm lets see, the Germans are complaining that their economy is suffering while the Spanish, Portugese etc are doing well and benefiting from Germanys credit rating........ YOU VOTED FOR IT YOU FOOLS... ITS CALLED SOCIALISM. The Germans are being dragged down while the lazy Spanish, yes they are lazy, are given a boost :roll:

    Idiots, lets stay well away from them, its bad enough with the scum in parliment
  11. Cheers UQ!

    A quirk, eh... Wasn't that some fat bird in a sitcom a few years back; no wonder my third option didn't get through! :lol:

    Unfortunately, when I tried 'edit', it didn't put the poll on offer, so I couldn't do anything about it! :roll:

    S*d it!

    Never mind, you get the drift anyway; given the membership of this site and their past 'voting record' I could have guessed the result anyway! :lol:
  12. To go a little off topic (but only a little) now that France has said no to the Euro Constitution, as has Holland, will TB actually give us a referendum?

    He said he would but as the rules on the Euro constituion say that its not going to happen if one country says no, and now two have, will he embarress himself by giving us a referendum he knows he'll lose?

    What makes it worse is that Chirac is telling him he has to give us a vote. WTF he thinks he's doing telling our PM what to do is beyond me. FCUK OFF Frenchie!!
  13. The Germans decided not to risk a referendum instead they had it passed in their parliament [Bundestag]. Perhaps that is the route Tony will take.
  14. I dont think so. its either referendum or nothing. If he tries to say yes without a referendum can you imagine the uproar? He'll be running out of Wesminster faster than Prescott with the munchies.
  15. The German constitution doesn´t contain a provision for referenda (though demanded since many years by leftwing parties). The reason is that the Allies in 1949, who had to approve of the new constitution for the federal republic of Germany, were afraid that the Nazis might get voted back in through a referendum (the Nazis used referenda a lot, e.g. the Anschluss of Austria). The constitution has simply never been amended.

    IMO, a drop of the Euro compared to the dollar isn´t too bad, especially for such an export oriented country like Germany. At the moment, many German products, especially in the traditional branches of engineering, are too expensive to compete against e.g. American products on the world market. This can create new jobs in Germany. I think for the last few years the Euro was ovbervalued in respect to the US Dollar.

    There has one big mistake been made during the introduction of the Euro:
    Theintroduction should have been cost neutral, e.g. an item that used to cost 2,- DM should have cost only 1,- Euro after the conversion, but many shop owners used the opportunity ( and correctly guessing on the inability of the average punter to calculate and compare prices) to increase their profit margins by simply converting 1 DM for 1 Euro. Since this was illegal, the governments (not just of Germany, but e.g. the Netherlands as well), should have acted against this and punished the offending dealers. Salaries on the other hand were converted at the correct exchange rate, effectively making people earn less than before.

    Germany has another problem, the costs of the reunification. Back then Chancellor Helmut Kohl, facing an election, didn´t want to raise taxes just before the election (might have cost him votes), but instead took the money for his electoral gifts to the East Germans out of the Federal Pension Funds, effectively the reunification has been paid for by the employed workers of the private industry (mainly voters of the Socialdemocrats) and not by entrepreneurs and civil servants (voters of Kohl´s party). This effectively ruined the pension funds, forcing subsequent governments to raise both the worker´s and the employer´s contributions (50% each), making German labour uncompetitive and too expesnisiveon the world market. Additionally did the reunification expenses not count in the EU (while we are in fact rebuilding the economy of a whole country), but we are still the biggest net contributor to the EU. Unfortunately, with the failed constitution, the principle of concensus will continue to rule the EU votes (instead of majority rule), so that some small countries can continue to blackmail EU decisions, so some countries (e.g. Ireland or Spain) will continue to receive massive subsidies, even though they don´t need them anymore.