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The UK economy will not collapse because of this, but it will cost them billions in the short term and a few basis points of yearly GDP growth for the next deca

by gizmo 10y ago

The UK economy will not collapse because of this, but it will cost them billions in the short term and a few basis points of yearly GDP growth for the next decade, and that really adds up. What's even worse is that the UK leaving the EU can destabilize the Euro, which is already on a knife's edge. If the Euro collapses we'll get a worldwide recession, with a staggering human cost. It's too easy to dismiss concerns as doomsaying. We know from history that civilization doesn't progress in a linear manner. It's entirely possible for societies to make mistakes that take a century to recovery from, and the EU and the US are not invulnerable.

stephen_g 10y ago
The late economist Wynne Godley explained why the Euro couldn't work in the long run and described how it would cause problems like Greece back in 1992 [1]. There is simply no way a supra-national currency could work without a federal budget. It's probably time to accept that the Euro will likely fail no matter what we do. Sadly, the people of Greece have already paid a terrible cost... 1. https://www.lrb.co.uk/v14/n19/wynne-godley/maastricht-and-all-that https://www.lrb.co.uk/v14/n19/wynne-godley/maastricht-and-al...
- gizmo 10y ago
  I'm familiar with his work. Many economists gave similar warnings. The Euro was a poorly conceived idea, no doubt. That is a sunk cost, though. The question is how to best go forward from here. Even if a Euro breakup is inevitable (it isn't; it can muddle along indefinitely if all countries adhere to a gold-standard-like fiscal policy) then a carefully premeditated breakup 8 years from now is much better than taking out the support beams now and watch it all fall apart. The Eurozone hasn't even recovered from the 2008 crisis. The banks haven't been reformed, unemployment is still high, millennials are still struggling financially. Even if the countries agreed the Euro has to break up (and they don't) it would still take years of negotiations for a plan to materialize. There is nothing that can be done short term that wouldn't be a total disaster. So kicking the can down the road is likely the best option.
- gpderetta 10y ago
  Or we get a federal budget.
  - stephen_g 10y ago
    That would require huge reorganisations (probably including constitutional changes) of all the Eurozone states. While possible, I don't think there is much appetite for giving up more sovereignty much of Europe.

by gizmo 10y ago

stephen_g 10y ago

The late economist Wynne Godley explained why the Euro couldn't work in the long run and described how it would cause problems like Greece back in 1992 [1]. There is simply no way a supra-national currency could work without a federal budget. It's probably time to accept that the Euro will likely fail no matter what we do. Sadly, the people of Greece have already paid a terrible cost... 1. https://www.lrb.co.uk/v14/n19/wynne-godley/maastricht-and-all-that https://www.lrb.co.uk/v14/n19/wynne-godley/maastricht-and-al...

gizmo 10y ago
I'm familiar with his work. Many economists gave similar warnings. The Euro was a poorly conceived idea, no doubt. That is a sunk cost, though. The question is how to best go forward from here. Even if a Euro breakup is inevitable (it isn't; it can muddle along indefinitely if all countries adhere to a gold-standard-like fiscal policy) then a carefully premeditated breakup 8 years from now is much better than taking out the support beams now and watch it all fall apart. The Eurozone hasn't even recovered from the 2008 crisis. The banks haven't been reformed, unemployment is still high, millennials are still struggling financially. Even if the countries agreed the Euro has to break up (and they don't) it would still take years of negotiations for a plan to materialize. There is nothing that can be done short term that wouldn't be a total disaster. So kicking the can down the road is likely the best option.
gpderetta 10y ago
Or we get a federal budget.
- stephen_g 10y ago
  That would require huge reorganisations (probably including constitutional changes) of all the Eurozone states. While possible, I don't think there is much appetite for giving up more sovereignty much of Europe.