5 ms·

> If they had separate currencies, Spain could inflate away a lot of their debt. Which is why Euro is good for Southern European countries: it forces them to c

by pif 8y ago

> If they had separate currencies, Spain could inflate away a lot of their debt. Which is why Euro is good for Southern European countries: it forces them to concentrate on productivity rather than economic alchemy. Spanish labor got too expensive? You don't need a government to inflate your currency, you just start lowering your rates. My fellow Italian workers cannot find a job? Stop talking about "articolo 18", stop looking for assured indefinite term contracts, accept the reality! Enterprises know ups and downs: when thing go well, they'll be happy to pay you good money for your services, but when hell breaks loose your salary will be a burden for them. Either accept that employment contracts can be terminated before your retreat, or keep up the good work... uh, keep up the work... just keep up!

batteryhorse 8y ago
The Euro has caused their debt to appreciate, so now they owe more money in real terms because the currency doubled in value. Meanwhile, Germany is able to export their goods without any currency risk. And now you have another layer of bureaucracy. The real issue is that when they created the Euro, they failed to consolidate the debt of all the nations. It's only a matter of time before the whole thing collapses.
- apexalpha 8y ago
  >The real issue is that when they created the Euro, they failed to consolidate the debt of all the nations. No one failed, we just didn't want to (for reasons very obvious now, in hindsight). Also, the countries (Spain, Greece, Portugal...) accumulated most of the debt _after_ they got the Euro precisely because the Euro enabled them to do so.
  - pif 8y ago
    > No one failed, we just didn't want to (for reasons very obvious now, in hindsight). Would you mind explaining a bit more, please?
- krageon 8y ago
  The Euro took away the single most painful thing still plaguing travel between EU countries. These days an EU citizen can up and leave to a different EU country with very little friction (aside from the language in some places), which was the idea. That goal was achieved. It is unrealistic to expect that countries will somehow not be able to solve their financial issues just because they lost one tool. That's an excuse, not a reason.
  - mnl 8y ago
    They lost control of their own currency. That's not just "one tool". It doesn't work and without full economic integration it never will. I think I know what I'm talking about as I'm living with this problem, have analysed it thoroughly because I have nothing better to do, know the history of this southern European country and their people, and as a result of all this I can't trivialize it by simply making up the belief that it'll be fine at some undetermined point in the future. It's more like the death by one thousand cuts, in slow motion.
    - pif 8y ago
      > They lost control of their own currency. Germany lost it, too. If it worked for Germany, why not trying to learn from their experience rather than keeping complaining?
  - rablo 8y ago
    That’s only good for privileged people. Almost nobody I know has enough skill with any other language (and that includes English) to move to another country in the EU.
  - beaconstudios 8y ago
    how does the Euro have anything to do with free movement? You could have one without the other.
  - coldtea 8y ago
    >The Euro took away the single most painful thing still plaguing travel between EU countries. In other words, it took away one insignificant burden on travelling, something which people do a best a few weeks a year, and in exchange it devastated their jobs and communities, for which they depend on survival (and for having the money to travel) all year long... >These days an EU citizen can up and leave to a different EU country with very little friction Yes, and usually with tears in their eyes, because they're forced to leave their country, culture, friends and close family to go work on some country that did better. Often even at 40 years old or later, and after their job in their own country crushed, because (among other things) of the Euro. The saddest songs in most southern countries are about migrating. The kind of migration you describe is only a good thing (and a chosen option) for more privileged people who chose to do it and can chose to live where they want at a whim -- not for the millions merely forced to go find work elsewhere. >which was the idea Yeah, just not an idea that people asked for -- just the dream of the elites that created and pushed for it.
repolfx 8y ago
So glad to see someone make this point. Every time I read histrionics about how the euro is a straightjacket, a trap, an evil German plan to benefit itself at the cost of its neighbours etc I just sigh. I am not even a supporter of the EU, but blaming the euro for low southern productivity is just wrong. The PIGS countries aren't seeing high unemployment and poverty because of the euro. They'd still have high unemployment even if they had their own currencies. The causes are fundamental. All a floating currency would do is make it easy for them to screw over lenders in the short term by inflating their debts, which would be compensated by the markets charging much higher rates (this already happens because investors fear default instead of inflation). It'd also act as a forcing function to require the people living there charge (foreigners) prices that are reasonable for what they can provide, rather than expect them to accept market realities and actually lower their prices in order to compete.
ForRealsies 8y ago
>it forces them to concentrate on productivity rather than economic alchemy I'm a Hayek fan, but even I can see merit to the Keynesian economics principle of debt deflation. A level of inflation is necessary in high Debt-to-GDP countries, it is not a matter of 'economic alchemy'. This is how countries have pulled out of recessions time after time throughout human history. The Euro, and to that extent the EU, is the unnatural force that doesn't have a historical precedent.
Rubinsalamander 8y ago
The Euro (Not directly but by risk sharing) also gives these countrys artifically low interest rate. Thats why they still can borrow cheap money despite being basically broke
coldtea 8y ago
>Which is why Euro is good for Southern European countries: it forces them to concentrate on productivity rather than economic alchemy. Yeah, and that experiment has gone very well... /s What it actually does is cripple them from one of the major tools to control your own economy. It's no "alchemy", it's a tool -- the greatest economies of the world use it whenever they have to.

by pif 8y ago

batteryhorse 8y ago

The Euro has caused their debt to appreciate, so now they owe more money in real terms because the currency doubled in value. Meanwhile, Germany is able to export their goods without any currency risk. And now you have another layer of bureaucracy. The real issue is that when they created the Euro, they failed to consolidate the debt of all the nations. It's only a matter of time before the whole thing collapses.

apexalpha 8y ago
>The real issue is that when they created the Euro, they failed to consolidate the debt of all the nations. No one failed, we just didn't want to (for reasons very obvious now, in hindsight). Also, the countries (Spain, Greece, Portugal...) accumulated most of the debt _after_ they got the Euro precisely because the Euro enabled them to do so.
- pif 8y ago
  > No one failed, we just didn't want to (for reasons very obvious now, in hindsight). Would you mind explaining a bit more, please?
krageon 8y ago
The Euro took away the single most painful thing still plaguing travel between EU countries. These days an EU citizen can up and leave to a different EU country with very little friction (aside from the language in some places), which was the idea. That goal was achieved. It is unrealistic to expect that countries will somehow not be able to solve their financial issues just because they lost one tool. That's an excuse, not a reason.
- mnl 8y ago
  They lost control of their own currency. That's not just "one tool". It doesn't work and without full economic integration it never will. I think I know what I'm talking about as I'm living with this problem, have analysed it thoroughly because I have nothing better to do, know the history of this southern European country and their people, and as a result of all this I can't trivialize it by simply making up the belief that it'll be fine at some undetermined point in the future. It's more like the death by one thousand cuts, in slow motion.
  - pif 8y ago
    > They lost control of their own currency. Germany lost it, too. If it worked for Germany, why not trying to learn from their experience rather than keeping complaining?
- rablo 8y ago
  That’s only good for privileged people. Almost nobody I know has enough skill with any other language (and that includes English) to move to another country in the EU.
- beaconstudios 8y ago
  how does the Euro have anything to do with free movement? You could have one without the other.
- coldtea 8y ago
  >The Euro took away the single most painful thing still plaguing travel between EU countries. In other words, it took away one insignificant burden on travelling, something which people do a best a few weeks a year, and in exchange it devastated their jobs and communities, for which they depend on survival (and for having the money to travel) all year long... >These days an EU citizen can up and leave to a different EU country with very little friction Yes, and usually with tears in their eyes, because they're forced to leave their country, culture, friends and close family to go work on some country that did better. Often even at 40 years old or later, and after their job in their own country crushed, because (among other things) of the Euro. The saddest songs in most southern countries are about migrating. The kind of migration you describe is only a good thing (and a chosen option) for more privileged people who chose to do it and can chose to live where they want at a whim -- not for the millions merely forced to go find work elsewhere. >which was the idea Yeah, just not an idea that people asked for -- just the dream of the elites that created and pushed for it.

repolfx 8y ago

So glad to see someone make this point. Every time I read histrionics about how the euro is a straightjacket, a trap, an evil German plan to benefit itself at the cost of its neighbours etc I just sigh. I am not even a supporter of the EU, but blaming the euro for low southern productivity is just wrong. The PIGS countries aren't seeing high unemployment and poverty because of the euro. They'd still have high unemployment even if they had their own currencies. The causes are fundamental. All a floating currency would do is make it easy for them to screw over lenders in the short term by inflating their debts, which would be compensated by the markets charging much higher rates (this already happens because investors fear default instead of inflation). It'd also act as a forcing function to require the people living there charge (foreigners) prices that are reasonable for what they can provide, rather than expect them to accept market realities and actually lower their prices in order to compete.

ForRealsies 8y ago

>it forces them to concentrate on productivity rather than economic alchemy I'm a Hayek fan, but even I can see merit to the Keynesian economics principle of debt deflation. A level of inflation is necessary in high Debt-to-GDP countries, it is not a matter of 'economic alchemy'. This is how countries have pulled out of recessions time after time throughout human history. The Euro, and to that extent the EU, is the unnatural force that doesn't have a historical precedent.

Rubinsalamander 8y ago

The Euro (Not directly but by risk sharing) also gives these countrys artifically low interest rate. Thats why they still can borrow cheap money despite being basically broke

coldtea 8y ago

>Which is why Euro is good for Southern European countries: it forces them to concentrate on productivity rather than economic alchemy. Yeah, and that experiment has gone very well... /s What it actually does is cripple them from one of the major tools to control your own economy. It's no "alchemy", it's a tool -- the greatest economies of the world use it whenever they have to.