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I would call the euro a smashing success to be honest. Small countries, especially the ones that came out of the old ussr, seem to be very susceptible to their

by seer 7y ago

I would call the euro a smashing success to be honest. Small countries, especially the ones that came out of the old ussr, seem to be very susceptible to their leaders playing with the currency to further their immediate goals, to the detriment of long term prosperity. Namely they like to print money. Countries that pegged their currency to the euro, or outright started using it got measurably better than the one that didn’t. Counties that had “troubles because of the euro” would have most definitely had them even without, but the problem would have surfaced much later, when the damage would have been done. It’s just so easy to solve economy problems with devaluing a currency and most, especially populist governments just can’t help themselves but do it, ending in huge nation wide catastrophes - see a lot of latin america, pre-euro ex-ussr countries etc. Having a stable currency is just vital to the long term health of a country, and the euro has certainly helped with that immensely. It does remove a tool from a government’s toolbox, but a dangerous one that I wouldn’t trust most of them to use anyway. As for Africa, with the amount of financial education the populace has at large, I would presume a stable currency would do wonders to their economies long term, at least for several generations ahead. A bit oversimplified but very accessible source of info for geopolitical economic stuff like this would be VisualPolitik youtube channel.

TomMarius 7y ago
The Czech Republic (the fastest growing EU economy) wouldn't be as successful had it accepted Euro.
- patrickmcnamara 7y ago
  Ireland has technically been the fastest growing economy in the EU for the past several years and it uses the Euro. GDP is an iffy measure for Ireland though.
- seer 7y ago
  Perhaps, its all a trade off. Maybe you lucked out with your governments. Having your own currency is a tool that _can_ be used wisely to great effect. It’s just that the modern world is filled with examples of the opposite. And it has been just a couple of decades. Over the long run, stable currencies usually outperform their capricious rivals. Mostly because investors want stability, and so they flock to places where it is present. There are numerous examples of countries with their own currency doing well, or doing very very poorly. But there are few examples of countries doing very badly _because_ they adopted a union currency. Imagine Alabama stating they’ll quit the US dollar and get their own alabamians or something - it might go great, it might go badly, but you sure know it would be risky. And investors by and large wouldn’t like that.
  - TomMarius 7y ago
    You're saying that there is no threat in accepting Euro? There definitely is - as you said, investors don't like uncertainty, and in our specific case that makes great uncertainty. Imagine a country saying they will abandon their 100+ years old currency in favor of much younger and worse performing one that the country has no control over, forever tying it to risky economies. Union currencies have usually been formed in times of either crisis or rapid growth which of course changes the risk calculation, but we're somewhere in the middle between these two and not after any destructive war.
repolfx 7y ago
Namely they like to print money So does the EU though. This doesn't seem like an especially great plus point for the Euro, given the QE (money printing) on a truly vast scale carried out by Mario "whatever it takes to save the euro" Draghi and likely to be continued by his successor. Basically the eurozone stays unified by having local governments borrow money from the ECB, which is willing to engage in apparently unlimited bond purchases to ensure yields stay low and pro-EU governments stay in power. This amounts to massive wealth transfers from (primarily) Germany to the rest of the eurozone for purely political reasons. Germany is willing to tolerate this because of its past: German national pride has been transferred nearly wholesale to the EU's desired future nation of "Europe". Would African nations tolerate the same? Seems very dubious.
- seer 7y ago
  The euro sure has its problems with the uneven power distributions of its users, but wouldn’t you call the same for the us dollar or the yuan for that matter? I’m sure there would chinese be provinces that tolerate their underperforming neighbors for similar political reasons. Maybe Africa will show us what a more equitable power distribution looks like? I’d love for them to try. But I would predict that it would be vastly beneficial for capital flowing into that African union to have a stable currency. People with money usually don’t want their capital to evaporate for frivolous reasons.

by seer 7y ago

TomMarius 7y ago

The Czech Republic (the fastest growing EU economy) wouldn't be as successful had it accepted Euro.

patrickmcnamara 7y ago
Ireland has technically been the fastest growing economy in the EU for the past several years and it uses the Euro. GDP is an iffy measure for Ireland though.
seer 7y ago
Perhaps, its all a trade off. Maybe you lucked out with your governments. Having your own currency is a tool that _can_ be used wisely to great effect. It’s just that the modern world is filled with examples of the opposite. And it has been just a couple of decades. Over the long run, stable currencies usually outperform their capricious rivals. Mostly because investors want stability, and so they flock to places where it is present. There are numerous examples of countries with their own currency doing well, or doing very very poorly. But there are few examples of countries doing very badly _because_ they adopted a union currency. Imagine Alabama stating they’ll quit the US dollar and get their own alabamians or something - it might go great, it might go badly, but you sure know it would be risky. And investors by and large wouldn’t like that.
- TomMarius 7y ago
  You're saying that there is no threat in accepting Euro? There definitely is - as you said, investors don't like uncertainty, and in our specific case that makes great uncertainty. Imagine a country saying they will abandon their 100+ years old currency in favor of much younger and worse performing one that the country has no control over, forever tying it to risky economies. Union currencies have usually been formed in times of either crisis or rapid growth which of course changes the risk calculation, but we're somewhere in the middle between these two and not after any destructive war.

repolfx 7y ago

Namely they like to print money So does the EU though. This doesn't seem like an especially great plus point for the Euro, given the QE (money printing) on a truly vast scale carried out by Mario "whatever it takes to save the euro" Draghi and likely to be continued by his successor. Basically the eurozone stays unified by having local governments borrow money from the ECB, which is willing to engage in apparently unlimited bond purchases to ensure yields stay low and pro-EU governments stay in power. This amounts to massive wealth transfers from (primarily) Germany to the rest of the eurozone for purely political reasons. Germany is willing to tolerate this because of its past: German national pride has been transferred nearly wholesale to the EU's desired future nation of "Europe". Would African nations tolerate the same? Seems very dubious.

seer 7y ago
The euro sure has its problems with the uneven power distributions of its users, but wouldn’t you call the same for the us dollar or the yuan for that matter? I’m sure there would chinese be provinces that tolerate their underperforming neighbors for similar political reasons. Maybe Africa will show us what a more equitable power distribution looks like? I’d love for them to try. But I would predict that it would be vastly beneficial for capital flowing into that African union to have a stable currency. People with money usually don’t want their capital to evaporate for frivolous reasons.