4 ms·

I read a lot of financial commentary. In the last year the discussion about the Euro breakup has gone from "if it breaks up..." to "when it breaks up..." There

I read a lot of financial commentary. In the last year the discussion about the Euro breakup has gone from "if it breaks up..." to "when it breaks up..." There is a lesson here about taking systems of people and trying to mash them together without acknowledging the necessary pain. I'm concerned that now we're in the end game, and more and more complex strategies are just going to make things worse. I would never advocate any kind of violence, but there's a good reason why Napoleon was the one person who did the most to modernize Europe. The general consensus seems to be that a recession is already under way, and the contraction will continue until this all gets straightened out.

VladRussian 15y ago
>but there's a good reason why Napoleon was the one person who did the most to modernize Europe. if you mean centralized government of the Empire - i'd not agree, there were other big Empires in the Europe which preserved, instead of solved/improved, the problems. If you mean Napoleonic wars, when i'd agree and add WWI and WWII.
Tichy 15y ago
The most convincing argument seemed to me that the way the Euro was set up is simply not workable/secure - for example they can not just print more Euros because of lots of rules. But that kind of thing hardly seems to be the problem of mixing too many people together, it is simply a flaw in the system. Of course the initial problem might have been that the system could only be some lowest common denominator of all the systems it tries to combine, making it almost impossible to create something good. I find it interesting that there are therefore two interesting problems: how to set up a stable currency, and more importantly, how to set up a decision process that produces good results and doesn't alienate everybody.
- k-mcgrady 15y ago
  The problem is that monetary policy is not set on a country by country basis. The economic cycles of countries differ and trying to control monetary policy on a global level leads to policies that do not help any country.
  - Tichy 15y ago
    Still, it worked before. For example Germany used to be a lot of little states with different rulers and different currencies. The money union worked out well. And even within a country there are strong and weak economic regions. That alone does not seem to stand against a common currency. I suppose even the US has different parts with different economic cycles and different economic strength.
    - k-mcgrady 15y ago
      That very interesting I didn't know that Germany previously worked like that. Your point about the US is valid. However as their national debt is $15 trillion they aren't exactly a model economy.
      - veyron 15y ago
        Even if the debt is 15 Trillion and one ratings agency felt we didn't deserve the highest rating, investors are champing at the bit to purchase bonds.
        themichael 15y ago
        Then the FED would not have to purchase bonds.
        k-mcgrady 15y ago
        The reason the US is not suffering more from its huge debt is because the US dollar is the primary reserve currency.
        flourpower 15y ago
        That's more of a reflection of liquidity than of creditworthiness though.
      - Tichy 15y ago
        I just checked with Wikipedia: the unification of Germany happened in 1871. Before then there were sometimes even ferocious wars among the states in Germany, including the Thirty Years War. That is one reason why people had high hopes for Europe: today it seems unthinkable to have a war between states of Germany (they don't have their own military either). Perhaps one day it could be as unthinkable to have war between European states.
- DanielBMarkham 15y ago
  Yes, it is a structural problem. Separately, the governments are ruled by politicians that get their mandate from the people. They tried to keep local fiscal policy and yet somehow together have a unified monetary policy. That's the kind of problem that's blatantly obvious from day one. What happened was a series of complexities that were added to these systems of governance that obscured this underlying reality. This trend looks to continue, with more and more schemes using more and more complex policies and products. It doesn't look so good. Of course, I'm just relating what I've been reading. I can tell you it's been quite alarming and yet strangely placid. Like watching a slow-motion train wreck. I didn't mean the number of people. I meant the idea of smashing up lots of different systems of government and cultures through byzantine layers of bureaucracy instead of just replacing them with a centralized government (which would have worked very well, probably, but it was politically unfeasible)
  - Tichy 15y ago
    I wish I had any idea what to do with my Euro savings :-(
    - scotty79 15y ago
      Bitcoins are now cheap again.
    - pagekalisedown 15y ago
      Greenbacks and Yuans, that's what I'd do.
      - BSousa 15y ago
        But exactly how? I'm not being rude, just asking. Apart from going to these countries and open a bank account or have actual money under the mattress, how would this work? My bank allows me to have accounts in USD and GBP (I actually have some money on each) but if the euro blows, and there is a bank freeze and mandatory 'exchange' of euros to whatever your local coin is, I would think these accounts would also be affected (something like exchanging the USD to EUR at current rate, and then changing the EUR to escudo or dracma) I looked at forex but I'm in no way qualified to understand how the hell that works.
- deleted 15y ago
  [deleted]
k-mcgrady 15y ago
I don't think the Eurozone will not break up. It will most likely lose some members though. These will either be the larger economies like Germany or the smaller ones which should never have been allowed in in the first place.
- deleted 15y ago
  [deleted]
seanalltogether 15y ago
In other words, you can't have a single economy without a single government responsible for enforcing the rules.

VladRussian 15y ago

>but there's a good reason why Napoleon was the one person who did the most to modernize Europe. if you mean centralized government of the Empire - i'd not agree, there were other big Empires in the Europe which preserved, instead of solved/improved, the problems. If you mean Napoleonic wars, when i'd agree and add WWI and WWII.

Tichy 15y ago

The most convincing argument seemed to me that the way the Euro was set up is simply not workable/secure - for example they can not just print more Euros because of lots of rules. But that kind of thing hardly seems to be the problem of mixing too many people together, it is simply a flaw in the system. Of course the initial problem might have been that the system could only be some lowest common denominator of all the systems it tries to combine, making it almost impossible to create something good. I find it interesting that there are therefore two interesting problems: how to set up a stable currency, and more importantly, how to set up a decision process that produces good results and doesn't alienate everybody.

k-mcgrady 15y ago
The problem is that monetary policy is not set on a country by country basis. The economic cycles of countries differ and trying to control monetary policy on a global level leads to policies that do not help any country.
- Tichy 15y ago
  Still, it worked before. For example Germany used to be a lot of little states with different rulers and different currencies. The money union worked out well. And even within a country there are strong and weak economic regions. That alone does not seem to stand against a common currency. I suppose even the US has different parts with different economic cycles and different economic strength.
  - k-mcgrady 15y ago
    That very interesting I didn't know that Germany previously worked like that. Your point about the US is valid. However as their national debt is $15 trillion they aren't exactly a model economy.
    - veyron 15y ago
      Even if the debt is 15 Trillion and one ratings agency felt we didn't deserve the highest rating, investors are champing at the bit to purchase bonds.
      - themichael 15y ago
        Then the FED would not have to purchase bonds.
      - k-mcgrady 15y ago
        The reason the US is not suffering more from its huge debt is because the US dollar is the primary reserve currency.
      - flourpower 15y ago
        That's more of a reflection of liquidity than of creditworthiness though.
    - Tichy 15y ago
      I just checked with Wikipedia: the unification of Germany happened in 1871. Before then there were sometimes even ferocious wars among the states in Germany, including the Thirty Years War. That is one reason why people had high hopes for Europe: today it seems unthinkable to have a war between states of Germany (they don't have their own military either). Perhaps one day it could be as unthinkable to have war between European states.
DanielBMarkham 15y ago
Yes, it is a structural problem. Separately, the governments are ruled by politicians that get their mandate from the people. They tried to keep local fiscal policy and yet somehow together have a unified monetary policy. That's the kind of problem that's blatantly obvious from day one. What happened was a series of complexities that were added to these systems of governance that obscured this underlying reality. This trend looks to continue, with more and more schemes using more and more complex policies and products. It doesn't look so good. Of course, I'm just relating what I've been reading. I can tell you it's been quite alarming and yet strangely placid. Like watching a slow-motion train wreck. I didn't mean the number of people. I meant the idea of smashing up lots of different systems of government and cultures through byzantine layers of bureaucracy instead of just replacing them with a centralized government (which would have worked very well, probably, but it was politically unfeasible)
- Tichy 15y ago
  I wish I had any idea what to do with my Euro savings :-(
  - scotty79 15y ago
    Bitcoins are now cheap again.
  - pagekalisedown 15y ago
    Greenbacks and Yuans, that's what I'd do.
    - BSousa 15y ago
      But exactly how? I'm not being rude, just asking. Apart from going to these countries and open a bank account or have actual money under the mattress, how would this work? My bank allows me to have accounts in USD and GBP (I actually have some money on each) but if the euro blows, and there is a bank freeze and mandatory 'exchange' of euros to whatever your local coin is, I would think these accounts would also be affected (something like exchanging the USD to EUR at current rate, and then changing the EUR to escudo or dracma) I looked at forex but I'm in no way qualified to understand how the hell that works.
deleted 15y ago
[deleted]

k-mcgrady 15y ago

I don't think the Eurozone will not break up. It will most likely lose some members though. These will either be the larger economies like Germany or the smaller ones which should never have been allowed in in the first place.

deleted 15y ago
[deleted]

seanalltogether 15y ago

In other words, you can't have a single economy without a single government responsible for enforcing the rules.