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The real solution is that Germany leave. The Euro could then devalue for the benefit of all the weaker Eurozone members: Greece, Italy, spain, Portugal and Irel

The real solution is that Germany leave. The Euro could then devalue for the benefit of all the weaker Eurozone members: Greece, Italy, spain, Portugal and Ireland.

aaggarwal 11y ago
Eurozone was formed by strong economical powers to bring economic stability in their countries and it's like a club of rich friends. Why would Germany leave the Eurozone and devalue their own money? Why would UK and its other rich friends let the euro and thus their money be devalued. And even if Germany leave the Eurozone which is highly unlikely, there are still many strong economic powers in Eurozone, so the Euro wouldn't devalue enough to support weaker economies. This situation is much more complex due to continuous delay by European powers to discuss this matter.
- mkempe 11y ago
  Note that the UK, Denmark, and Sweden have kept their own currencies, not using EUR. Look up GBP, DKK, SEK.
  - aaggarwal 11y ago
    Yes, point noted. Still they would never want euro to devalue against their currencies, it will result in huge inflation.
    - mkempe 11y ago
      You truly have no idea what you're saying. If EUR falls relative to SEK, Swedes will pay less for goods purchased in Europe. Falling prices are not a consequence of inflation, rising prices are.
      - aaggarwal 11y ago
        I am certainly not the authority on economics, but if EUR falls relative to SEK, then in Sweden imports would be high, exports would be low. This in turn would effect local manufacturers because people would prefer buying things from outside for lower price rather than within country for higher price. This might lead to closing of manufacturing units in Sweden and loss of jobs in the country. Also, wages would decrease relative to the rest of Europe because SEK is more valuable now (This would also result is movement of jobs out of Sweden to other European countries). Now the imports are flourishing and export industry is dying out and wages are getting lower, unemployment may be rising. The in-country manufacturers would keep the prices same for their goods to be sold within the country, but people's wages has decreased, so in order to compete with competitive import industry they will reduce the goods prices, which in turn will decrease their staff's pay. Thus, even though SEK is strong compared to rest of Europe, but within Sweden, people are making less than before, which in turn will lead to inflation. Also, I haven't yet accounted to another possible consequence of this, while SEK is stronger relative to Euro and Swedes might be making less money, American economy might not be affected and $ would still be the same. This will affect Swedes international buying power. A strong control by government may change a few factors here. If I am wrong somewhere, I would be happy to be learn new things, please give reasons.
ZeroGravitas 11y ago
The real solution is a united states of Europe. Some claim the whole point of the euro was to inevitably lead to this point, and hopefully the crisis would hit when the politics were favourable to this solution. I think a couple of the arrangements put in place to bail out the French and German banks are basically a policy shift towards that.
- mrweasel 11y ago
  >The real solution is a united states of Europe If the goal is to make the Euro work, then yes. More realistic it would be better to roll back parts of the EU, and strengthen other. Environmental policies and free trade is really the stuff the EU needs to focus on and leave the rest to the individual countries. I'm a big supporter of the idea of a European community and the ideas behind the EU, but I'm very much against what the EU has become. We also need to accept that many Europeans want small, more homogenous states and less EU interference. It makes sense for Alexis Tsipras to call for a referendum, because on the one hand they don't want to fulfill the requirement from the ECB, EU and IMF, on the other they also don't want to leave the Euro. If those two options being mutually Tsipras can't win, and if they public believe that those two options are bad, they should get to pick which of those options they believe to be the lesser evil. Greece can't stay in this perpetual economical limbo. There needs to be a plan that doesn't require the EU top politicians to meet every year and which let the Greek businesses know what to expect for the next 10 years.
XorNot 11y ago
Germany really really doesn't want to leave the Eurozone. A strong Deutschmark would tank their export economy.
- pjc50 11y ago
  Being in the eurozone means that they get to tank the Greek economy instead. (It doesn't have to be zero-sum, but it is in the current setup! It's not possible for all EU countries to run trade surpluses with one another)
- mafribe 11y ago
  That is rather questionable. German exports did very well before the Euro. And neighbouring countries not in the Eurozone are also doing well. Switzerland, UK, Denmark etc.
  - XorNot 11y ago
    It's not like they'd take a hit. But that's not the point - the investors leveraging themselves into the millions of the basis of fractional % improvements/decrements care very much about any possible, natural contraction you might expect from a German mark holding very high value.

The real solution is that Germany leave. The Euro could then devalue for the benefit of all the weaker Eurozone members: Greece, Italy, spain, Portugal and Ireland.

aaggarwal 11y ago

Eurozone was formed by strong economical powers to bring economic stability in their countries and it's like a club of rich friends. Why would Germany leave the Eurozone and devalue their own money? Why would UK and its other rich friends let the euro and thus their money be devalued. And even if Germany leave the Eurozone which is highly unlikely, there are still many strong economic powers in Eurozone, so the Euro wouldn't devalue enough to support weaker economies. This situation is much more complex due to continuous delay by European powers to discuss this matter.

mkempe 11y ago
Note that the UK, Denmark, and Sweden have kept their own currencies, not using EUR. Look up GBP, DKK, SEK.
- aaggarwal 11y ago
  Yes, point noted. Still they would never want euro to devalue against their currencies, it will result in huge inflation.
  - mkempe 11y ago
    You truly have no idea what you're saying. If EUR falls relative to SEK, Swedes will pay less for goods purchased in Europe. Falling prices are not a consequence of inflation, rising prices are.
    - aaggarwal 11y ago
      I am certainly not the authority on economics, but if EUR falls relative to SEK, then in Sweden imports would be high, exports would be low. This in turn would effect local manufacturers because people would prefer buying things from outside for lower price rather than within country for higher price. This might lead to closing of manufacturing units in Sweden and loss of jobs in the country. Also, wages would decrease relative to the rest of Europe because SEK is more valuable now (This would also result is movement of jobs out of Sweden to other European countries). Now the imports are flourishing and export industry is dying out and wages are getting lower, unemployment may be rising. The in-country manufacturers would keep the prices same for their goods to be sold within the country, but people's wages has decreased, so in order to compete with competitive import industry they will reduce the goods prices, which in turn will decrease their staff's pay. Thus, even though SEK is strong compared to rest of Europe, but within Sweden, people are making less than before, which in turn will lead to inflation. Also, I haven't yet accounted to another possible consequence of this, while SEK is stronger relative to Euro and Swedes might be making less money, American economy might not be affected and $ would still be the same. This will affect Swedes international buying power. A strong control by government may change a few factors here. If I am wrong somewhere, I would be happy to be learn new things, please give reasons.

ZeroGravitas 11y ago

The real solution is a united states of Europe. Some claim the whole point of the euro was to inevitably lead to this point, and hopefully the crisis would hit when the politics were favourable to this solution. I think a couple of the arrangements put in place to bail out the French and German banks are basically a policy shift towards that.

mrweasel 11y ago
>The real solution is a united states of Europe If the goal is to make the Euro work, then yes. More realistic it would be better to roll back parts of the EU, and strengthen other. Environmental policies and free trade is really the stuff the EU needs to focus on and leave the rest to the individual countries. I'm a big supporter of the idea of a European community and the ideas behind the EU, but I'm very much against what the EU has become. We also need to accept that many Europeans want small, more homogenous states and less EU interference. It makes sense for Alexis Tsipras to call for a referendum, because on the one hand they don't want to fulfill the requirement from the ECB, EU and IMF, on the other they also don't want to leave the Euro. If those two options being mutually Tsipras can't win, and if they public believe that those two options are bad, they should get to pick which of those options they believe to be the lesser evil. Greece can't stay in this perpetual economical limbo. There needs to be a plan that doesn't require the EU top politicians to meet every year and which let the Greek businesses know what to expect for the next 10 years.

XorNot 11y ago

Germany really really doesn't want to leave the Eurozone. A strong Deutschmark would tank their export economy.

pjc50 11y ago
Being in the eurozone means that they get to tank the Greek economy instead. (It doesn't have to be zero-sum, but it is in the current setup! It's not possible for all EU countries to run trade surpluses with one another)
mafribe 11y ago
That is rather questionable. German exports did very well before the Euro. And neighbouring countries not in the Eurozone are also doing well. Switzerland, UK, Denmark etc.
- XorNot 11y ago
  It's not like they'd take a hit. But that's not the point - the investors leveraging themselves into the millions of the basis of fractional % improvements/decrements care very much about any possible, natural contraction you might expect from a German mark holding very high value.