Future Of The Euro

stilicho · 17th November 2010, 12:09 AM

I am a little surprised there's not a current thread about the status of the euro or any transnational currency union in the wake of uncertainty first in Greece and now in Ireland.

Here's a pessimistic view of the situation in Ireland:

http://www.dailymail.co.uk/debate/ar...in-nation.html

Since I live in Canada, I feel we've lived almost forever with the risks of default due to the ongoing political rancour from Quebec separatists. We have referendums every now and then which jolts the common currency and bond prices. It's not always Quebec, either, as any profligate province can cause market jitters and insecurity in the currency or bond markets. (Though not Saskatchewan in recent years--Go Riders!!)

But none of these distinctly Canadian issues are nearly as critical as recent problems have been in Europe. There, the banks appear to be almost always on the verge of collapse, and their bond prices suffer because there is no relief from currency devaluation since they all use the same one.

Is the euro doomed? Any links to keep people up to date would be appreciated along with your considered opinions.

geni · 17th November 2010, 12:15 AM

Originally Posted by stilicho

I am a little surprised there's not a current thread about the status of the euro or any transnational currency union in the wake of uncertainty first in Greece and now in Ireland.

Here's a pessimistic view of the situation in Ireland:

http://www.dailymail.co.uk/debate/ar...in-nation.html

You've just admitted to using the daily mail as a source. Your argument is invalid.

It's not as if there are a shortage of media sources covering this. 30 seconds searching would have brought you the BBC with mr doom and gloom himself for example:

http://www.bbc.co.uk/blogs/thereport...es_crisis.html

stilicho · 17th November 2010, 12:18 AM

Originally Posted by geni

You've just admitted to using the daily mail as a source. Your argument is invalid.

It's not as if there are a shortage of media sources covering this. 30 seconds searching would have brought you the BBC with mr doom and gloom himself for example:

http://www.bbc.co.uk/blogs/thereport...es_crisis.html

I understand the risks of using the Daily Mail as a source and have priced it into the value of the post.

Your perspective on the future of the euro?

Tolls · 17th November 2010, 06:32 AM

So long as the powers that be in Ireland do not act like eejits (as they seemed to be doing yesterday) and try and facedown the ECB, essentially asking for financial support with no strings attached, then things'll be OK.

Of course I have no idea if sanity will prevail or not.

geni · 17th November 2010, 11:11 AM

Originally Posted by stilicho

I understand the risks of using the Daily Mail as a source and have priced it into the value of the post.

Your perspective on the future of the euro?

Well since you've priced in the value of the daily mail I think it will result in more asylum seekers with cancer resulted in lower house prices unless chocolate turns out to be a miracle cure.

Corsair 115 · 17th November 2010, 01:13 PM

Originally Posted by stilicho

Since I live in Canada, I feel we've lived almost forever with the risks of default due to the ongoing political rancour from Quebec separatists. We have referendums every now and then...

There have only been two sovereignty referendums: the first in 1980 and the second in 1995. (Based on that frequency, we ought to have been one this year but there seems little prospect of one occurring anytime soon.)

The main things keeping Canada out of international market trouble is our stable banking system and our stable public finances (though now in deficit, this occurs after numerous years of budget surplusses, and the deficit is but a small proportion of GDP, much lower than that of many other western nations).

Puppycow · 17th November 2010, 03:58 PM

Was Iceland a Euro country or did they have their own currency?

Puppycow · 17th November 2010, 04:14 PM

Originally Posted by Puppycow

Was Iceland a Euro country or did they have their own currency?

The answer is no. Linky.

Furthermore, IIRC Iceland had very high interest rates before its financial crisis. So debunking the Daily Mail argument is rather straightforward.

Their argument seems to be that low interest rates and the euro caused the bubble, but Iceland had a similar or even worse crisis and Iceland had its own currency and high interest rates.

stilicho · 18th November 2010, 10:23 PM

Originally Posted by Corsair 115

There have only been two sovereignty referendums: the first in 1980 and the second in 1995. (Based on that frequency, we ought to have been one this year but there seems little prospect of one occurring anytime soon.)

The main things keeping Canada out of international market trouble is our stable banking system and our stable public finances (though now in deficit, this occurs after numerous years of budget surplusses, and the deficit is but a small proportion of GDP, much lower than that of many other western nations).

I understand that. But the potential risk is priced into our provincial and federal bond issues. I'm more interested in how these economic pressures affect a federal or international currency (including the CND and the EUR) where the risk is created by centrifugal political needs.

For those who didn't like the Daily Mail used as a source, here's another perspective from Bloomberg on the crisis in Ireland. It recommends a couple of books on the topic. I haven't read either of them but hopefully I'll have some time this weekend:

http://www.bloomberg.com/news/2010-1...n-johnson.html

@Puppycow:

The experience of Iceland is at least partly instructive. Ireland won't have a dramatic currency devaluation because it doesn't have its own currency. What suffers is their bond issues. Same thing as in Greece.

Comparison: http://www.ft.com/cms/s/0/144ef7ea-f...#axzz15hrrXqcf

It's obviously not all sunshine and light in Iceland but it appears they're better off and have better prospects now than any of Ireland, Latvia, or Greece.

commandlinegamer · 20th November 2010, 05:58 AM

Margaret foresaw the calamity:

http://blogs.telegraph.co.uk/news/pe...astate-europe/

Quote:

It is as if, all those years ago, the British prime minister possessed a crystal ball that enabled her to foresee the catastrophic events of the past year or so in Ireland, Greece and Portugal. Indeed, it is one of the tragedies of European history that the world chose not to believe her. President Mitterrand of France and Chancellor Kohl of Germany dismissed her words of caution. And when Mrs Thatcher was driven from office in 1990, a crucial voice was lost, and a new consensus started to form in Britain in favour of the euro.

Fun reading for a Saturday afternoon.

rjh01 · 21st November 2010, 02:16 PM

Originally Posted by commandlinegamer

Margaret foresaw the calamity:

http://blogs.telegraph.co.uk/news/pe...astate-europe/

Fun reading for a Saturday afternoon.

Problems.
1. I do not think she would have said the euro will survive 20+ years before it hits a major crisis. The prediction is too vague.
2. The euro still exists.
3. The pound has not done much better. Look at the exchange rates. They go up and down a lot. If she was right then the pound would be worth far more now than in say 1996. But it is not. Ref http://www.x-rates.com/d/EUR/GBP/hist1996.html

ServiceSoon · 21st November 2010, 05:10 PM

Originally Posted by stilicho

...Is the euro doomed?...

If the currency did crash somebody will cash-in. The following could cause the euro to crash...

1. It's possible that the media or a well-known financial guru could speculate a crash thereby causing it to occur.

2. If more nations' that use the euro request a loan or has their debt downgraded. (Based on my memory the US gov has spent more money trying to fix their problems than nations' that use the euro have had to spend to date).

3. Any uncertainty (political, tax rates, etc) in the nations' that use the euro could cause inventors to take their money elsewhere.

AnnoyingPony · 21st November 2010, 05:58 PM

Alex Jones says you should GO TOO DUH GOLD STAYUNDURRD

17th November 2010, 12:09 AM	#1
stilicho Trurl's Electronic Bard Join Date: Feb 2007 Posts: 4,714	Future Of The Euro I am a little surprised there's not a current thread about the status of the euro or any transnational currency union in the wake of uncertainty first in Greece and now in Ireland. Here's a pessimistic view of the situation in Ireland: http://www.dailymail.co.uk/debate/ar...in-nation.html Since I live in Canada, I feel we've lived almost forever with the risks of default due to the ongoing political rancour from Quebec separatists. We have referendums every now and then which jolts the common currency and bond prices. It's not always Quebec, either, as any profligate province can cause market jitters and insecurity in the currency or bond markets. (Though not Saskatchewan in recent years--Go Riders!!) But none of these distinctly Canadian issues are nearly as critical as recent problems have been in Europe. There, the banks appear to be almost always on the verge of collapse, and their bond prices suffer because there is no relief from currency devaluation since they all use the same one. Is the euro doomed? Any links to keep people up to date would be appreciated along with your considered opinions.
	__________________ "Suppose you're thinking about a plate of shrimp. Suddenly someone will say, 'Plate' or 'Shrimp' or 'Plate of shrimp,' out of the blue. No explanation and there's no point in looking for one either. It's all part of the cosmic unconsciousness." -- REPO MAN LondonJohn: "I don't need to cite."

17th November 2010, 12:18 AM	#3
stilicho Trurl's Electronic Bard Join Date: Feb 2007 Posts: 4,714	Originally Posted by geni You've just admitted to using the daily mail as a source. Your argument is invalid. It's not as if there are a shortage of media sources covering this. 30 seconds searching would have brought you the BBC with mr doom and gloom himself for example: http://www.bbc.co.uk/blogs/thereport...es_crisis.html I understand the risks of using the Daily Mail as a source and have priced it into the value of the post. Your perspective on the future of the euro?
	__________________ "Suppose you're thinking about a plate of shrimp. Suddenly someone will say, 'Plate' or 'Shrimp' or 'Plate of shrimp,' out of the blue. No explanation and there's no point in looking for one either. It's all part of the cosmic unconsciousness." -- REPO MAN LondonJohn: "I don't need to cite."

17th November 2010, 06:32 AM	#4
Tolls Graduate Poster Join Date: Nov 2007 Posts: 1,127	So long as the powers that be in Ireland do not act like eejits (as they seemed to be doing yesterday) and try and facedown the ECB, essentially asking for financial support with no strings attached, then things'll be OK. Of course I have no idea if sanity will prevail or not.
Tolls Graduate Poster Join Date: Nov 2007 Posts: 1,127

17th November 2010, 01:13 PM	#6
Corsair 115 Philosopher Join Date: Apr 2007 Location: Tranquility Base Posts: 8,589	Originally Posted by stilicho Since I live in Canada, I feel we've lived almost forever with the risks of default due to the ongoing political rancour from Quebec separatists. We have referendums every now and then... There have only been two sovereignty referendums: the first in 1980 and the second in 1995. (Based on that frequency, we ought to have been one this year but there seems little prospect of one occurring anytime soon.) The main things keeping Canada out of international market trouble is our stable banking system and our stable public finances (though now in deficit, this occurs after numerous years of budget surplusses, and the deficit is but a small proportion of GDP, much lower than that of many other western nations).
	__________________ "We choose to go to the moon in this decade and do the other things not because they are easy, but because they are hard. Because that goal will serve to organize and measure the best of our abilities and skills, because that challenge is one we are willing to accept, one we are unwilling to postpone, and one which we intend to win."

17th November 2010, 03:58 PM	#7
Puppycow Penultimate Amazing Join Date: Jan 2003 Location: Japan Posts: 15,789	Was Iceland a Euro country or did they have their own currency?
	__________________ “Some men are born mediocre, some men achieve mediocrity, and some men have mediocrity thrust upon them. With Major Major it had been all three.” ― Joseph Heller, Catch-22

17th November 2010, 12:15 AM	#2
geni Anti-homeopathy illuminati member Join Date: Oct 2003 Location: UK Posts: 26,578	Originally Posted by stilicho I am a little surprised there's not a current thread about the status of the euro or any transnational currency union in the wake of uncertainty first in Greece and now in Ireland. Here's a pessimistic view of the situation in Ireland: http://www.dailymail.co.uk/debate/ar...in-nation.html You've just admitted to using the daily mail as a source. Your argument is invalid. It's not as if there are a shortage of media sources covering this. 30 seconds searching would have brought you the BBC with mr doom and gloom himself for example: http://www.bbc.co.uk/blogs/thereport...es_crisis.html

17th November 2010, 11:11 AM	#5
geni Anti-homeopathy illuminati member Join Date: Oct 2003 Location: UK Posts: 26,578	Originally Posted by stilicho I understand the risks of using the Daily Mail as a source and have priced it into the value of the post. Your perspective on the future of the euro? Well since you've priced in the value of the daily mail I think it will result in more asylum seekers with cancer resulted in lower house prices unless chocolate turns out to be a miracle cure.

17th November 2010, 04:14 PM	#8
Puppycow Penultimate Amazing Join Date: Jan 2003 Location: Japan Posts: 15,789	Originally Posted by Puppycow Was Iceland a Euro country or did they have their own currency? The answer is no. Linky. Furthermore, IIRC Iceland had very high interest rates before its financial crisis. So debunking the Daily Mail argument is rather straightforward. Their argument seems to be that low interest rates and the euro caused the bubble, but Iceland had a similar or even worse crisis and Iceland had its own currency and high interest rates.
	__________________ “Some men are born mediocre, some men achieve mediocrity, and some men have mediocrity thrust upon them. With Major Major it had been all three.” ― Joseph Heller, Catch-22

18th November 2010, 10:23 PM	#9
stilicho Trurl's Electronic Bard Join Date: Feb 2007 Posts: 4,714	Originally Posted by Corsair 115 There have only been two sovereignty referendums: the first in 1980 and the second in 1995. (Based on that frequency, we ought to have been one this year but there seems little prospect of one occurring anytime soon.) The main things keeping Canada out of international market trouble is our stable banking system and our stable public finances (though now in deficit, this occurs after numerous years of budget surplusses, and the deficit is but a small proportion of GDP, much lower than that of many other western nations). I understand that. But the potential risk is priced into our provincial and federal bond issues. I'm more interested in how these economic pressures affect a federal or international currency (including the CND and the EUR) where the risk is created by centrifugal political needs. For those who didn't like the Daily Mail used as a source, here's another perspective from Bloomberg on the crisis in Ireland. It recommends a couple of books on the topic. I haven't read either of them but hopefully I'll have some time this weekend: http://www.bloomberg.com/news/2010-1...n-johnson.html @Puppycow: The experience of Iceland is at least partly instructive. Ireland won't have a dramatic currency devaluation because it doesn't have its own currency. What suffers is their bond issues. Same thing as in Greece. Comparison: http://www.ft.com/cms/s/0/144ef7ea-f...#axzz15hrrXqcf It's obviously not all sunshine and light in Iceland but it appears they're better off and have better prospects now than any of Ireland, Latvia, or Greece.
	__________________ "Suppose you're thinking about a plate of shrimp. Suddenly someone will say, 'Plate' or 'Shrimp' or 'Plate of shrimp,' out of the blue. No explanation and there's no point in looking for one either. It's all part of the cosmic unconsciousness." -- REPO MAN LondonJohn: "I don't need to cite."

20th November 2010, 05:58 AM	#10
commandlinegamer Philosopher Join Date: Oct 2009 Location: Mazes of Menace Posts: 5,905	Margaret foresaw the calamity: http://blogs.telegraph.co.uk/news/pe...astate-europe/ Quote: It is as if, all those years ago, the British prime minister possessed a crystal ball that enabled her to foresee the catastrophic events of the past year or so in Ireland, Greece and Portugal. Indeed, it is one of the tragedies of European history that the world chose not to believe her. President Mitterrand of France and Chancellor Kohl of Germany dismissed her words of caution. And when Mrs Thatcher was driven from office in 1990, a crucial voice was lost, and a new consensus started to form in Britain in favour of the euro. Fun reading for a Saturday afternoon.
	__________________ He bade me take any rug in the house. Last edited by commandlinegamer; 20th November 2010 at 06:02 AM.

21st November 2010, 02:16 PM	#11
rjh01 Gentleman of leisure Tagger Join Date: May 2005 Location: Planet Earth Posts: 17,198	Originally Posted by commandlinegamer Margaret foresaw the calamity: http://blogs.telegraph.co.uk/news/pe...astate-europe/ Fun reading for a Saturday afternoon. Problems. 1. I do not think she would have said the euro will survive 20+ years before it hits a major crisis. The prediction is too vague. 2. The euro still exists. 3. The pound has not done much better. Look at the exchange rates. They go up and down a lot. If she was right then the pound would be worth far more now than in say 1996. But it is not. Ref http://www.x-rates.com/d/EUR/GBP/hist1996.html

21st November 2010, 05:10 PM	#12
ServiceSoon Muse Join Date: Oct 2007 Posts: 996	Originally Posted by stilicho ...Is the euro doomed?... If the currency did crash somebody will cash-in. The following could cause the euro to crash... 1. It's possible that the media or a well-known financial guru could speculate a crash thereby causing it to occur. 2. If more nations' that use the euro request a loan or has their debt downgraded. (Based on my memory the US gov has spent more money trying to fix their problems than nations' that use the euro have had to spend to date). 3. Any uncertainty (political, tax rates, etc) in the nations' that use the euro could cause inventors to take their money elsewhere.
ServiceSoon Muse Join Date: Oct 2007 Posts: 996

21st November 2010, 05:58 PM	#13
AnnoyingPony Critical Thinker Join Date: Nov 2010 Posts: 366	Alex Jones says you should GO TOO DUH GOLD STAYUNDURRD