Is it time to join the euro?

Really2

ninky wrote: »

Why? Please explain for simple folk...

Well all our assets, salaries would be worth more, So when it was 1.3 and you earn £20K you would earn 26K euros

at 1-1 you only earn 20K euros.

so at a low time it is the worst time for all in our country to join as you are basically selling yourselves short.

Basicaly we would be exchanging our currancy at an all time low.

Simply, would you have liked to gone on holiday to europe last year or this year.

A= last year as your spending money awould have lasted longer and your holiday would have been cheaper.;)

lostinrates

Its a good question, but like others I say no.

I follow the Euro as closely as I follow Sterling (I keep an eye on my few dollars, but not so much....there's not much I have there now). I'm pretty annoyed I missed transfering my Euro to sterling at the last Euro mini-high but we're still hedging bets.

Dan:_4

Generali wrote: »

That's just a coincidence.

The Euro won't last five years IMO. Not with all its current members.

They said that when the euro first came out, but it's still here.

What would happen to the country's using the Euro?

Dan:_4

Im pretty p!ssed off actaully as im going to Greece in a few months and gonna have to have a lot less beers then usual!

Infact, I was hacked off on last years holiday when the exchange rate was 1.25 - I wish it was back there now!!!

Degenerate

ninky wrote: »

So why have other countries like France and Germany considered it a good idea?

It was a political decision made against the advice of leading economists.

How have their economies performed as a result?

It's done them no favours so far, but I really think the worst is yet to come.

I really don't see the Euro-zone surviving this crisis intact. The right solutions to their problems would require a political union that just isn't going to happen. What they're left with is hanging the weaker countries out to dry, forcing them to suffer what will probably be a Japanese-style lost decade, while they deflate back into alignment with Germany. Faced with that, I'd choose the short sharp shock of exiting the Euro.

Generali

stevetodd wrote: »

What do you see happening? (and why)

Bond prices/repos.

You can buy (for example) Irish Government bonds, post them with the ECB and borrow cash against them and buy (again for example) German Government bonds with that cash.

If there is a belief in the market that Irish Government debt is riskier than German (which it probably is) then Irish bonds should fall in price relative to German debt. Under the current rules, everyone in the Euro will be compelled to pay to prop up risky Government debt.

In the end either the better regarded countries will get fed up supporting the worst or it'll simply become too expensive. I don't know which will happen first although I suspect the former.

My outside bet is that Italy's economy is so ruined by not being able to devalue her currency any more that her citizens vote for a party committed to quitting the Euro - Italy has a long history of continual competitive devaluations. That would raise risk premiums on Euro debt (presumably) which could make other large countries feel it's not worth remaining as members.

The big outsider is that countries (France, Italy, Spain?) run bigger and bigger deficits. The European Commission has already shown that it isn't going to intervene to ensure that the Maastricht(?) Treaty conditions are met (deficits must be < 3% GDP). Eventually Germany gets the jitters about inflation and pulls out. Without Germany the Euro is stone cold dead.

Just a few thoughts. The Euro is a riskier proposition than many imagine as there is a big political risk which doesn't exist with other currencies by and large.

purch

However, as it's pretty much 1 euro = 1 pound there may not be a better time

Shurely you mean "....may not be a worst time" :eek:

The PPP should be somewhere around 1.35/1.40 so fixing a rate of par would be suicidal longer term.

SGE1

Degenerate wrote: »

No time would be a good one to give up monetary independence in favour of the abomination that is the Euro. Without a political union to back it, it's an orphan currency that is crippling the weaker nations by robbing them of the monetary tools they need to recover.

That's right, because our monetary tools have so far proved so useful to us...:rolleyes:

Degenerate

SGE1 wrote: »

That's right, because our monetary tools have so far proved so useful to us...:rolleyes:

Indeed they have, despite what you may think.

Generali

Degenerate wrote: »

Indeed they have, despite what you may think.

Could you give an example rather than an assertion?