Is it time to join the euro?

Generali

Degenerate wrote: »

Even when trade is declining, the competitive advantage of a weak pound remains. You can be sure that if the pound was at say, 2 Euros, our exports would decline at a much faster rate.

It's a competitive advantage if you're exporting. Less so if you're importing things like fuel, food or clothing (things that the UK imports a lot of).

Degenerate wrote: »

Again, this is the same as the VAT argument. People apply the faulty logic that any measure that didn't completely solve the problem was totally ineffective, and ignore the possibility that things could have been even worse.

So your argument is that a poor solution is better than an awful one? I guess that has a certain logic although I'd hope for better from the finest minds that Socialism has to offer.

Generali

baileysbattlebus wrote: »

there were those who said the Euro wouldn't last 10 years / or survive it's first economic crisis. I guess this is the economic crisis.

The PIGS couldn't afford to leave the Euro - as you say Italy has a large national debt and a history of devaluing the Lira.

If it left the Euro it's borrowing costs would be horrendous, potentially bond investors would want double digit returns due to the risk of devaluing the Lira. Italy are better off where they are.

IMHO being in the Euro has saved the likes of Ireland already. And I would think after this crisis the new member states will be lining up to join the Euro - but will they be allowed to? They will have plenty of baggage.

I agree that only countries who are in a position of strength can afford to leave the Euro at the moment, and that would be Germany.

The weaker countries have been able to manage upto now because of a strong global economy, but with everything stripped away how will they manage.

Will Euro country default on it's debt obligations - and if they did what would happen ? Would the defaulting member come under Euro administration?

It really is a tough one. AFAIK, no country has defaulted on sovereign debt denominated in the local currency except Russia a while back except in the case of revolution.

What happens if France for example refuses to make coupon payments, that they want to print money to repay investors instead?

lostinrates

SGE1 wrote: »

Sorry, but it's not "basic". If it were "basic", the answer would be clear, and we wouldn't be having this conversation.

Thanks SGE1, well said!

Its wonderful that we have a resource where people who understand it can explain to those of us who don't and have never studied finance and economics. Most people on MSE, I suggest, are those like I, who need to ascertain basics. It doesn't make us less worthy of learning nor stupid.

Other things confirm our stupidity, and thats enough.

Generali

lostinrates wrote: »

Thanks SGE1, well said!

Its wonderful that we have a resource where people who understand it can explain to those of us who don't and have never studied finance and economics. Most people on MSE, I suggest, are those like I, who need to ascertain basics. It doesn't make us less worthy of learning nor stupid.

Other things confirm our stupidity, and thats enough.

With the blog I'm doing I'm trying to write about current stuff but keep it jargon-free and understandable.

Getting round to writing more on there would be a good start.

It's my 10th wedding anniversary tomorrow so no posting this w/e.

lostinrates

Generali wrote: »

With the blog I'm doing I'm trying to write about current stuff but keep it jargon-free and understandable.

Getting round to writing more on there would be a good start.

It's my 10th wedding anniversary tomorrow so no posting this w/e.

HAPPY ANNIVERSARY! to both you and Mrs Generali!

I read your blog (all four entries) religiously, as you know.

Degenerate

Generali wrote: »

It's a competitive advantage if you're exporting. Less so if you're importing things like fuel, food or clothing (things that the UK imports a lot of).

Fuel I grant you, since the oil price is set internationally and in dollars. For food and clothing it still gives an advantage to local producers by making imports more expensive, thereby encouraging substitution with local goods.

So your argument is that a poor solution is better than an awful one? I guess that has a certain logic although I'd hope for better from the finest minds that Socialism has to offer.

What makes it a "poor" solution? I'd call it an incomplete solution - one that by itself will not solve a problem on this scale. Cutting interest rates is your first line of defence, and any devaluation than results an added bonus. It's no panacea, but it certainly helps.

One pump isn't enough to put this fire out boys, so might well turn off the hose and let it burn?

Generali

Degenerate wrote: »

One pump isn't enough to put this fire out boys, so might well turn off the hose and let it burn?

I'd argue better to put the pump to good use and put out the right fire.

Anyhoo, goodnight all.

King_Of_Bling

ninky wrote: »

With the pound in such a weak position, would now be a better or worse time to join the euro?

will it make skunk cheaper?

Degenerate

lostinrates wrote: »

Its wonderful that we have a resource where people who understand it can explain to those of us who don't and have never studied finance and economics. Most people on MSE, I suggest, are those like I, who need to ascertain basics. It doesn't make us less worthy of learning nor stupid.

Sorry, I was just exasperated by having to explain why monetary policy is helping. Most people have seen their mortgage payments go down, you don't have to understand economics to know that leaves them with more money to spend.

lostinrates

Degenerate wrote: »

Sorry, I was just exasperated by having to explain why monetary policy is helping. Most people have seen their mortgage payments go down, you don't have to understand economics to know that leaves them with more money to spend.

But lots of us don't have mortgages. Our saving interest rates however are going down...or have nowhere to go. We probably do need a bit of explanation

ETA: Apology accepted though, and thank you for have the grace to make it.