40% Chance of a Euro Zone Breakup: Economist

[Alex E]

"The system" is just screwed up. As I've understood, the main reason people are thinking about breaking this up, is so that countries with a bad economy can devaluate their currency so that their products become competitive (cheap) again. There's no real solution there, it's just financial accounting tricks. In the long run, such solutions won't bring anyone anything. You need to sustainably make an economy more efficient and effective to really solve these issues. Also, the economic system should be less risk-inducing and complicated.

[stormshadow]

"The system" is just screwed up. As I've understood, the main reason people are thinking about breaking this up, is so that countries with a bad economy can devaluate their currency so that their products become competitive (cheap) again. There's no real solution there, it's just financial accounting tricks. In the long run, such solutions won't bring anyone anything. You need to sustainably make an economy more efficient and effective to really solve these issues. Also, the economic system should be less risk-inducing and complicated.

Devaluation would do nothing actually, it would only make things worse. Whether you devalue the Euro or - in the case of a breakup - individual currencies, it would not help at all if a country is not a major manufacturer/exporter.
In such a case no matter how much you devalue you're not producing what the world wants.
Greece, Ireland Portugal all fall in that category.
Devaluation would in fact just boost France & Germany! the big exporters.

What is needed is also politically the most difficult to agree on, and that is a along with a monetary union the creation of a fiscal union. A fiscal union would also help countries in issuing much talked about Eurobonds.

[Alex E]

^^^^ I completely agree about the devaluation part.



And, let's take Greece. If that would want to pay off their loans in the near few decades, it's economy would have to grow faster than that of the fastest growing economies right now. Quite a bit faster, even.

Never should they, the politicians (idiots), have tried to mindlessly draw more countries into the EU. Because, while the subtleties and stories are different, that's basically what happened. The EU wasn't stable and functioning properly at all yet, though they just had to get pull in a crapload of instable countries, making it impossible to manage for such a slow functioning system as our political one (a simple, proven side-effect of Democracy). You get the M$ Windows effect (before Windows 7, that is): For the sake of the money and the fame a faulty system is built upon, and at some point it crashes like a m*therf*cker.


Those morons really piss me off sometimes, when they do what everyone sees is a stupid thing to do...

[stormshadow]

^^^^ I completely agree about the devaluation part.



And, let's take Greece. If that would want to pay off their loans in the near few decades, it's economy would have to grow faster than that of the fastest growing economies right. Quite a bit faster, even.

Never should they, the politicians (idiots), have tried to mindlessly draw more countries into the EU. Because, while the subtleties and stories are different, that's basically what happened. The EU wasn't stable and functioning properly at all yet, though they just had to get pull in a crapload of instable countries, making it impossible to manage for such a slow functioning system as our political one (a simple, proven side-effect of Democracy). You get the M$ Windows effect (before Windows 7, that is): For the sake of the money and the fame a faulty system is built upon, and at some point it crashes like a m*therf*cker.


Those morons really piss me off sometimes, when they do what everyone sees is a stupid thing to do...

They should have chosen quality over quantity.
Some countries like Greece blatantly violated the criteria(with regard to govt deficits & debt) laid down in the The Maastricht Treaty in order gain access to the Euro.
On top of that the banks in the better of countries (France & Germany) went on a lending spree to these weaker countries.
Now they've created this domino effect that they cant get out of. I cant fully understand the angst of the German voter, but they should have stopped this nonsense long time back.

Now Greece has to resort to literally selling off bits of their country to pay their debt .

[Matt_13]

The EU is nothing. I don't care about it. I just can't get the point in German's way of thinking. What do they get? They have a very stron economy and business. Why they want to pay for financial failers?! What is good in the EU when 25% of money (50.000.000.000 euro every 6 years) is spent on administration? These money don't grow on trees - countries pay it.