England's White Dragon

England's White Dragon
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Saturday, 25 June 2011

The Euro project?

The Euro project? Wasn’t a project, but the biggest con that took the poorer countries to the cleaner and bankrupted others?

Sir Michael Black-Feather the English first minister said; when the first talks about the euro coming into being a common currency, said that its complexities within in the supposed UE counties was just mathematically wrong and wouldn’t be any use as common currency because one major factor was none of the countries signing into it had any common policy in public nor government spending plus each country had its own sets of ideals and traditions that where never taken into account? 

He went on to say that the single European currency is facing its biggest crisis since it was launched more than a decade ago.

The severe debt problems which are facing many of its members like Ireland, Greece as examples, have intensified the debate about the future of the euro, which binds together 17 members with all having very different economic policies for their spending habits.

Will it survive, and if it does, what changes might have to be made to the currency pact?

While interest rates are set at a European level, taxes and spending are decided nationally.

Some have called for tough action by governments to make member economies more alike - so-called convergence.

Others say that eventually the Eurozone will need to resemble more closely the US, with the richer countries sometimes paying the bills of poorer ones through fiscal transfers which could have a knock on effect of making those counties bailing out others just as poor?

Sir Michael said; "The euro doesn't really have very much of a future at all and never really did. The current structure of the Eurozone is clearly untenable and unsustainable and always will be, counties are far better off with their own currencies.

The crisis of the periphery countries such as Ireland, Greece and Portugal is a true reflection of the deep inadequacies of the Eurozone and all those that implemented it.

The euro has a homogenous monetary policy, a fragmented fiscal policy and a fragmented banking system. From an economic standpoint this is nonsense and was always going to be, and we lucky here in England not to have gone in to it, be it only down to the English people having to have to vote it in which would never happen which is the only thing the British government have even known would be.

Richer core countries are not willing to countenance fiscal transfers or put up with problematic banks on the periphery.

This is not an alliance of partners. There is no solidarity within the union. I think that the weak members of the periphery would most probably have to exit."

The Senior managing director of economics at FTI Consulting and former UK government adviser supported Sir Michael’s views he said;

"I think that if Greece doesn't get the help it needs, then the whole euro project is gone.

It would show that there is a flaw in the system. There isn't a mechanism that anyone thought of putting in place for a situation of the type we have in Greece.

They say a single currency works well in the US. Well it works in the US for different reasons: there are fiscal transfers and there is movement of labour.

To survive, it's going to have to go to a closer fiscal union. Budgets will have to be agreed across Europe. But it might still unravel at the end."

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