Text 23278, 51 rader
Skriven 2011-12-04 07:16:56 av Robert Bashe (2:2448/44)
  Kommentar till text 23254 av Roy Witt (1:387/22)
Ärende: See what I mean...
==========================
Roy Witt wrote to Robert Bashe on Saturday December 03 2011 at 12:33:

RW> What's the deal with the Euro? Is it gonna go the way of the dodo bird
RW> or what? I see that, as I predicted years ago, the EU may lose a
RW> couple or three of it's members over the EU economic problems.

Nobody really knows what's going to happen, Roy.

There's a lot of speculation around, about issuing "Eurobonds" (with the entire
Euro zone guaranteeing them, not just one country) - which the Germans don't
want because that would increase their borrowing cost and reduce the pressure
on the high-debt countries to institute reforms. Not to mention the fact that
the EU treaties would have to be changed to allow this.

There's also talk about the ECB (European Central Bank) in Frankfurt simply
buying up all national bonds without any limit (yes, even Greek, Portuguese and
Irish ones) to prop up the prices and let those countries stay solvent. But
this would violate the ECB statutes, and is violently opposed by both the ECB,
the German government and the German federal bank. One further reason is that
this would probably push inflation up to high levels (I've read about 6% in
Germany), again burdening the German economy with such a bailout and again
reducing the pressure on the debtor states to reform their systems. And of
course it's politically unacceptable in Germany, where the political situation
(the CDU/CSU and FDP coalition) is fragile at best.

Then there's the option of some Eurozone countries withdrawing and
re-introducing their old currencies - which would have to be voluntary
according to the current statutes, and might be worse for the countries
involved - and most certainly for the Euro - than somehow keeping them in.
People are worried - and as we have seen, not without justification - about the
"domino effect" that would have on other Eurozone countries such as Spain and
Italy, and possibly even France.

Then there's the suggestion that Germany could leave the Eurozone and introduce
the "new" DM. The problem there is that the new DM would presumably appreciate
so fast, so much that German export industries - the backbone of the economy -
would probably go down the tube, with a major recession in Germany as a result.
Then who pays the bills?

And of course, that would be the end of the Euro and probably of the EU as
well. The same problems crop up if the Germans and French would get together to
form a "new", strong Euro and leave the rest to the old, weak one.

These are only the main ideas being traded around at the moment. But as I
mentioned above, nobody really knows what's going to happen and it's making a
lot of people here and elsewhere very nervous.

Cheers, Bob

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