Text 23292, 84 rader
Skriven 2011-12-06 07:31:48 av Robert Bashe (2:2448/44)
  Kommentar till text 23283 av Roy Witt (1:387/22)
Ärende: See what I mean...
==========================
Roy Witt wrote to Robert Bashe on Monday December 05 2011 at 14:42:

[The EU and the Euro]
RB>> Nobody really knows what's going to happen, Roy.

RW> As you probably remember, I subscribe to Deutsche Welle and I'm
RW> reading about all of this happening there. It's scary at times since
RW> Wall Street stock values rise and fall at any news of the Euro in
RW> decline.

It's scary here, too, particularly since most of us have the impression that
the politicians don't know what to do either.

RW> On the other hand, the EU could expel those high-debt countries and
RW> let them fend for themselves until they go under.

Can't be done. The treaties only allow Eurozone countries to _voluntarily_
withdraw. There is no way to legally exclude them, and any attempt would mean
the end of the EU, not just of the Euro. The original idea was that the Euro, a
common currency, would automatically lead to alignment of the fiscal and tax
structures of the participating countries. No provisions were made to _ensure_
that, however, and it simply didn't happen. As a result, you have a large
number of different fiscal and tax structures in the Eurozone, but a common
currency. Naturally that only works as long as times stay good - we're now
experiencing what happens when times are not so good.

In contrast to single currencies such as the Dollar, the Yen and the Renminbi
(Yuan), all of which are subject to a _single_ fiscal and tax system, the Euro
has this fatal flaw, and has had it from the beginning. The question is whether
it can be eliminated or at least reduced at this point in time. Nobody really
has an answer to that at present.

RB>> People are worried - and as we have seen, not without justification -
RB>> about the "domino effect" that would have on other Eurozone countries
RB>> such as Spain and Italy, and possibly even France.

RW> I thought that France was about as stable as Germany...I guess not.

Unfortunately not. For one thing, France isn't economically as strong as
Germany, although the difference isn't great - and for another, France is much
more exposed to Greek, Portuguese, Italian and Spanish debt than Germany. So
the present weakness of those countries also affects France. One of the rating
companies - I think it was Fitch, but which one isn't really important -
recently downgraded French debt by mistake for a few hours, and the markets
went crazy before the mistake was corrected, with many apologies.

And in today's newspaper, I read that the rating agencies are now observing
even Germany with some concern, seeing a "negative" outlook and a possible
recession of the entire EU for 2012. News could definitely be better.

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

RW> Germany, with the 'new' DM...

Which the Germans would naturally reject even if they had the money, which they
wouldn't in case of a major recession.

RW> It's making some Belgians so nervous, they're seeking dual citizenship
RW> with Luxumberg. That is, if they can prove that they have at least one
RW> living or one ancestoral relative born in that country. The way the
RW> talked about it was as though there is no future for Belgium.

That's another matter, Roy, and has more to do with the lack of a government in
Belgium - something that originally didn't bother the Belgians much, if you
remember back to what Ward was writing a year ago - but is meanwhile becoming
pretty unsettling because of the long duration.

Anyway, for all practical purposes, Belgium and Luxembourg are one country
(with few exceptions in lower denominations, Luxembourg even used Belgian
Francs before the Euro was introduced), and Belgians - like all EU citizens -
have the right to establish residence in Luxembourg and live there with no more
restrictions than Luxembourg nationals. So I don't really see any advantage to
something like a dual citizenship.

Possibly Ward can add something to this, but the above is my understanding.

Cheers, Bob

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