Skip to main content

Split the Euro?

It would seem Euroland can be divided into two regions. Those with relatively weak economies and lax tax regimes who need the Euro to be strong so they can afford to buy imports and keep borrowing, and those with strong economies who need the Euro to be weak so they can export more. Unfortunately the stronger the economy, the stronger the currency. So Greece, Spain, Portugal, Italy and eastern European countries are all suffering because the Euro has been been strengthened by the relative economic successes of Germany, France, Holland and others. These countries are relying on the failing economies to keep the Euro weak to help them export.

Clearly this arrangement isn't working for Greece who can see Germany in particular is benefiting, and it isn't working for the UK, the US and others outside the Euro who are competing unfairly with Germany who quote for products and services in devalued Euros.

Why don't they split the Euro into North and South? A N-euro would enable the stronger Northern economies to find a more appropriate FX level while offering more attractive bonds and higher interest rates for savers. A S-euro would immediately find it's own FX level thereby providing a kiss-of-life to those economies who by now would have devalued their currencies to help pay their debts.

If the Euro is kept, then only the South or the North need to adopt the new variant. Perhaps the stronger economies are the ones who can afford to pay for the changes needed for a breakaway Euro. So we end up with a Neuro (not a bad name - sounds clever. Also sounds like NewEuro) and a revalued Euro. Each country chooses which one they want to join, or remain in, having experienced austerity imposition if they fall below the standards set by a central bank.

Would this halfway house solution make the ideals of a single European currency somewhat more practical, albeit meaning two currencies rather than one? It would mean turmoil for a while perhaps. But only 10 years ago, that's what happened when all the national currencies converted to the Euro. At least now the populations who have to change will quickly get the hang of it. Just one letter difference and the people of those nations will either be delighted that they're no longer supporting zombie economies or delighted they're not being told what to do by 'bullying' neighbours. Yet anyway.

Of course it doesn't get away from the flawed concept of countries sharing currencies, while not sharing tax and other fiduciary laws. But it might help to sort out the current mess. For a while... or until similar splits are again needed to reflect the different requirements of healthier and sicker economies. The trouble with the Euro was timing. All economies have ups and downs. The idea was that the ups of some economies supported the downs of others whose turn would come to provide their support when their own economies eventually strengthened. But it's now been revealed that this could take centuries - if ever for some. Clearly bailing out weaker nations is fine if the stronger population wants to pay for them, but how much do the Germans still want to help ungrateful Greeks these days?

Forcing the Greeks, Portuguese, Spanish and others to repay their debts in Euros they can't afford to earn is clearly not working. They have no alternative except to extract it from meagre internal assets which is starting to look like a bridge too far for countries like Greece where a run on their banks is happening while I type.

Unless China buys Greece, what other solutions are there? Do olives go with Peking duck?


Popular posts from this blog

Phillips screws - yes I'm angry about them too

Don't get me wrong. They're a brilliant invention to assist automation and prevent screwdrivers from slipping off screw heads - damaging furniture, paintwork and fingers in the process. Interestingly they weren't invented by Mr Phillips at all, but by a John P Thompson who sold Mr P the idea after failing to commercialise it. Mr P, on the otherhand, quickly succeeded where Mr T had failed. Incredible isn't it. You don't just need a good idea, you need a great salesman and, more importantly, perfect timing to make a success out of something new. Actually, it would seem, he did two clever things (apart from buying the rights). He gave the invention to GM to trial. No-brainer #1. After it was adopted by the great GM, instead of trying to become their sole supplier of Phillips screws, he sold licenses to every other screw manufacturer in the world. A little of a lot is worth a great deal more than a lot of a little + vulnerability (watch out Apple!). My gromble is abo

Norman's Autobiography

The following is an unfinished autobiography written by my father who passed away earlier this week at the age of 93. Cheerbye Dad (you were the only person I knew to use this expression). You were a huge influence on my life. Thanks for taking the time to record so much that I never knew about your own life and those of our immigrant ancestors. Dad's the one in the middle ;-) The HorBraJacSac Saga by Norman Horwood  9th June 1926 (or possibly earlier!) - 27th June 2019 The Families' Backgrounds. We have four families; Abrahams/Horowitz/Horwood; Bralofsky/Braley; Jacobs and Tchaikofsky/Sacof. Taking my pair, the (Abrahams) Horowitzs/Horwood and the (Bralofskys) Braleys. They escaped from different parts of "Mittel Europe" at different times. Abraham and Rachel Abrahams, nee Gess, (Horowitz), had been in England longer than the Bralofskys, having come here from Lithuania in about 1897 as a married couple without children. It is certain that Abraham

Prepare for Alien Contact

I've not gone barking mad or joined some weird religious cult (aren't they all?). But I do predict that we will make contact with intelligences from other planets soon. Here's my reasoning: There are approximately 100,000,000,000 stars in our galaxy (easy way to remember this order of magnitude is it's one hundred, thousand, million). Usefully there are also approximately the same number of galaxies in the universe. And assuming every star has about the same number of planets orbiting it as our Sun, and that the Milky Way is an average size of galaxy, that means there are around 100,000,000,000,000,000,000,000 planets in the universe. A lot. Scientists have long debated the probability of life, as we would recognise it - reproducing, eating, etc - existing outside Earth. Most agree mathematically that it's a certainty. What they did was take all the components they believed were required for life to have evolved on Earth and then extrapolate what they know about