Fwd: [Mind's Eye] Re: Euro the way of the Yugo?

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-----Original Message-----
From: Don Johnson <dajohn@gmail.com>
To: minds-eye@googlegroups.com
Sent: Mon, Mar 29, 2010 11:11 am
Subject: Re: [Mind's Eye] Re: Euro the way of the Yugo?

On Mon, Mar 29, 2010 at 10:00 AM, ornamentalmind <ornamentalmind@yahoo.com> wrote:

"Shoulds" imply a lack of acceptance of the nature of reality as it
is. Such puffery and wishes to impose ego upon appearances is the way
of suffering.

Are you saying there 'shouldn't' be accountability?  Or are you just quoting your favorite fortune cookie?

dj

On Mar 29, 5:50 am, Don Johnson <daj...@gmail.com> wrote:
> Dropping them is my knee-jerk reaction.  I'm trying to think long-term
> economic health for the entire region.  It's important to have a plan that
> gets implemented and then stuck with.  Too often concessions are given again
> and again and the lesson learned is there really is no accountability.
> Well, there should be.
> dj
>
>
>

> On Mon, Mar 29, 2010 at 3:47 AM, Slip Disc <bug...@gmail.com> wrote:
> > First you say drop Greece like a bad transmission then follow with
> > wanting to see the Union remain intact.  To drop Greece might set a
> > precedent that only the viable members are worth keeping in the fold.
> > The bugs need to be worked out for sure and there could be more
> > unforeseen follies ahead but nary a nation has been without them,
> > needless to say ours.
>
> > On Mar 28, 8:37 am, Don Johnson <daj...@gmail.com> wrote:
> > > First, I have to say the gentlemen from Wurzburg has a delightful
> > surname.
> > > This theme song played over in my head as I re-read the interview.
>
> > >http://www.youtube.com/watch?v=Cr2_GNIF1WI
>
> > > There are two key quotes I took from the interview that I agree with.
> >  The
> > > first.
>
> > > "A community can't function when it's made up of
> > > unequal partners who are supposed to behave as equals."-Starbatty
>
> > > This is key.  Sounds pompous and maybe it is but it doesn't make it any
> > less
> > > true.  The next quote is in reply to the observation that economists make
> > > lousy oracles.
>
> > > "Many of us put too much stock in numbers. But
> > > mathematical models can't depict complex realities."-Starbatty(also
> > > delightfully named);-)
>
> > > Adding to that my complete ignorance of European economics I've come to
> > the
> > > none too startling conclusion that I have no idea what should be done
> > here.
> > > My instincts say drop Greece like a bad transmission from the Union but
> > help
> > > them by encouraging investment there.  Perhaps something in-between
> > > completely booting them out and keeping them as a trusted partner.  Put
> > them
> > > in an economic half-way house as it were.
>
> > > I'm afraid Starbatty may be correct and if the Union bails them out now
> > > other countries will be tempted to be fraudulent as well.  Personally,
> > I'd
> > > like to see the Union remain whole if for no other reason then it helps
> > keep
> > > Germany in check.  I much prefer the current pacifist leadership over the
> > > nationalist leadership from days of old.
>
> > > Just curious.  How do the Minds Eye Brits feel about the EU?  Are you
> > glad
> > > or disappointed that the pound lives on?
>
> > > dj
>
> > > On Tue, Mar 23, 2010 at 11:37 PM, Slip Disc <bug...@gmail.com> wrote:
> > > > Tell us what you think after you check out this Interview conducted by
> > > > Thomas Tuma and Alexander Jung of Spiegel Online International
> > > > with.........
>
> > > > Peter Bofinger, 55, a member of the German Council of Economic
> > > > Experts, a respected panel of five economists who advise the federal
> > > > government in Berlin. The economist, who lives in the Bavarian city of
> > > > Würzburg, founded a pro-euro initiative in 1997.
>
> > > > AND
>
> > > > Joachim Starbatty, 69, a professor emeritus in economics at the
> > > > University of Tübingen in southwestern Germany. In 1997, he and three
> > > > other academics filed a lawsuit against the introduction of the euro
> > > > at Germany's Constitutional Court, though it was ultimately
> > > > unsuccessful.
>
> > > > The Interview is titled:
> > > > Bringer of Prosperity or Bottomless Pit?
> > > > Top German Economists Debate the Euro
>
> > > > SPIEGEL: Mr. Bofinger and Mr. Starbatty, do you think it was a mistake
> > > > to introduce the euro?
>
> > > > Peter Bofinger: No, of course not. Today, we live in a currency zone
> > > > that, despite everything, is significantly more stable than where the
> > > > dollar or yen are used. The euro has brought growth and prosperity to
> > > > Europe.
>
> > > > Joachim Starbatty: Actually, the euro was a mistake with particularly
> > > > serious consequences. A monetary union requires its members to pursue
> > > > the same policies and be similarly productive. The so-called
> > > > convergence criteria were meant to ensure that this would happen. But
> > > > -- as the dramatic developments in Greece are now showing -- they
> > > > didn't.
>
> > > > SPIEGEL: Do you feel vindicated today?
>
> > > > Starbatty: Unfortunately, our fears have become a reality. The
> > > > monetary union was launched with real self-deception.
>
> > > > Bofinger: Excuse me?
>
> > > > Starbatty: The euro was sold to us as a modernization program for
> > > > Europe, and we were also told that it would push the Community toward
> > > > stability. But, in reality, it has drifted apart and become a truly
> > > > unstable entity.
>
> > > > Bofinger: Unstable? The inflation rate has been very moderate,
> > > > hovering at around 2 percent since 1999, and it is significantly lower
> > > > than it was when Germany used the mark. We have a lower budget deficit
> > > > than the Americans, the Japanese and the British. Our debt-GDP ratio
> > > > is also lower than it is in the United States and Japan. There is no
> > > > reason why the euro should be coming under pressure. The decision to
> > > > introduce it was smart and far-sighted.
>
> > > > SPIEGEL: Without any drawbacks?
>
> > > > Bofinger: Sure, the euro zone is currently looking a little worse for
> > > > the wear. But that's to be expected, given the storm the global
> > > > economy has gone through. Still, thanks to the common currency, it's
> > > > no longer possible, for example, to wage speculative attacks on
> > > > individual currencies. This eliminates a key disruptive factor that
> > > > massively destabilized markets in the past.
>
> > > > Starbatty: But that's exactly the problem! In the past, exchange rates
> > > > served as a valve. Individual countries could control their economies
> > > > by allowing their currencies to gain or lose value. Now, this
> > > > adjustment mechanism no longer works and, as a result, a completely
> > > > different sort of dangerous imbalance has emerged. Today, there are
> > > > two blocs within the monetary union: a strong currency bloc in the
> > > > north and a weak one in the south. The robust north has joined forces
> > > > with countries that have constantly devalued their currency throughout
> > > > their histories. Just look at the Italian lira, for example. At the
> > > > end of the 1950s, I paid 6.70 German marks for 1,000 lire. The final
> > > > exchange rate was less than one mark for 1,000 lire.
>
> > > > SPIEGEL: What would happen if the old currencies were reintroduced in
> > > > the euro zone tomorrow?
>
> > > > Bofinger: It would be a catastrophe. The German mark would have to
> > > > appreciate significantly -- I'd say by 10 percent to 20 percent.
> > > > Everything that we've worked so hard to attain in terms of
> > > > competitiveness would vanish overnight. There would be wailing and the
> > > > gnashing of teeth in Germany. And Europe would be making a serious
> > > > mistake if it were to revert to regionalism and nationalism during
> > > > this phase of advancing globalization.
>
> > > > Starbatty: I see things completely differently. The euro was also sold
> > > > to citizens as an instrument for securing peace. I never understood
> > > > that because, if that really were the case, you would have to open the
> > > > monetary union to everyone. Instead, in light of its failure, we are
> > > > now witnessing just how nationalism arises in the first place. EU
> > > > flags have already been burned in Greece.
>
> > > > SPIEGEL: Would it have been better if all countries in Europe had kept
> > > > their own currencies?
>
> > > > Starbatty: Yes. A community can't function when it's made up of
> > > > unequal partners who are supposed to behave as equals. With the euro,
> > > > Germany has created an artificial competitive advantage for itself,
> > > > which has enabled us to conquer markets all over the world. But this
> > > > has also led to the buildup of massive excess capacity in our export
> > > > industries and, consequently, the export-oriented companies in the
> > > > southwestern state of Baden-Württemberg are hurting. The monetary
> > > > union changed the structure of economies in an unhealthy way.
>
> > > > Bofinger: Oh, come on! You can't blame the euro for these imbalances!
> > > > The blame primarily lies with economic policies. Since 1995, there
> > > > have been almost no appreciable wage increases in Germany, partly as a
> > > > result of pressure brought on from increases in subcontracted labor.
> > > > Politicians have done everything to relieve employers of the burden of
> > > > paying social security contributions because we fell into this strange
> > > > panic, believing we weren't globally competitive. With our economic
> > > > policies, we placed too much of a lopsided emphasis on exports. The
> > > > Irish, Greeks and Spaniards, on the other hand, put too much emphasis
> > > > on domestic demand.
>
> > > > 'Putting the Virtuous in the Dock Rather than the Real Offenders'
>
> > > > SPIEGEL: In recent days, French Finance Minister Christine Lagarde has
> > > > repeatedly criticized Germany's export surpluses for being high
> > > > compared with those of other EU countries. Is she right to do so?
>
> > > > Starbatty: No. I think it's strange that Madame Lagarde is putting the
> > > > virtuous, who have always been oriented toward stability, in the dock
> > > > rather than the real offenders.
>
> > > > Bofinger: But the Germans have sinned just as much as the Spaniards,
> > > > for example. The Spaniards made their wages too high, while we in
> > > > Germany practiced the opposite by not increasing the purchasing power
> > > > of workers for years.
>
> > > > Starbatty: So what? It made us successful. It arose from the concern
> > > > that jobs would migrate abroad. And Germany's moderate wage policy has
> > > > made the country attractive to companies again.
>
> > > > Bofinger: You should look at it more holistically. We wouldn't have
> > > > been able to increase our exports if the
>

> ...
>
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