7 ms·

If only there was some sort of regional currency, less susceptible to a single country’s economic changes, that one could use...

goatinaboat 7y ago
What do you suggest? German domination of the Euro has exactly the same effect on Southern Europe, the so-called PIGS.
- achamayou 7y ago
  We’re talking about what would be good for the UK. Countries that never had strong exports definitely wouldn’t benefit.
  - danmaz74 7y ago
    Italy had very strong industrial export. It's still not bad.
    - goatinaboat 7y ago
      Yes Italy is very strong in the machine-tool industry and the luxury-goods industry. They do plenty of exports.
- pjc50 7y ago
  I could make the argument that London domination of the pound has had the same effect on peripheral counties of the UK. The forces are the same - money flows in to the capital, but the peripheral areas need to keep buying globally produced goods, so money flows out.
coldtea 7y ago
...if only that currency was controllable by Britain's government according to Britain's needs, instead of being run according to some other country's interests to propel its own economy (using a number of satellite states to vote in its favor) -- and causing the exact same problem the grandparent described in the periphery countries...
- achamayou 7y ago
  Yeah it’d be even better for Britain if it was in control of that currency, you’re definitely right there!
  - coldtea 7y ago
    Is this supposed to be a parody of sarcasm? First, I didn't say it would be better if Britain was in control of Euro. Obviously it would be better if the Euro was controlled to the interests of all the Eurozone, not particular to the interests of some top-dog states. Which might even need a "two/three zone" currency. Second, if you ask whether it be better for Britain to control its own currency, that's a given. EU aside, that's what any economist will tell you: a country is better off when it controls its own currency. Denying that is as kooky as being an anti-vaxxer.
- siscia 7y ago
  Where this narrative of German driving the EU comes from? Please note that I am not taking any position, I just want to get more informed about the internal EU problems.
  - JanSt 7y ago
    It‘s not based on facts but on feelings. The facts show that GB had way more rights and power to decide than Germany (exlusions from certain EU rules everyone else accepted etc.) Germany is also by far the single biggest financial contributer to the EU. The GB politicians used to blame the EU for all their own problems. There will be a hard awakening coming at the end of the year, but I‘m sure the EU will still be their scapegoat somehow.
    - dash2 7y ago
      The general point that the Euro will be controlled by the ECB, which must balance the priorities of all member states, is true. It’s also true that this generates some well-known public goods problems. And it is widely accepted among economists that ECB policy has been better suited to Germany than to e.g. the PIIGS countries of the Mediterranean. Hence the anger about European austerity in Italy, Greece.... Seriously, nobody in Britain, Remainer or Brexiteer, is arguing for us to join the Euro. That argument is not currently live.
jason0597 7y ago
The ECB is not unbiased in the slightest, they always favour the northern states.
- achamayou 7y ago
  Britain is definitely in the northern half of Europe.
  - jason0597 7y ago
    It's kinda obvious that the ECB can only deal with Eurozone countries
- tonyedgecombe 7y ago
  The ECB/Euro favours the fiscally disciplined states. I'm not convinced that includes the UK.
- JanSt 7y ago
  QE is made for Southern Europe, the North has argued against it for years (especially Jens Weidmann). Draghi is Italian.
  - chewz 7y ago
    QE transfered money to Southern countries with a caveat to use them to pay bondholders - large banks of the North. So in essence it was taking money from Northern taxpayers to give to Northern banks to save them from illiquidity. People in the South and their country budgets haven't seen a cent of these money.
    - JanSt 7y ago
      That's not a correct description, but it's true in some way. 1) QE did not transfer money with any caveat to pay bondholders. QE is not like giving cash to a country. The ECB buys up bonds on the open market (thus mostly from banks, which supports your point). 2) The buying up of bonds drastically reduces interest rates, because artifical demand is created. 3) The South can now borrow money for pretty low interest rates on high debt-loads. Italy wouldn't be able to afford high interest rates very long. 4) Northern banks holding higher paying bonds in their portfolio profited because the high-coupon bonds values increase.

goatinaboat 7y ago

What do you suggest? German domination of the Euro has exactly the same effect on Southern Europe, the so-called PIGS.

achamayou 7y ago
We’re talking about what would be good for the UK. Countries that never had strong exports definitely wouldn’t benefit.
- danmaz74 7y ago
  Italy had very strong industrial export. It's still not bad.
  - goatinaboat 7y ago
    Yes Italy is very strong in the machine-tool industry and the luxury-goods industry. They do plenty of exports.
pjc50 7y ago
I could make the argument that London domination of the pound has had the same effect on peripheral counties of the UK. The forces are the same - money flows in to the capital, but the peripheral areas need to keep buying globally produced goods, so money flows out.

coldtea 7y ago

...if only that currency was controllable by Britain's government according to Britain's needs, instead of being run according to some other country's interests to propel its own economy (using a number of satellite states to vote in its favor) -- and causing the exact same problem the grandparent described in the periphery countries...

achamayou 7y ago
Yeah it’d be even better for Britain if it was in control of that currency, you’re definitely right there!
- coldtea 7y ago
  Is this supposed to be a parody of sarcasm? First, I didn't say it would be better if Britain was in control of Euro. Obviously it would be better if the Euro was controlled to the interests of all the Eurozone, not particular to the interests of some top-dog states. Which might even need a "two/three zone" currency. Second, if you ask whether it be better for Britain to control its own currency, that's a given. EU aside, that's what any economist will tell you: a country is better off when it controls its own currency. Denying that is as kooky as being an anti-vaxxer.
siscia 7y ago
Where this narrative of German driving the EU comes from? Please note that I am not taking any position, I just want to get more informed about the internal EU problems.
- JanSt 7y ago
  It‘s not based on facts but on feelings. The facts show that GB had way more rights and power to decide than Germany (exlusions from certain EU rules everyone else accepted etc.) Germany is also by far the single biggest financial contributer to the EU. The GB politicians used to blame the EU for all their own problems. There will be a hard awakening coming at the end of the year, but I‘m sure the EU will still be their scapegoat somehow.
  - dash2 7y ago
    The general point that the Euro will be controlled by the ECB, which must balance the priorities of all member states, is true. It’s also true that this generates some well-known public goods problems. And it is widely accepted among economists that ECB policy has been better suited to Germany than to e.g. the PIIGS countries of the Mediterranean. Hence the anger about European austerity in Italy, Greece.... Seriously, nobody in Britain, Remainer or Brexiteer, is arguing for us to join the Euro. That argument is not currently live.

jason0597 7y ago

The ECB is not unbiased in the slightest, they always favour the northern states.

achamayou 7y ago
Britain is definitely in the northern half of Europe.
- jason0597 7y ago
  It's kinda obvious that the ECB can only deal with Eurozone countries
tonyedgecombe 7y ago
The ECB/Euro favours the fiscally disciplined states. I'm not convinced that includes the UK.
JanSt 7y ago
QE is made for Southern Europe, the North has argued against it for years (especially Jens Weidmann). Draghi is Italian.
- chewz 7y ago
  QE transfered money to Southern countries with a caveat to use them to pay bondholders - large banks of the North. So in essence it was taking money from Northern taxpayers to give to Northern banks to save them from illiquidity. People in the South and their country budgets haven't seen a cent of these money.
  - JanSt 7y ago
    That's not a correct description, but it's true in some way. 1) QE did not transfer money with any caveat to pay bondholders. QE is not like giving cash to a country. The ECB buys up bonds on the open market (thus mostly from banks, which supports your point). 2) The buying up of bonds drastically reduces interest rates, because artifical demand is created. 3) The South can now borrow money for pretty low interest rates on high debt-loads. Italy wouldn't be able to afford high interest rates very long. 4) Northern banks holding higher paying bonds in their portfolio profited because the high-coupon bonds values increase.