The latest data on unemployment is above (through March, but only through Jan for Greece). Things have improved slightly in Ireland and have been stable (but bad) for a month or two in Italy and Portugal. However, Greece and Spain continue to compete for the "Worst developed country to live in" award. Or possibly, "Most compelling reason never to join a currency union".
When I was young and living in the UK, I was vaguely pro-Europe, like most other youngish lefties. My grandparents were bitterly opposed to losing the pound, out of unthinking knee-jerk conservative resistance to change, as I saw it. I now see that unthinking knee-jerk conservatism can be the right instinct at times.
"I now see that unthinking knee-jerk conservatism can be the right instinct at times."
ReplyDeleteBut was their knee-jerking based on a model that made testable predictions, or did their knees just jerk? And note that the only reason this particular conservative impulse turned out to be the right one is because the EU (Germany in particular) is later responded to an economic crisis with knee-jerk conservative solutions.
You may have to add Holland to your "PIGS updates":
ReplyDeletehttp://www.telegraph.co.uk/finance/financialcrisis/10031680/Debt-crippled-Holland-falls-victim-to-EMU-blunders-as-property-slump-deepens.html
I was flying to Africa last summer and was changing planes in Holland, so I spent the 24 hours that I had in the country stopping people at random and asking them if they thought the EMU would hold together. Pretty much all of them looked at me glassy eyed and said something like "It would be impossible for us to leave the monetary union." Then I asked them if they would be willing to see 10% of their tax revenue go to the "club med" countries every year, because that is what the richest states in the USA send to the poorest ones every year. Only one of them said yes.
I never would have guessed that Holland might need to be on the receiving end of such "equalization payments".
Heh, if the banking sector had been more conservative in the true sense of the word, that might have helped... but in general the Conservative political parties were applauding the triumph of the unrestrained market when credit levels soared to hallucinatori heights.
ReplyDeleteSure, and the US is doing just fine and peak oil has nothing to do with it.
ReplyDeleteSingularity is coming anyway, will be cute.
Right, exactly. This is not a problem caused by the Euro. You cannot inflate your way to wealth and happiness.
ReplyDeleteThe ONLY way this would have played out differently sans Euro is that now the Drachma would have massively dropped vs other currencies and the people there would still be extremely poor and unable to import basic supplies. No real change, just a difference in mechanism.
James has exactly the right analysis. The root cause of this is that the Euro was not sold as a transfer union, even though experience with the dollar indicated that's exactly what it'd become. Either the Euro becomes a transfer union in which poor states are repeatedly propped up by richer ones, or it dissolves. But that won't say anything about the nature of money. It will make a statement about the relatively lower unity of Europeans vs Americans.