General Chat

It´s a bit like keeping up with the Joneses. Countries like Spain, Italy & Greece were much weaker when they were "encouraged" to join the euro.
They were not strong enough to compete, but were doing OK with their own currencies & living reasonably well within their means.
As soon as they joined the euro, they were expected to up their lifestyles & spending in order to compete with their richer collegues.
It´s like expecting a person on the minimum wage to spend at the same level as a millionaire.
I really don´t have enough savings in any bank to worry about them grabbing a percentage & intend to stay with it.
Spain is my adopted country & although times are hard & certainly not the lotus eating existence that people think, I have chosen to live here & have to take the rough with the smooth.
All I would hope is that Brussels stop moving the goalposts.

I think the place to have your bank account is where you live. If you feel confident enough to live in a country, your money should be there.

Oh, you can invest in Germany or China or India and do better - but you are speculating.

And they have the power to take money off you without you having any rights of citizenship. My Zimbabwe mining shares are paying out next to nothing, but have moved some of my money to Argentina where financial gain is much easier and more secure. :-( :-(

John, can you qualify your comment "all the other countries should help - like we have done in Ireland and Cyprus"

I am not sure what help we gave to Cyprus, let's fave it we more or less abandoned them in 1974 when Turkey invaded Cyprus, and since then have only used them as a base to allow us to have a military presence in the Mediterranean region :-(

Germany's attempts to take over and control Europe by the use of armed force in the the 1930's - 1940's failed when the world went to war to stop them doing this. Now some 73 years later it appears Germany under the leadership of Angela Merkel has managed to do this without resorting to armed force, all she used was a subtle smile and a few sleight of hand tactics.

Looking at the Eurozone problems, maybe Germany is the place to have your bank account ;-)

Is it too early for my brain, I wonder? But I was just thinking if I make something that costs 1000 Euros and need to sell it to make a profit, I have to do monetary calculations in certain countries (including UK) to decide what price I need to need to retail at.

If all Europe used Euro, it would be much easier and I would not need to pay BrianW or whoever to do detailed forecasts of import tariffs, transport costs. It would be free trade throughout Europe and we could buy the best value and be competitive.

Each nation within Europe would then be free to develop their economies within their democratic legislature. So a central European bank would have little effect on the sovereignty of a country. And if any country in Europe is struggling, all the other countries should help - like we have done in Ireland and Cyprus.

But if they cannot recover despite all the help being given, that country has to go bankrupt and suffer the consequences for many years. And that probably means hardly any welfare and grossly deflated pensions.

That could happen in UK in next few years if we don't wake up and smell the coffee. If we don't ask Mr Balls to stop pumping out his failed Keynes economics that worked in 1952 - like pyramid selling works for first few who join the scheme.

And if countries like UK, Spain, Greece and Italy cannot learn to live within their means, much of the world will really suffer :-( :-(

Like wisechild I am worried about Spain as like Menorca Tenerife is only a small island and governed by Spain. In am unsure where my best interests lie and have a small amount of money both in the UK in sterling and here in Tenerife in euros. Should I move what's here to the UK or not leaving just enough euros to live on?
I don't know.

Just when I thought things couldn't get better, they don't.

In my view, albeit as an accountant rather than an economist, you cannot have monetary union without political union.
The EU has tried to force it the other way round, hoping that political union would follow monetary union.
That means that if the Eurozone survives then national Parliaments, and with it control over their economies, must disappear and be fully replaced by the European Parliament.

The main driving force behind the €uro was not Germany but France. France has always had a much weaker economy than Germany. It wants Germany to pay its bills.

Since ww2 France sought to tie the German economy with that of France in such a way that France would get a permanent large subsidy without calling it "war reparations". (*) This is the CAP. When England joined France's CAP payments went up quite a bit even though Mrs T's handbag knocked off some of the shine.

The French idea behind the ERM/€uro was that Germany would be forced into permanent large funds transfers to other weaker economies and in particular France. The €uro was France's price for German reunification.

Unfortunately for France the current German leaders do not feel bound by old Kohl/Mitterand deals and will not make any more substantial transfers or commitments.

I was doing consultancy work for the Banque de France when the €uro was being brought in. I was astounded to discover that the €uro meant monetary without fiscal union, something impossible to believe in before breakfast. I thought it would take 20 years to blow up though, not ten.

None of this is the fault of Germany. It is the inevitable result of a currency union of diverse economies and not enough political and financial glue to hold the union together.

Sure the Germans are not very diplomatic, that is the way they are. To say they are trying to "rule Europe" is plain daft.

The Dutch have given the game away, the banking "big bazooka" is dead and any further banking makeovers in the PIGS will involve substantial depositor haircuts. It may well take Cyprus2 aka Portugal before the penny drops.

So why don't the PIGS countries just leave the €uro ?
EZ. Within the €uro life will be nasty and brutish.
Outside it would be nasty, brutal and short.

They all have only themselves to blame. Their biggest mistake was to join the €uro in the first place.

Brits who are based in Spain may rue the day if they haven't already.

(*) most of the ww2 damage and loss of life to France was inflicted by RAF Bomber Command.

You are correct Rollo

Roy

Thatcher was a wily old bird and against the ERM from first to last. She was spot on with her opposition foreseeing all of today's €uro imbroglio. Unfortunately the Treasury and most of her ministers were rabid EU enthusiasts who gradually undermined her government. She was forced to take the UK into the ERM in 1990 and forced out of office a few months later.

Whoever was the guilty party for Black Wednesday it was not Margaret Thatcher.

Quite agree Roy.
The main danger at the moment seems to be that several vulnerable EU member states are actively encourageing Russian investors.
A whole block of 150 apartments near where I live have been standing empty for around 3 years at great cost to the banks who lent money to the builders. They are now being marketed to the Russians. Menorca is a much smaller island than Cyprus & is not independant so I can see a knock on effect all over Spain. To be fair, it´s been happening on the mainland for the last 5 years.
Germany is determined to be "top dog" no matter what the cost to everyone else.

Germany has always been the main driving force behind the euro, The European union has always been sold as the best was to ensure peace in the region but i have always thought that its seen by Germany as another way to dominate and dictate to the rest of us, (finish what Hitler started)

The euro was always going to fail without complete integration, We tried the original experiment under Thatcher it was called the exchange rate mechanism (ERM) which led us into the recession after we entered in 1990 and we had to pull out before it bankrupted us, I will never understand having done the experiment and failed why any country would think that it could work

Roy

Get rid of the euro & let the countries take control of their own currency again.
I live in Spain & fear the writing on the wall.

The quicker this failed social experiment (the EU) comes to an end the better.

Could it happen here?

There are seventeen countries in the Eurozone and to date there are six of those countries - Greece, Portugal, Ireland, Cyprus, Spain, and Italy who have received bailouts. That is just over a third of the countries that make up the Eurozone, and most of the others are facing economic woes, which begs the question, who will be next. The UK is not in the Eurozone.

British Banks have large exposures in many of the banks in the Eurozone countries, and our own economy is flat lining if not stagnating, and there are no signs of any growth on the horizon.

To answer your question, I think it could happen here, because if we do not see substantial growth in our economy soon, investor confidence, which at the moment is falling, will collapse. The UK is already facing the possibility of a further downgrading of its credit rating and if that happens it could cause a run on the pound and knock some of our already fragile banks for six.

If as a result any bank shows signs of being in trouble, there will be people queuing at banks to draw out their money. You only have to cast your mind back to Northern Rock to see what happened when news broke that there was a problem.

The next question is, if we faced another financial crisis, and that could happen, if according to some analysts views on the Chancellor's new mortgage assistance scheme, does not create any real growth or if it leads to sub-prime lending.

Who would bail us out, we are not in the Eurozone so it would have to be the International Monetary Fund (IMF) and depending on what they would demand from us, what happened in Cyprus could happen here.

As I type Ministers are running around saying it could never happen here, do you believe them, let's face it, it is very cold outside at the moment and the only thing coming out of Downing Street and The Treasury, is enough hot air to heat the whole of the UK ;-)

i wonder whether its a nice controlled experiment by the eu
small island see how it works

then watch out everyone else

I think there will be a lot of people who mistrust banks & stuff mattresses :-0

Perhaps I need to invest money in shares of a Home Safe Company

trouble is, Dermot, if you are desperate and you REALLY need it.......chances are, you cant afford to pay it back!

You'd like to think it wouldn't happen here wouldn't you? But once a line has been crossed there's no saying where it will go from here.

I'm truly appalled at the ease in which a state can basically raid banks and steal their citizen's money.

So much for democracy !