Eurozone: Crisis or not?

[Tagaziel]

Something that's been bugging me are the gloomy forecasts over the Eurozone. I wonder to myself: why? Granted, fiscal problems are present all around, but the problem isn't tied to the common currency, but rather, flawed financial policies.

This is why it puzzles me to no end: "experts" proclaim that Greece may leave the Eurozone, the EU is in crisis etc., but it's all the same kneejerk reaction whenever even a minor problem arises, the same arguments all around.

The EU is, presently, too deeply integrated to suddenly collapse and leaving it would be tantamount to economical suicide. Same goes for going back on the Euro: switching back to a national currency may give a degree of immunity from financial upheavals in the Eurozone, but at the same time necessitates tons of expenses and changes in legislature to cover the switch; this, again, means extreme economical stress.

Another thing that bugs me is how ignorant people can be. Maybe it's my background in law, but when I hear people go "Oh, Greece will leave the Eurozone" or "Oh, The EU will collapse in x+1 years" something boils inside me. Both the EU and the Eurozone rely on multilateral international treaties that aren't repealed at a whim, without the consent of other sides. This is a lengthy, complicated process you can't just walk out on.

And finally, the common European market and the Schengen zone mean that any politician who so much as suggests breaking either of these concepts will face fierce opposition from pretty much any entrepreneur and company operating in Europe. Such a move would mean political suicide, so I'm not sure where people are getting such vibes.

Oh yeah, the sensationalist media. Don't get me started on that.

tl;dr version: Why do people insist on being ignorant on major, vital matters and refuse to educate themselves?

 

[Atomkilla]

tl;dr version: Why do people insist on being ignorant on major, vital matters and refuse to educate themselves?

Because it's very easy to act as a I-know-everything kind of guy with a pessimistic attitude, throw in some random numbers and statements from who-knows-whom, and then pick an argument with your neighbor who is often on the same ignorance level.
In my experience, that is...

Back to reality, now, I'd really love to hear your personal opinion (guess that's partially covered, already) and prediction about the whole Eurozone/EU crisis going on, Tagaziel.
I've read plenty of stuff you've written here and on other sites (on various topics), and a lot of those were quite eye-opening for a wee lad such as I, so I'd like to hear something on this so frequently discussed topic.

 

[Alphadrop]

This is why it puzzles me to no end: "experts" proclaim that Greece may leave the Eurozone, the EU is in crisis etc., but it's all the same kneejerk reaction whenever even a minor problem arises, the same arguments all around.

Yea I don't understand why they keep saying that about Greece, worst... or best it'll do is tell Germany to go take a jump of a cliff.
Maybe tag team with the new French government and flood the Eurozone with Keynesian economics. A man can dream.

Most of our news is about how our current government is trying to blame all it's failings on anything that isn't them, including the weather, the previous government and workers still getting paid. The whole Eurozone stuff is kinda in the background apart from when Cameroon does something silly in Europe.

 

[SimpleMinded]

To your tl;dr, because it's easier that way? I stay knee deep in every issue I can get my hands in and try and keep informed, but ultimately, for what? There are only so many things you can get enraged about and want to see fixed but in the end, things stay the same.

I would be interested given the large number of Europeans on this forum to see their takes on things. In the US, I feel like the most that comes on any news station is as you mentioned "The sky is falling! The sky is falling!" only to be followed days later by "meh, nevermind, forget about that."

 

[Joelzania]

tl;dr version: Why do people insist on being ignorant on major, vital matters and refuse to educate themselves?

I don't think that people consciously try to be ignorant on complicated issues. That would be counterproductive; locking yourself in a box when you can already see how frightening the events are anyway.

I think that problem is that it is easy to be ignorant. Things become hard and scary when you personally act on thinking about issues bigger than yourself. You can simply just ignore the news bulletin. Out of sight, out of mind. I don't like reading the news, but I do it anyway. I particularly like it when funny stories appear, like a German waiter spilling coffee over Angela Merkel. Now that's news.

 

[Crni Vuk]

people complaining about greece are not understanding the full situation anyway. They make a very great scapegoat right now that is all. The problems though go much deeper then just with greece and blaming them is the wrong move.

 

[Brother None]

people complaining about greece are not understanding the full situation anyway. They make a very great scapegoat right now that is all.

No. In no way "is that all".

Greece should never have been allowed into the EU in the stage it was. It should never have been let into the Eurozone. It is a backwards-ass country whose economy would have been destroyed by the import/export deficit if not for heavy loans provided by European banks, which are now leading to a crisis.

It doesn't really matter if you want to "blame" Greece. Personally I don't, I blame the EU's stupid policy of overexpansion and the unthinking assumption that Hellenic-memories, anti-communist Greece "deserved" to be in the EU. It never had much of a place there, culturally or economically.

That said, the much deeper-lying problem is something us liberal-tards were pointing out since day 1: a fiscal union with no strict economic-political oversight is a bad, bad, bad idea. The Euro as a whole was a bad idea, just because of how it was organized. We (Dutch SP-voters, basically) have been tolling this doomsday bell since day 1. It's not surprising, and it is in need of structural changes.

 

[DammitBoy]

What's so complicated about spending money you don't have on things you don't need?

Austerity riots, hah!

I can think of a few previous generations that would sneer at the latest generations idea of what austerity is...

 

[.Pixote.]

The EU get what is deserves, those greedy, greedy politicians wanted to build a power house, that would challenge the economic strength of the US, and basically screwed themselves.

I think these are all the countries in the EU, forgive me if I've forgotten anyone.

Austria - keep
Belgium - keep
Cyprus - expel
Estonia - expel
Finland - keep
France - keep
Germany - keep
Greece - expel
Ireland - expel
Italy - expel
Luxembourg - keep
Malta - expel
Netherlands - keep
Portugal - expel
Slovakia - keep
Slovenia - keep
Spain - expel

Expel those that are too small, or too stupid to run their economies properly.

If the Union is fracturing only after 10 years, imagine what the next 50 years will do to the Union. I don't blame the Germans for being unhappy with all the money they've thrown into Greece; that country was run by morons, for morons, and the the average Greek citizen is now paying the price. I know of people in Australia who were getting a pension from Greece, and from Australia as well, they exploited foolish loop holes, and didn't give a damn about the long term consequences, and now the shit has hit the fan. Their beloved Greece is bankrupt.

Fundamentally the bankers are to blame for this, when debts are counted as assets you have to wonder.

 

[Ratty Sr.]

Estonia - expel

Slovenia - keep

So you want to expel Europe's fastest growing economy and keep a country that'll probably go the way of Greece, that is, unless it first collapses unto itself due to rampant corruption?

Hell, why not? It would be very much in keeping with the kind of sober decision-making we've come to expect from the EU.

EDIT: Also, you missed about ten countries or so. A few of which have indeed been admitted prematurely by a couple of decades.

 

[Alphadrop]

Wait you got Ireland but missed the United Kingdom?

Also the the Union has been going on way longer than a decade, methinks you have the European Union and the Euro mixed up.

 

[Sub-Human]

Why would EU kick Greece out anyways? It's a bigger loss for them than for anyone else, really.

 

[Jebus]

Belgium - keep

If Greece deserves to be kicked out, then Belgium sure as hell is too.

Belgium's always been pretty good at keeping quiet about its own problems, but as someone relatively well-connected working in accountancy (and hence getting a lot of looks 'behind the curtain'); the state of Belgium, economically, politically and socially, is on the very verge of the worst possible shitstorm in its entire history.

 

[mobucks]

 

[.Pixote.]

Wait you got Ireland but missed the United Kingdom?

Also the the Union has been going on way longer than a decade, methinks you have the European Union and the Euro mixed up.

My apologies, it's all so confusing with these various zones/unions, no wonder it's a mess.

If Greece deserves to be kicked out, then Belgium sure as hell is too.

They never should have been allowed in. Burn them, burn them all.

 

[mobucks]

Everytime I see Switzerland not the same color as everything else on a map I chuckle and get a good isolationist feeling inside.

 

[Tagaziel]

I'll provide further thoughts on the matter in the form of a wall of text of variable size.

I believe that the European Union will not fall apart. That much, to me, is evident. It is an organization with humble beginnings, the Treaty of Paris in 1952, that formed the European Coal and Steel Community, proposed by Robert Schuman following the devastation wrought by the Second World War. 2012 marks the 60th anniversary of an united Europe, and while we have economical problems (which are by no means unique to Europe), I don't see any chance of the EU failing any time soon.

For starters, what we have currently can hardly be called a crisis. I see it thrown around a lot, in media, between people, but few actually mean it. There is no pan-European crisis that threatens the very foundation of the Union. Rather, what we have now is a problematic situation that can become a crisis, if not handled properly. No country has defaulted yet, no economy has imploded and we haven't suffered anything comparable to the Wall Street Crash of 1929. Steps are being taken towards averting the worst possible outcome, plans are being made and implemented... Unless someone decides to do something unbelieveably crazy, or something unpredictable happens, I believe we are going to get by.

Why am I optimistic? It's simple calculation. For the past few years, the European Union has remained the most powerful economy in the world in terms of gross domestic product (adjusted for purchasing power parity). The Euro continues to be a popular currency worldwide, despite the current problems. And finally, the Schengen Area created a single, massive market for trade, travel and work. Basing on just these three factors, I conclude that there's just too much money involved, too much investments made and too much to lose for every member state of the EU (and by extension, companies, corporations, employees and citizens of theirs). Basic survival instincts.

But as said, I don't think that the EU is in any real danger of collapse. Sure, we have problems right now, but rather than seeing them in the gloomiest possible colours, we should consider the possible positive implications. For one, as BN mentioned, an unified fiscal and monetary policy may be developed and implemented across Europe, estabilishing new, better institutions for the EU.

The United States didn't collapse after the Great Crash of 1929. I'm sure the European Union won't collapse due to economical problems either.

Before you call me out on nomenclature: I'm hesitant to call the current issues a "crisis" because that's needlessly alarmist and only serves to fuel panic and paranoia. That's one of the things I dislike: sensationalist journalism plays the "Crisis, crisis!" tune ad nauseam, which coupled with irresponsible rating agencies leads to generating needless panic among the people, which in turn aggravates the irrational, panicking cowardly creature that is the stock exchange. And thus the problems are perpetuated, when taking it down a few notches and having a calm, rational discussion would help fixing problems.

But hey, crisis sells, right?

 

[donperkan]

Like most of you said Grece was prematurely allowed in the zone as was Romania, Sovakia Slovenia ...

The question here is why was this allowed even though EU members knew this move would be disasterous for the new members?

Answer: Widening of Schengen space. Expanding the free market.

That is not the problem on its own but when coupled with poor economy of a certain new member we get Greace.

My country is heading the same way. We are not developed enough, our economy is in a miserable state, we have nothing to export to Schengen. The few commodities that are suited for export can't compete with the prices of other members. And jet we are granted membership.

They see us only as potential merket exansion.

That being said EU is bad. But not for everybody.

Atomkilla the same will happen to your country as well.

 

[TheWesDude]

why would you kick out ireland and the UK... the problem is one of shared monetary dependance.

UK and ireland use the pound, not the euro. they are a political member, not an economic member.

 

[Brother None]

UK and ireland use the pound, not the euro. they are a political member, not an economic member.

The Republic of Ireland uses the Euro, bro.

And it's not that simple. The Eurozone is definitely the biggest problem, when you spread it over developed economies (Netherlands, Germany), developing economies (Ireland, several Eastern countries) and slow, low-productivity economies (Portugal, Greece). Adding in a mixed country like Italy makes it even worse. If only we could split Italy in two.

The bigger countries can pull the cart to some extent, but at some point you'll run into problems. The developing economies are probably more manageable than the southern ones. And despite Tagaziel's objections, it was simply a mistake to include them in the Eurozone, and the most obvious solution might end up being removing them. It'd be very hard to do, and messy for all countries involved, but unlike the current methods of just pumping in money, it'd actually offer a long-term solution. Own up to making a mistake, and undo it.

Schengen is also a problem, but on a much lighter scale. Still, for countries that are not productive enough to create a positive import/export ratio, like Portugal or Greece, being a Schengen member comes with huge disadvantages, and necessitates building up debt to keep up. Same goes for our newer Eastern members. The push/pull effect of Schengen can be positive on the long-term, though, as long as you don't try to expand to keep expanding the Eurozone as well.