Reply to post: That's a lot of words...

C'mon! Greece isn't really bust and it can pay its debts

h4rm0ny

That's a lot of words...

I have a shorter article of about three sentences: "Greece only got into the EU because Goldman Sachs helped them fiddle their financials and because some of the EU leaders were keen on expansion for political reasons. It never was a good fit and should never have been allowed in. And when they crashed rather than infinite bailouts for which the taxpayer takes the risk, they should have been allowed to crash out of the EU rather than dragging everyone else down with them."

Any of the above would make the rest of what was said academic. Yes, there are problems with a currency zone but there are benefits too. Not everything is about setting the most perfect interest rate possible. In reality, Tim is talking about, in his example, people in the North of England being charged more for debt than those in the South, or vice versa. Contrary to his article above, there are downsides to such discrimination.

The EU can certainly absorb a little imprecision in interest rates for all the benefits such as negotiating as a large trade bloc, ease of labour migration, ease of internal trade. This is much like one of those interminable Windows vs. Linux arguments of the AGW debates we have on here where someone picks out one element and says: "Look, this could be better" and tries to turn the whole discussion into one facet rather than the whole picture.

It is survivable that Spain is in the same currency union as Germany. Not ideal, but not critical either. In general, the rich drag up the poor a little bit as a consequence. Which is a good thing long term because otherwise you just get ever widening gaps which end extremely badly. What the EU can't survive is a country as rife with corruption and reckless borrowing as Greece. They should have been kicked out long before (or not admitted). Then we wouldn't be having this conversation because the issues Tim is talking about would be far less exacerbated by the general malaise Greece is largely responsible for. Spain and Ireland would pick up quickly enough. Such peaks and troughs are inevitable, not a consequence of monetary union.

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