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The EU/euro concept: going down together — 41 Comments

  1. “Yoking all of Europe’s currencies together was supposed to help the weak ones be stronger, not make the strong ones weaker. Now it threatens to bring the whole edifice tumbling down.”

    What was that old saying from my (much) younger days, about a chain being no stronger than its weakest link? . . .

  2. The beast. Rome. Iteration 191. Agenda 21. One ring to find them, and in the darkness, bind them.

    The Bible declares Nimrod shall not happen except for a very short time and at the very end. So far, it’s been right.

  3. I lived in Europe when the Eurocrats were just preparing to romance the canine, and found the whole concept of European unity – the underpinning of the EU and the euro – as risible.

    Uniting a patchwork of disparate peoples (with their correspondingly disparate languages, cultures, and histories) who’ve been at each others’ throats throughout recorded history, except during the Pax Romana and the Pax Americana? Sure. That’ll work.

    Ridiculous.

  4. And now that the EU and its euro have been exposed as a stupid concept to begin with, it’s staggering that the system ever got set up in the first place. Who could have thought even for a moment that this sort of thing would work out in the long run?

    The people who espouse it up continue to benefit from it, so it’s not a stupid concept as far as they’re concerned.

    The foregoing is a bit harsh: I’m open to be persuaded that the people who got the ball rolling on Europeanization were trying to preclude another WW1/II. However, I have no such open mind wrt their successors, who responded to repeated failures of the construct by repeatedly doubling down on it.

  5. Occam, why ridiculous? Wouldn’t “amusing” be more appropriate?

    Bob, yes, amusing to the observer, but ridiculous for the participants to think it would/could ever work. The whole EU thing was a gigantic cargo cult; much like the natives who (probably apocryphally) used a banana and a pair of coconut half shells, like Stone Age air traffic controllers, to call down the aircraft bearing cargo, the Eurocrats seemed to think that evincing the trappings of federation would result in the reality.

    To gs’s point, I suspect that the motivation wasn’t so much peace on the Continent – they have that, thanks to the US – but rather the siren call to the vanity of those who thought they were/should be the natural rulers of Europe (*cough* the French *cough*).

  6. “It will not be the case that the south will get the so-called wealthy states to pay. Because then Europe would fall apart. There is a ‘no bail out rule’, which means that if one state by its own making increases its deficits, then neither the community nor any member states is obliged to help this state” – Horst Koehler, former German Finance Secretary, April 1992

    A baker’s dozen of such statements in 1992 – €0.02

    “Germany’s approval of $600 billion to help Greece and the euro financial system is being scorned by analysts and many in the U.S., but is a step in the right direction” – Zachary Karabell, September 2011

    Hubris meets Nemesis — priceless.

  7. Afterthought on the motivation: as indicated above, I see the French as the prime movers to federation (with themselves firmly in charge, of course), with the southern Europeans more or less went along for the ride.

    The natural leaders of Europe, the Germans, made nice because they’re trying to live down their unhappy reputation for throwing their weight around. They went along with the EU to show that they’re reformed, good Europeans now.

    The other potential countervailing force to the French, the British, have semi-sat out the EU (and are probably damned glad that they didn’t plump for the euro, but they’re nonetheless helping to pony up for PIIGS). I’ve long thought that the British would be much better off throwing in their lot with us rather than the Continent. A lot more separates the UK from Europe than the Channel.

  8. Yup…the Euro is very much overpriced. I’ve felt that way for quite a while and have been amazed at the Euro/dollar exchange rate.

    Don’t think for a second we will be isolated from a European crash. The very conservative and responsible Swiss are being forced to devalue (essentially via central bank operations) the Swiss franc in relation to the Euro because their export trade to the Euro countries was getting creamed.

  9. texex is exactly right. The EU crash, evolving in amazingly slo-mo, will almost assuredly cause a US crash of 2008 size, or worse. We are on icy terrain, all roped together by the best and brightest. What will Helicopter Ben and Hussein do when the slide toward the crevasse really gets going? Not to worry, says Bernanke; we have lots of (totally unspecified) options. I am not reassured.

    Meanwhile, gold is going down. But I’m hanging onto mine.

    I tried to play the dollar against the euro 2yrs ago, because I thought it was so freakin’ obvious. Nope. Lost on that.

  10. It is also worth noting the bank regulators, here and there, have increased bank capital requirements while bank investments in sovereign debt are eroding. Extrapolation of this portends eventual bank nationalizations. The taxpayer is the ultimate sucker. Hussein doubtless loves that outcome.

  11. I was living in the UK in the late 90s when whether to enter the euro or not was a hot topic. The UK’s political elites love the EU, because they are part of the European we-know-best elites that you mention, and the EU allows them to pass all sorts of unpopular laws that they themselves approve of, while pretending they don’t want to but are being forced to by the EU. Back in the late 90s, anyone who was opposed to getting rid of the British pound was basically smeared in the predominantly left-wing media as being racist, xenophobic or backward-looking. There were even news reports about nasty little experiments where shopping malls would accept euros since adopting the euro was “inevitable” (supposedly). The British are now thanking God they stayed out and kept their currency. Things will be bad if the Greece situation implodes, but not as bad as if they’d joined the euro. I’m sure Denmark and Sweden are feeling the same.

    In a broader sense, I don’t think the British are suited to the EU. As an island nation, they haven’t been subjected to the constant border and ruler changes that a lot of other European countries have, so they have a stronger loyalty to their own country. The polar opposite to that would be Belgium, funnily enough. And when you’ve had the same currency for 1000 years, you don’t just casually dump it for some foreign monopoly money invented with political aims in mind. Those are just my observations from living here. Basically, politicians, the BBC, the media etc. love the EU, ordinary people, not so much.

  12. Greece is sovereign embezzlement.

    Period.

    Embezzlers NEVER have the where with all to pay the money back.

    In this case, so much was stolen that it has destroyed the French, English, German, Belgian and Austrian banks.

    Plus, in the bonus round…

    Has destroyed CDS underwriters in America…

    That is Wall Street and the TBTF.

    QED.

  13. This just in: Eurocrats in Brussels have just repealed the law of gravity. Film at eleven.

  14. “… Yoking all of Europe’s currencies together was supposed to help the weak ones be stronger, not make the strong ones weaker …”
    – – – – – – –

    Kind of like how “spreading the wealth” is intended to make poor people richer… but somehow the Progressives don’t bother with the other half of the equation. When wealth has been confiscated from producers and distributed to those who consume without producing, the capital available for business activity shrinks. There’s less economic growth, jobs disappear, and everything spirals downward. Oops. Those Unintended Consequences again.

  15. But, but it all works so well in Switzerland. Anyone ever been there and seen the wide disparities between the various areas of Switzerland? Three or four different languages (actually more if you count local dialects) and cultures all divided by mountain ranges. Yet they have managed to make it work. A miracle!

    I guess the disparities in greater Europe are just too wide and deep. As to Greece, it’s hard to construct a vibrant economy on olives, goat cheese and tourism. Such a country will always remain poor unless they revamp their whole culture. And that is what the EU elites thought could be done. But no one ever accused them of being in touch with reality. Now, of course, there will be damages to pay. Globalization giveth and taketh away.

  16. Occam’s Beard: but I still wish Britain had changed to, if not the euro (perish the thought!), then some sort of base-10 currency.

    But I know how much I hate the metric system, and cling to my feet and inches and miles, as well as Fahrenheit. Old habits die hard.

  17. Occam’s Beard: but I still wish Britain had changed to, if not the euro (perish the thought!), then some sort of base-10 currency.

    neo, the UK has had decimal currency for 40 years. Shillings, etc. went the way of the carrier pigeon in 1971 (IIRC).

  18. Occam’s Beard: definitely my bad! I haven’t been to Britain since 1978, but for some reason I remembered the old system as still having been in place at that time. I guess it’s just pounds that I remember.

    I did think that they’d gone off the shilling, etc. system some time later, but I wasn’t sure when. I think I got confused because they’re not on the euro and still on the pound, which I somehow connected to the old non-decimal system.

    British money has most definitely never been my strong suit! Only been there that one time, in 1978.

  19. The EU zone is toast. 3, 6, or 12 months at the most and it will crash. Ridiculously or amusingly or tragically (depending upon your perspective) Greece is but a tiny pebble that will trigger an avalanche. However, the problems there are dwarfed by the many trillions (50? or 70? or 100?) of debt and unfunded liabilities facing the elephant in the room: namely, the USA.

    For 30+ years we have created an economy based upon easy credit and debt. Sooner or later we will all be Greek because it is impossible to grow your way out of the hole until you stop digging.

  20. “I guess the disparities in greater Europe are just too wide and deep.”

    California and South Dakota. Nevada and North Dakota. Michigan and Montana. Illinois and Iowa. New York and Nebraska. Washington and Wyoming. The disparities are too wide and deep. We don’t need you. All we need is access to the seas via the Mississippi.

  21. Stability of natural ecosystems is founded on diversity, not on uniformity. There are always many rival contenders for every job to be done. When one fails, another replaces it. The same for free-market economy. The essence of life is making reliable systems from unreliable components. That is the lesson which socialists of every colour will never learn: every plan can fail and eventually will. That is why any system of centralized planning is short-lived and doomed.
    This EU project is just another Tower of Babel: false unity to paper over deep divisions. If something can unite Europe, this is its Christian heritage, but exactly this was rejected by founders of EU.

  22. This is not only economy, there are bigger problems undermining EU. But when economy is more or less OK, these problems can be ignored or relieved by cash injection. When economy tanks, they became intolerable and will ruin the whole edifice, politically, culturally and ideologically. The whole rulling class of Europe can be decrowned. I hate to admit, but the only force that can now stop and reverse European decline is fascism all over Europe.

  23. Couldn’t happen to a nicer bunch.

    Long after Europe is gone, historians will propose solutions as to why fascism, nazism, communism, socialism and the EU attracted Europe’s intellectuals. Let the necropsy commence soon.

  24. “But I know how much I hate the metric system”

    You use computers. Do you hate binary, too? It’s much more rational than the metric system, and in wider use, too. Everyone on earth uses it.

  25. I’ve been to London and Paris recently. Both are expensive but London seemed much more expensive than Paris. Can anyone explain why to me?

    (The trip I took when I went to both was about three years ago.)

  26. ErisGuy: your comparison has nothing to do with what the user of a computer perceives. The binary system used to be something a computer user actually had to grapple with, back in the days of computers that filled rooms and that needed punch cards. Now everything has been made so that most people never do more than follow prompts described in regular language and click on where they want to go.

    As for the metric system, I don’t hate it on some sort of general principle. In fact, I’m rather certain that, had I been raised on it, I’d find it just fabulous, because anything with base 10 has easier math for me (like the US money system). It is only because I was raised with the concepts of inches and feet and miles and Fahrenheit, and have learned to understand the natural world and measurements in those terms, that I prefer these and dislike the metric systems that vie to replace them in the US (and have replaced them in Britain, to the best of my knowledge). I know what an inch or a mile is, and when they say it’s 72 degrees F out I can feel almost exactly what it means, whereas 2 kilometers or 22 C mean almost nothing to me.

    It is on that, and only that—perceptual habit—that my preferences are based.

  27. @texexec – London’s so expensive because so many people from across the world want to live there, including the international superrich who buy up all the expensive houses. It’s not really a British city at all any more.

    And @ErisGuy – The metric system might be preferable for scientists, but I find feet, inches, pounds etc. work best in the real world, because they developed in response to everyday measuring needs. Check out the great book “About The Size Of It” by Warwick Cairns for more information on this. And what with the “the rest of the world is metric” argument, using customary units is a symbol of independence. If they work for us, why change them?

    The British haven’t gone completely metric, despite the best efforts of the BBC and the euro elites. Road signs etc. are still in miles, people still weigh themselves in pounds (and stones – pounds are a sub-unit of stones), measure their height in feet and inches, buy milk in pints, talk about (especially summer) temperatures in Fahrenheit, use inches for clothing, television screens and many other things. The fact that the old units have clung on is a fascinating example of politicians failing to completely impose their political will on ordinary people – a metaphor for the whole European project.

  28. Anne:

    You said: “@texexec — London’s so expensive because so many people from across the world want to live there, including the international superrich who buy up all the expensive houses. It’s not really a British city at all any more.”

    I guess that explains it but don’t a lot of people including the superrich wanna live in Paris too? It’s pretty darned nice there.

  29. >>> (especially those wacky non-decimal British ones)

    Ah, Neo, British decimalization occurred in the sixties.

    >>> Hubris meets Nemesis — priceless.
    I believe the real problem here is that idiots in Europe bought Greek bonds, and, if they let it fail, it’ll hurt them BAD.

    I’m not entirely in agreement with Neo that bailouts are utterly ineffective, but there has to be an actual intention on the part of the bailee to actually fix the problem, or, alternately, the capacity on the part of the bailer to force the bailee to act in such a manner as to fix the problem.

    With regards Greece, this does not appear to be the case — the Greek government is responding to the whining of little Greek Children, ahem, sorry, “Citizens” and essentially thumbing their nose at the (mostly German) creditors saying “Go ahead, spank me! I dare ya!! I DOUBLE DARE YA!” and refusing more austerity measures.

    Worse still, if the Creditors give in, it only says to the Italian government: “Hey, we’ll cave if you don’t!”, because the Italian economy is a lot larger than Greece’s, and it’s only slightly better off at the moment. And Spain, with its wonderful investment in Green Jobs paving the way towards the future, is also teetering on the brink of collapse.

    Welcome to the end result of the Nanny State:
    30 and 40 year old children threatening to hold their breath if you don’t give them their way.

    ==============

    Y’all may find THIS essay, from Walter Russell Mead, of interest — I found it a good intro to what is up right now and why:

    The Trojan Horse

    It fleshes out a lot of what I’ve noted above, and discusses the whole situation a lot more than I have.

  30. >>> Kind of like how “spreading the wealth” is intended to make poor people richer…

    This is a child’s notion of how money works. Real money works on flow — much as water under pressure can be used to generate power, so, too, does money “under flow” generate wealth.

    A lot of leftist fun has been made about “trickle down” economics, but, in actual fact, it’s worked for most of the last 25 years now.

    In order to generate wealth, it requires a certain “collection” of it, the amount required to initiate and complete a project, and to finish it and get the product out the door and into the hands of the user/buyer for it.

    This seems rather DUH but it’s too complex for the typical lefty brain to grasp.

    Suppose I see a possible demand for a type of software.

    First off, I have to create this software — this requires a certain amount of manpower to do the software design and coding, to produce any graphics needed for the task, the packaging and so forth. Then there’s a marketing group who will be needed to go out and identify how it will be sold, and what price the market will bear, and to make sure that the potential buyer is aware of its existence. Finally, there’s some support organization needed to deal with bad copies, or buggy copies, or installation issues that buyers may have.

    Depending on the size of the project involved, the above group of people could run from one single person acting as jack-of-all-trades to an organization of dozens, or even hundreds.

    WHO PAYS THEIR SALARIES UNTIL THAT FIRST PRODUCT GOES OUT THE DOOR?

    The guy with the pile of cash he’s either built up or gotten other people to go in on for a piece of the action.

    Someone has to pay those salaries — Because people don’t work for free — they can’t. They have home mortgages, electric bills, doctor bills, the kid needs new clothes, the car needs repairs, and so forth… normal, day-to-day living expenses.

    Yes, there is the collective model of the above where everyone works for a piece of the company, but that just means that people are “paying their own salaries” in order to make that living while doing the job, usually from their personal capital reserve… you know, the pile of cash THEY THEMSELVES have built up.

    In other words, in any venture, there is a time where money goes OUT the door with no money coming IN the door. Money for that time comes from a capital reserve that someone has built up from their own efforts or from a collection of the efforts of others.

    In other words, “spreading the wealth” in the “giving it away” sense has very limited value.

    Because in truth, concentrations of wealth are what drive an economy, by allowing it to FLOW elsewhere, which makes everyone richer.

    I’m put in mind of a classic Scrooge McDuck comic, in which he’s spending a summer out in the farmlands. He’s got (of course) a money bin nearby that’s really nothing but a gigantic “water trough” filled with loose cash. Donald is whining about having to work, while (of course) Huey, Dewey, and Louis are hard at work on McDuck’s farmstead.

    Along comes a tornado, and all Scrooge’s money gets sucked out of the bin and tossed to everyone in the area. HD&L expect Scrooge to freak, but instead he just says, “keep working, it’ll come back”. They do, though Donald, of course, decides to spend his new-found wealth. He goes to the nearby diner. “Closed, off to see the world”. The Gas Station? “Closed, off to see the world”. He can’t even get a bus anywhere, the driver has gone… Off to See the World. LOL.

    So, no one is working, and that means nothing is getting produced. No food, zip.

    Pretty soon, people are getting hungry. Guess who, having continued to work, is the only one with any food left to sell?

    Yep.

    Eggs, $10 each
    Bacon, Strip, $5 each
    and so forth.

    Scrooge is standing there with a gun, as I recall, protecting his property rights.

    By the end, all of Scrooge’s money is back in his bin.

    You can see how this would go nowadays, as the government would accuse him of “price gouging” and fine him half the contents of his money bin for daring to actually keep producing when no one else was.

    But it’s interesting to note how different the message Disney had for kids only a couple generations ago: Work hard and it pays off.

    Here’s another description of the comic

  31. >>> It is on that, and only that–perceptual habit–that my preferences are based.
    Neo, one of the better arguments for the classical system is that the units tend to be “optimized” for the real world and real world circumstances. Excepting where there is an unintentional analogous measure (e.g., yards and meters), this is rarely true in the Metric system.

    I’ve heard the above best explained as “A pint of beer is just about right. A liter of beer is just too much”.

    Mind you, a half liter of beer would be as good as the pint, but doing things THAT way is, well, just not done in proper circles.

    The problem for you is mostly one of your mental map, which has concepts laid onto it which you use regularly. It’s much like languages. When you first wind up in, say, France, your capacity to understand French is pretty sucky. But if you keep working at it, your brain will start to add French words to its map, and you’ll gradually develop the ability to hear it and understand what is being said WITHOUT first translating it to English and then thinking about it.

    So, too, are various dimensional units worked into your mind. If you were in Europe, using them all the time, for the first while you’d have to keep conversion factors in your head, and convert everything to “English” units, but eventually you’d start to be able to “think” in metric, just like you could “think” in French.

    Eww. Wait. Considering what thinking in French has done to the French, make that Italian:

    When you first wind up in, say, Italy
    😀

  32. ErisGuy,

    “You use computers. Do you hate binary, too?”

    As Neo said, the binary basis of digital computers is unknown to most users. We are at a period in which kids today no longer know what a command line is, let alone the underpinnings below the interface. Even programmers use the knowledge of binary less than they used to in the past–what was indispensable in the heyday of assembly language programming (1950s on mainframes, 1980s in the personal computer world) is largely unnecessary when doing application programming in a high-level language like Java or Haskell. (System programming in C still requires good knowledge of binary arithmetic, but still not so much as assembly language, which forces you to do binary arithmetic at least every five lines of code.)

    “It’s much more rational than the metric system,…”

    For designing electronic circuits, yes. For day-to-day arithmetic, binary and its shorthands (octal and hexadecimal, bases 8 and 16 respectively) are worse than decimal, because they have only one prime factor as their divisor–the digit recurrence you get for 1/3 in decimal (0.33333…) is there in binary as well, in addition to digit recurrence for 1/5. If we used base 12 for everything, we’d get simple fractions for 1/3, 2/3 etc., much more useful than fifths. Base 60, the one we use for angles and time (except for higher science, where radians and decimal multiples of the second are used), would be even more useful. However, decimal is welded tightly to most human languages, so changing a base in everyday use would be far more difficult than changing between metric thinking and U.S. unit thinking.

    With 12 inches to the foot, U.S. units look appealing, but other units have different scale factors. Metric has the advantage of consistency, which lets you scale by prefixes according to the precision you need. A base-12 Metric System would have been the Holy Grail of human measurement, but, as I said, that’s a change too far–greater than the change Fibonacci made in numeric notation in 13th-century Europe.

    (As you can see, I have commented on nothing but the [off-]topics that hold my interest. Apologies to the hostess of this blog.)

  33. Excepting where there is an unintentional analogous measure (e.g., yards and meters), this is rarely true in the Metric system.

    Not true, actually. The meter was chosen as one-ten millionth of the distance from the equator to the North Pole, the fraction being selected to be a useful length that roughly corresponds to a yard. So, no accident.

    Similarly, the liter was chosen to be a convenient size (roughly a quart), as was the kilogram (2.2 lbs.) – which is the weight of … one liter of water.

    Sorry, scientist here who loves the metric system because it makes calculations so easy and intuitive across disparate phenomena. The energy to heat a liter of water one degree Centigrade (from 4 C to 5 C, specifically)? One kiloloule. How much electricity needed to do that? One amp at one volt (i.e., one watt) for one second.

    Nothing to it. The same calculation in the English system is a nightmare.

  34. Usually, when people get into debates about metric versus the English/U.S. system, the metric people use the “Why are you getting so upset?”/”It doesn’t matter”/”Get a life” argument. Thankfully, nobody’s used that argument here. I think it’s a valid debate. I also think ziontruth makes a good point about many English/U.S. units being divisible by 2 AND 3 – it makes life easier in ways that metric does not.

  35. Traditional measures, such as British imperial system, were convenient when all things were made by hands. They correspond (as measures of length) to human anathomy: inches are digits of a thumb, foots – correspond to length of human feet, elbows were traditional Russian measures. So every worker and customer always had measuring devices with him. Accuracy was not important. With advent of science and engineering all this became obsolete. But keeping tradition is also important, that is why railroad gauge is equal to the length of axis of a Roman chariot. They too were standartized already in Roman times, to make roads always passable.

  36. I also think ziontruth makes a good point about many English/U.S. units being divisible by 2 AND 3 — it makes life easier in ways that metric does not.

    True of some units, but not true of many. Ounces in a pound? 16. Fluid ounces in a quart? For some unfathomable reason, 32. (Would it be asking too much for the word “ounces” to be always 1/16th or 1/32nd of the larger unit?)

    Re division by 2 and 3, back when crystallographers used make physical models, they were fans of dividing axes into 60 subunits, because then dividing an axis by 2, 3, 4, 5, or 6 – the common divisors in crystallography – all fell on a tick mark.

  37. Anne,

    “I also think ziontruth makes a good point about many English/U.S. units being divisible by 2 AND 3”

    But not all of them–that was exactly my point. 16 ounces to the pound doesn’t make for a division by any prime factor except 2. 22 yards to the chain introduce the prime factor 11, which is of very little use (all prime factors greater than 5 aren’t very useful, and 5 would arguably be the same were it not for our fingers).

    A consistent base-12 system derived from the U.S. units would be superior to the Metric System. As the U.S. system stands, it’s an inconsistent hodgepodge of scaling factors. The only real problem with the Metric System isn’t really a problem with the Metric System–it’s most of humanity’s boneheaded idea of basing their numerals on single-finger counting instead of on counting on the phalanges (3 phalanges per finger, 4 fingers, the thumb being used as the counter).

    Additionally, I agree with Neo that loving or hating one of those systems is a matter of habit. I grew up in metric Israel, stayed in the U.S. for a few years and then came back to live in Israel. In both directions, the need to adopt a system I wasn’t accustomed to had me cursing that system for about half a year until I finally got the habit. And as with learning a new language, it gets harder the older you are–I was lucky enough to be still young in both cases, while now I don’t think I could change again.

    I’m now comfortable with the Metric System and find U.S. units either hazy or meaningless. That situation is a function of habit. In contrast, the discussion of number bases, anthropic correspondences and engineering history is a worthy attempt to steer this debate away from the murky swamps of subjective opinion into hopefully more objective waters.

  38. “In contrast, the discussion of number bases, anthropic correspondences and engineering history is a worthy attempt to steer this debate away from the murky swamps of subjective opinion into hopefully more objective waters.”

    I agree, such a discussion is a good thing. I find that debates about the metric system usually get no further than “Metric’s divisible by ten so it’s better” plus a few ad hominem attacks on the other side for being old-fashioned/illogical/sad. There are perfectly valid arguments on both sides, although I come down in favour of U.S./English units.

  39. IGotBupkis: about British money, see this comment of mine where I respond to Occam’s Beard, who points out to me in the comment above it that Britain changed to a decimal system in 1971.

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