Germany and France examine 'two-tier' euro

ei.sdraob

A European official has told The Daily Telegraph the dramatic option was being examined at cabinet level.

Senior politicians believe their economies need to be better protected as they could not cope with another crisis on a par the one in Greece.

The creation of a "super-euro" zone would initially include France, Germany, Holland, Austria, Denmark and Finland.

The likes of Greece, Spain, Italy, Portugal and even Ireland would be left in a larger rump mostly Mediterranean grouping.

A two-tier monetary system in the 16-member euro zone is being examined as a "plan B".

"The philosophy is the stronger countries might need to move away from countries they can't afford to bail-out," said the official. "As a way of containing the damage, they may have to do something dramatic, though obviously in the short term implementation is difficult.

http://www.telegraph.co.uk/news/worldnews/europe/7837874/Germany-and-France-examine-two-tier-euro.html

:eek: ouch... such a system would effectively shut Ireland and other reckless states out and left with a rapidly devaluing currency

where does it stop?

Euro Lite
Euro Pear
Euro Berries
Irish Euro
Spanish Euro

sensibleken

I honestly can't see how that is workable. Although i have always been an enthusiastic supporter of the Euro it seems like its allot more fragile than we thought

ei.sdraob

sensibleken wrote: »

I honestly can't see how that is workable. Although i have always been an enthusiastic supporter of the Euro it seems like its allot more fragile than we thought

Im an enthusiastic supporter of the euro and EU, but my confidence in the euro was broken recently

The fact that they are looking into is more worrying
then again it could just be political posturing in order to put pressure on certain states (and rightly so)
theres nothing stopping any group of states with coming up with new currency DeutschEuro (TM) and then converting accounts of citizens on 1:1 basis or something I suppose
The Germans could very well be sick of all the ****e and walk away taking few countries along (but France? seriously?? they are half way in the PIIGS trough themselves)

Zynks

As much as I hope this doesn't happen, I also see why Germany and France would want this. After all, they shouldn't have to pay for the incompetence of governments, businesses and citizens of countries that behave like children when cheap money is available.

It is time we start behaving like grown ups, take responsibility for our actions and for electing absolutely rubbish governments. Our political system stinks, and from there everything else controlled by the state.

I am sick of all decisions being made by this watered down system. We should look into presidentialism going forward, where there is someone with balls and accountability in power, backed by a team the president picks from the best there is in each area rather than from a pool of cosy TDs.

If we don't get out of this system we will keep going forever with u-turns every couple of weeks in reaction to pressure, and nothing will ever be fixed.

ednwireland

i wouldnt beleive anything a uk paper says about the euro there is a lot of undermining ogf confidence going on deliberatkley from financial markets because, get this thats one of the ways they make money.
personally i would guess UK and US financial houses have large amounts bet on a falling euro and they are just trying to push it along.
now thats not to say that this isnt been discussed but i think theres so much spin going on in financial circles i wouldnt beleive anything printed

ei.sdraob

ednwireland wrote: »

i wouldnt beleive anything a uk paper says about the euro there is a lot of undermining ogf confidence going on deliberatkley from financial markets because, get this thats one of the ways they make money.
personally i would guess UK and US financial houses have large amounts bet on a falling euro and they are just trying to push it along.
now thats not to say that this isnt been discussed but i think theres so much spin going on in financial circles i wouldnt beleive anything printed

maybe (the telegraph are fairly anti euro)

tho' see this, published 2 days earlier in the business section of the indo

Speaking in relation to the viability of the euro currency, Mr Teeling outlined how the gap between the economies of Portugal, Italy, Greece and Spain (PIGS) and Germany is simply too large for the euro to survive.

"Hardworking German taxpayers are not going to fund their Greek counterparts to retire at 53 on an 83pc pension. Monetary union, without fiscal and political union cannot survive, so the euro in its current form must break" he said.

Mr Teeling believes that one of three things will happen over the next five years;

- the currency will struggle on as more and more euros are printed and sold to international pension funds;

- a two tier system will emerge with the PIGS devaluing against the Deutschmark group; or

- a flexible euro might evolve where internal exchange rates can vary against a base level.

"It is important to remember that none of these outcomes are positive in terms of the Irish economic outlook" he cautioned.

http://www.independent.ie/business/irish/euro-and-inflation-longterm-threats-to-irish-recovery-2225277.html

despite the recent ~1 trillion of "shock and awe" the spreads are rising quickly again and alot of the media have similar articles on two tier euro (or worse)

danbohan

ei.sdraob wrote: »

maybe (the telegraph are fairly anti euro)

tho' see this, published 2 days earlier in the business section of the indo




http://www.independent.ie/business/irish/euro-and-inflation-longterm-threats-to-irish-recovery-2225277.html

despite the recent ~1 trillion of "shock and awe" the spreads are rising quickly again and alot of the media have similar articles on two tier euro (or worse)

if i was a french or German citizen i be very much in favor of it.

dan_d

danbohan wrote: »

if i was a french or German citizen i be very much in favor of it.

+1
You can see their point on it.

"It is important to remember that none of these outcomes are positive in terms of the Irish economic outlook" he cautioned.
I like the way he highlights that. Of course it's not good for Ireland. We screwed up and we're paying the price. The last thing in the minds of France and Germany is what will benefit Ireland - if anything they probably want to put as much distance as possible between themselves and us.Understandably.

I'm not sure if this link is appropriate here, but it ties into the overall picture I suppose. See below from this morning's news

http://www.breakingnews.ie/ireland/report-social-welfare-funds-run-out-462495.html

It's being reported on a number of sites. I forsee a budget of cuts to benefits everywhere this year - and endless giving out about how we bailed out the banks but we're cutting social welfare. That headline speaks for itself.

danbohan

dan_d wrote: »

+1
You can see their point on it.

"It is important to remember that none of these outcomes are positive in terms of the Irish economic outlook" he cautioned.
I like the way he highlights that. Of course it's not good for Ireland. We screwed up and we're paying the price. The last thing in the minds of France and Germany is what will benefit Ireland - if anything they probably want to put as much distance as possible between themselves and us.Understandably.

I'm not sure if this link is appropriate here, but it ties into the overall picture I suppose. See below from this morning's news

http://www.breakingnews.ie/ireland/report-social-welfare-funds-run-out-462495.html

It's being reported on a number of sites. I forsee a budget of cuts to benefits everywhere this year - and endless giving out about how we bailed out the banks but we're cutting social welfare. That headline speaks for itself.

not too worry , our dear government and their public service are working hard and coming up with wonderful money raising ideas like this one , so fear not !

Millions of people of Irish descent will soon be able to apply for a certificate of heritage.

The intiative is being set up for around 70 million people across the world who do not qualify for citizenship.

It is expected that many descendents of Irish emigrants will take up the offer.

The idea of the certificate was first proposed at the Global Irish Economic Forum in Farmleigh last year.
http://www.breakingnews.ie/ireland/g...me-462484.html

dan_d

Having a very difficult time in seeing any benefit whatsoever in that project!

ei.sdraob

danbohan wrote: »

not too worry , our dear government and their public service are working hard and coming up with wonderful money raising ideas like this one , so fear not !

Millions of people of Irish descent will soon be able to apply for a certificate of heritage.

The intiative is being set up for around 70 million people across the world who do not qualify for citizenship.

It is expected that many descendents of Irish emigrants will take up the offer.

The idea of the certificate was first proposed at the Global Irish Economic Forum in Farmleigh last year.
http://www.breakingnews.ie/ireland/g...me-462484.html

lets see

20,000,000,000 / 70,000,000 = €285 per each of the 70 million descendants year on year

Finnbar01

But doesn't the PIIGS owe German and French banks 100's of Billions? If this was to happen we would have to default and the entire EU banking system would go under.

Permabear

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George Orwell 1982

The Euro is safe: http://www.finfacts.ie/irishfinancenews/article_1019906.shtml

Scofflaw

donegalfella wrote: »

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Or, indeed, the fiscal irresponsibility of liberal governments, if one can bear to look at reality without one's ideological blinkers on.

As to the story - I really doubt there's very much in it. The Telegraph in this case is most probably both channelling and pandering to the City of London's dislike of the euro. I see that no names are mentioned as the proposers of the idea - which makes me immediately suspicious - and that Denmark is touted as being one of the supposed 'strong northern euro' group despite not being a euro member at all.

cordially,
Scofflaw

Permabear

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pat_mas

France would never join such a (German)Euro because it would be against its own interest, this is pure rubbish from the Brits.

When one sees the mess the US/UK economies are in, one might consider that it's not too bad if investors/speculators are diverted from looking @ the UK/US economies !!!
There is not much choice: 1 big and "solidary" eurozone or no eurozone at all. This 2 speed EZone is a pure fantasy coming from hopeless anti-EU propaganders

RichardAnd

Doesn't sound too good for Ireland but I don't blame them.

astrofool

While you can see why Germany (and a couple other countries) might see this as a good idea, they were also complicit in creating the environment for this to happen.

• Low interest rates due to anaemic French and German markets, priming the pump on growing economies.
  
• No penalties when the big countries (wasn't it France) break the stability pact first.
  
• While our own regulator was out sucking off the local banks for his gold plated pension, the ECB should have been monitoring this area, and you know, not blindly lend to everyone that asked for it.
  
• Allow Greece in, when even a cursory peak at their accounts, and their benefits schedule would tell you that they were creaming it from the rest of Europe, and selling a pig in a poke in the form of the Drachma.

And this is before you look at the money hole that is East Germany, or the ridiculous laws that work against entrepreneurs in France, that stops anyone with a brain operating there.

thebman

It won't happen because we could devalue our debt with them then and so could all other Euro countries.

It would be a major financial headache. I think we are too debt intertwined to break from the Euro at this point and must rescue it.

hinault

astrofool wrote: »

While you can see why Germany (and a couple other countries) might see this as a good idea, they were also complicit in creating the environment for this to happen.

• Low interest rates due to anaemic French and German markets, priming the pump on growing economies.
  
• No penalties when the big countries (wasn't it France) break the stability pact first.
  
• While our own regulator was out sucking off the local banks for his gold plated pension, the ECB should have been monitoring this area, and you know, not blindly lend to everyone that asked for it.
  
• Allow Greece in, when even a cursory peak at their accounts, and their benefits schedule would tell you that they were creaming it from the rest of Europe, and selling a pig in a poke in the form of the Drachma.

And this is before you look at the money hole that is East Germany, or the ridiculous laws that work against entrepreneurs in France, that stops anyone with a brain operating there.

I agree with some of your points.

Low interest rate environment makes sense for economies that need stimulus.
Low interest rates was the last thing that the Irish economy needed between 2003 and 2006.




A couple of other points, Dublin was regarded as "Leichtenstein on the Liffey" by Europe and publications like the FT and Economist.
It was well known that there were "regulatory issues" here as far back as 2005.

oppenheimer1

ei.sdraob wrote: »

http://www.telegraph.co.uk/news/worldnews/europe/7837874/Germany-and-France-examine-two-tier-euro.html

:eek: ouch... such a system would effectively shut Ireland and other reckless states out and left with a rapidly devaluing currency

where does it stop?

Euro Lite
Euro Pear
Euro Berries
Irish Euro
Spanish Euro

This is just more anti-euro propaganda from the Torygraph. Denmark aren't even in the euro.

southsiderosie

donegalfella wrote: »

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Ireland has never had a socialist government. The Socialists did not come into power in Spain until 2004. Regardless of whether the government has been socialist or conservative, France has not had a balanced budget in over 30 years. US government spending exploded under George Bush after Bill Clinton brought the deficit under control.

Please stop blaming "socialism" for the fact that many politicians, regardless of party or campaign ideology, will spend money like water when times are good (one notable exception is the socialist government of Chile, which set up a rainy-day fund with copper revenues and was recently voted out of office).

NOBODY in the euro zone has clean hands here. That said, most eurozone countries need Germany more than Germans need the eurozone, although Germany certainly benefits from the fact that most of its neighbors (competitors) can't devalue their way out of the crisis.

Permabear

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southsiderosie

donegalfella wrote: »

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Aside from the fact that in your posts you constantly attack socialism and seem to label any leftist party as socialist (for example, you cannot put Labour and the PSOE in the same box politically), I disagree with the point you seemed to have made, which is that "bad" eurozone countries are in a sorry state because they have or had socialist governments. Looking both within the eurozone and across industrialized countries, it seems clear that out of control government spending is not limited to socialist governments. Since joining the euro, both Greece and Spain have switched between conservative and socialist governments (and the socialists were out of power much longer in Spain), and Italy's socialist/communist left is totally inept. (I would also add that Spain's bigger problems are with its labor market regulations, something that is the case regardless of government spending). Party differences seem to have had little effect on corruption and spending in Italy or the fact that the Greek government has consistently cooked the books. And looking beyond the eurozone, there are several socialist governments who have weathered the crisis and managed the boom years much better than their conservative neighbors.

I raised Bush and Clinton to highlight the fact that government spending and economic problems can be created by non-socialist governments as well; the US does not even have a politically viable socialist party that could theoretically "pull" democrats to the left, and certainly nobody would mistake the Republican party for socialists. Yet, in terms of government spending and debt, the conservative Bush administration behaved in a manner that you have seemingly characterized as "socialist", i.e. spend spend spend and damn the consequences. The US is damn lucky that it is still considered a safe haven for investors; their economic indicators are terrible. If Germany were to go it alone, or form the core of a "breakaway" euro group, the US might have a serious contender for a rival reserve currency.

Ultimately, I think the political culture and institutions of individual countries (not to mention their individual economic "weights" both within the EU and the world economy) can be just as important as the stated ideologies of governments in power when it comes to economic policies, something which is often glossed over in the rush to pin blame on neo-liberal or socialist ideology.

RichardAnd

This is going slightly off topic here but has anyone else noticed that the PIIGS are all united in that they are traditionally Catholic countries? I say this because I had a discussion with a mate about how religion and politics were/are so close in Ireland and we ended the conversation with just this observation. Interesting eh.

southsiderosie

RichardAnd wrote: »

This is going slightly off topic here but has anyone else noticed that the PIIGS are all united in that they are traditionally Catholic countries? I say this because I had a discussion with a mate about how religion and politics were/are so close in Ireland and we ended the conversation with just this observation. Interesting eh.

Argh, I've been trying to find an article I swore I read a few years ago that basically said that Catholic countries were more corrupt and authoritarian than their Protestant counterparts, and this had an impact on their economic regulation and growth. I think they did some kind of empirical analysis, but I don't remember what the variables were. But, bringing it back to the OP, if there was some kind of "core" euro, it would presumably include the historically Catholic French. And what box would Orthodox countries like Greece fit in?

Permabear

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