Smart Developing Economies Dump the Euro
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  • ojfl

    It seems from this reader the debt crisis in Europe does not have a solution within the current parameters of the EU. Either they will have to dissolve the Euro or the people will demand they do so.

    • Philopoemen

      I agree; it seems hopeless at this point.

      I think I still have some Italian Lire laying around somewhere. Maybe I’ll get to use them after all.

  • Mark Michael

    I’m going to stick with my contrarian laissez-faire opinion: the CB’s are switching from what appears to be one Titanic to a slightly more waterproof 2nd Titanic. Or to switch metaphors, picking the taller of the only 2 midgets in the room. The “real” problem (as if I know!) is the political elite on both sides of the Atlantic and their addiction to political power and urge to dominate too much of the economic life of their areas. What others cite as reasons for despair about either area and their currencies, I see as a glimmer of hope: (1) Tea Party support in the US and (2) finally forcing European sovereign debt to be more (crudely, admittedly) closely managed/taken responsibility for locally. In other words, the ones who created the problem should, where practical, bear the burden of the problem’s consequences. Poor little Cyprus got the crude brunt of this first “signal” to the investors, bankers, very large depositors in the banking system within the EU. Very savvy types will quietly note (hopefully! Boy, am I naive or what!) and begin adjusting their economic behavior.

    Fiat currencies, floating rate exchanges, are the epitome of irresponsible behavior in my bizarre worldview. They automatically force the entire country to pay the price for what nearly always is the bad behavior of a tiny number of elite. (Yeah, I know the voters elect the pols. But in my bizarre world, only highly moral people should ever run for elected office. They should then swear an oath to uphold the Constitution, the Rule of Law, treat everyone equally. In that strange world, central bankers would actually monitor the riskiness of the banks within their system, call them out long before they create subprime mortgage bubbles, MBSs. Etc.)

  • Keep in mind that a “strong” dollar is not necessarily a good thing. It is an essential ingredient in America’s out-sized trade deficits with the rest of the world, which not only reduces American manufacturing (including manufacturing employment) but has resulted in our becoming the most highly indebted nation in the world.

    Too bad the word “strong” has macho connotations since a strong currency can undermine the industrial strength of a nation.

    • Christopher Anderson

      Why is a current account deficit a bad thing? Isn’t it by definition a capital account surplus?

  • If the history of the world over the past 200 yrs has taught us one thing it is this : You do not bet against the United States of America.

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