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Thread: Will the Euro Survivie?

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  1. #1 Default Will the Euro Survivie? 
    So Merkel and Sarkozy couldnt get the EU to agree on policy for all EU states (mainly since the UK said they should be able to opt out of any regulation on financial services ), they are planning to reach an agreement outside of the EU treaty. It probably wont be as effective but its better than nothing I guess. The primary focus will be to increase controls over spending and budgeting. Here are some other clauses:

    1) a cap of 0.5% of GDP on countries' annual structural deficits
    2) "automatic consequences" for countries whose public deficit exceeds 3% of GDP
    3) the tighter rules to be enshrined in countries' constitutions
    4) European Stability Mechanism (ESM) to be accelerated and brought into force in July 2012
    5) adequacy of 500bn-euro (427bn; $666bn) limit for ESM to be reassessed
    6) Eurozone and other EU countries to provide up to 200bn euros to the IMF to help debt-stricken eurozone members

    That last point is just to develop a fund for bailouts essentially. Lets hope that works better than it did here. I am thinking the collapse of the Euro will really put the world in a bad spot.
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  2. #2 Default  
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    I don't know if the collapse of the Euro will really hurt things all that much. The Euro's main accomplishment was lending the illusion of stability to nations that really didn't live up to it. The UK wouldn't buy into the Euro probably because they saw this coming. The ones left holding the bag for the spending orgy if things fall apart are the Germans. Of course, they'd be the ones bailing out the rest of the nations to keep the currency alive as well. It seems like German currency is getting screwed again. They took a huge loss in the 90's when they absorbed East Germany and I think gave 1:1 for the deutschmarks for the East German currency (which was essentially worthless at the time).

    If the Euro falls, in the long run, it will just mean less investment in the unstable nations in Europe. They'll have to get their own houses in order to get the respoect of the international financial community, and they'll probably have to really do it this time instead of fudging the paperwork.

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  3. #3 Default  
    the markets dont react well to these dramatic changes though. the collapse may even bolster the Dollar a bit after the markets freak out a little but I think there will be a few months of uncertainty. I mean having to implement local currencies again in and of itself will be a bitch.

    I do agree that the Euro was not the greatest idea in the first place though. The economies involved were too uneven for it to work correctly.
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    Oh, the transition, if there is one, will be ugly. But I think that trying to prop the failing nations up is just postponing the inevitable. There's going to be an ugly adjustment whichever way they go with it. They just need to decide if there's a common currency on the other side of the transition. If I were Germany, I would want to cut my losses and get the hell out.

    -Justin

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  5. #5 Default  
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    Time and time again socialism is proven to not work... Why do people insist on trying to make it work
    The disease runs deep, relapses often, not looking for a cure, just another sick bastard to share it with.
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    I wouldn't really blame it on socialism. It's financial stupidity.

    If you spend money like a sailor on shore leave - whether you're spending it on social programs, roads or weapons doesn't really matter. It's the spending outpacing income and borrowing to fill the gap that leads to problem like this.

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  7. #7 Default  
    Quote Originally Posted by Justin.b View Post
    I wouldn't really blame it on socialism. It's financial stupidity.

    If you spend money like a sailor on shore leave - whether you're spending it on social programs, roads or weapons doesn't really matter. It's the spending outpacing income and borrowing to fill the gap that leads to problem like this.

    -Justin

    this
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    Quote Originally Posted by 55fanatic View Post
    Time and time again socialism is proven to not work... Why do people insist on trying to make it work
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  9. #9 Default  
    yep.

    World economies are just propped up on a toothpick now as is and any little additional strain may be defining. And I am usually an optimist.
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