Can the euro fight back?

I doubt it, not whilst Germany is there.

Germany is going to be the fall guy here. Club Med has been living the life of Reilly and them supposed to be managing the core economics just let them have their way, when they knew the party couldn't go on but kept quiet, living in cloud cuckoo land, in hope.

Remind you of any people in this country? Come to think of it it will be Germany, Austria, Holland but sure as heck not France, because when Italy goes, France will be sure to follow. But then France is also part of Club Med.

The question is whether the ref is going to put the Euro out of its misery? Will he be merciful? I think not, because the ref and others who stand to lose a bundle if the Euro fails will want them to recover.

Even before Italy joined the euro their debt, I believe, was over 100% of GNP.

Most of Italy's debt was internal; i.e. Italians lent their own government money which meant that the threat wasn't dumped so much on other countries.

Since then I believe the external Italian debt has shot up - many banks from other countries have lent Italy debt etc and that seems to be the problem should Italian sovereign debt collapse.

Re. the euro - it's still far stronger than initially when a pound was worth over 1.50 euro and the the USD was worth more than the euro.

Maybe the whole eurozone should devalue?

Exports/imports within the eurozone would be relatively unaffected. It's what people say Greece or Italy would do if they came out of the euro so why can't the euro do so on a slightly lesser scale as a whole?

Personally, I've never felt devaluation was the answer as imports of raw materials go up and so does inflation but that seems the standard way of making things better in the short term.

The only way to really solve the problem is for people to get paid what they deserve and if they don't like it they'll have to work harder and become more efficient as a nation to make their goods and services more attractive.......... this, of course, is the unpalatable truth and why efficient Germans resent subsisdising their less productive and spendthrift near neighbours.

Rather than bringing Germany down to the level of a mediterranean economy Greece, Spain etc need to aim to be more like their northern eurozone economies to create real prosperity.

Personally, I am truly amazed as to how the Euro has managed to hold its value vis a vis other major currencies! I would not touch the Euro myself and i still do much pondering as to why the Euro can strengthen against Sterling in particular. Wild horses at the moment, wouldn't convince me to invest any of my money in to Euros!

I Snoekie is underestimating France, after travelling around Italy, Greece, Spain & Portugal I returned to France (Where I live) and its obviously much better organised and productive. Most of France is put to work, with vast fields of crops and high quality infrastructure with roads rail, factories, and efficiency comparable to German (Where I lived and worked for many years).

France is not the basket case that Club Med is, Spain is a tip with unfinished buildings and garbage all over the place, nobody is working and the cafe's and bars are full all day with 10 cents in their pockets. Italy & Greece are worse!

France is out there working. Yes they still like their "le lunch" and holidays, but they start on time, and work later. They are self sufficient and exporters of food, electricity, cars, and many other quality good.

France is quality player and offers a much better quality of life than many other "Northern Eurozone Economies".

"Maybe the whole eurozone should devalue?"

Germany's exports are going great guns - look at the BMWs, Mercs, Audis, VWs on our roads - and half of our trains in recent years are made by Siemens - plus the recent Thameslink contract for 1,500 carriages.

If the euro is devalued, it would wipe out manufacturers everywhere.

"The only way to really solve the problem is for people to get paid what they deserve and if they don't like it they'll have to work harder and become more efficient as a nation to make their goods and services more attractive.......... this, of course, is the unpalatable truth ..."

You try telling London underground drivers that their £50,000/year is too much and that you're gonna cut it by a third - what do you think the response would be coming up to the 2012 Olympics.

"Rather than bringing Germany down to the level of a mediterranean economy Greece, Spain etc need to aim to be more like their northern eurozone economies to create real prosperity."

How are you going to organise that? What can the southern countries do to compete with Germany?

My view is that the weak countries should break away and default on their debts. Of course, there would be enormous repercussions but the currencies of the southern countries would fall (the effect is the same as cutting salaries but in a way that they would have to accept). Then, they could compete even if it is only to offer cheap holidays.

Surely if the euro were devalued it would mean more exports from the Eurozone as goods would be cheaper.. Also Europeans would be importing less as consumer goods (mostly from Asia) would be more expensive. So wouldn't that balance their economies? Anything that encourages us to buy locally , whether from the next town or within europe must be positive.

Of course, it all depends where their 'big borrowing' has come from- banks within the Eurozone or outside.

Actually, I also have a radical suggestion. Our government wants us to (yet again) experiment with time for three years by not only not reverting to GMT in October, but by having double summertime also. During this period, the Mediterranean countries could be much more attuned to northern Europe if they adopted the full day approach to business and dropped the daily siesta. At least two hours of productivity could be added this way. Here in Britain, many workers, especially office staff, are already working two or three hours extra per day to meet deadlines etc, often unpaid, the club meds could do the same. Oh, and think what a difference it would make to us Brits on holiday. Instead of wandering around a ghost town for two or three hours we could actually spend our money. After all, if we are going to play around with our body clocks for the sake of productivity, (not to mention SAD syndrome due to lack of daylight sun) so can they.Admittedly it would cost a little more in energy for air conditioning in work places.

There now! European crisis solved in one.

Oh, and if they worked longer hours per week, they could retire earlier

More productivity, lower prices - who needs China?

Stephanie Dewar,

Siesta?

The siesta is already dying in parts of the mediterannean.

Supermarkets and many shops are not now only open all day but also supermarkets are open on Sundays (which is a minor miracle though subjectively good or bad in a population that is 99+% Roman Catholic.

My attitude is that if 'God' needed a day of rest then I need at least three, but that's another topic of debate re. the effects on family life etc if you never get to have a full day 'enjoying' each other's company once per week.

I have somebody working on repointing 'the villa'. This morning he arrived at 10 a.m. after starting work elsewhere from 6.30 a.m. until five minutes before he got here. He'll work here until 4 p.m. without even a five minute break and shall drink a mug of coffee I take him about 2 p.m. without pausing from work.

Lord knows what work he does from 4 p.m. but I should imagine he has at least one other job - he MUST have at least one other job as he and his wife rent out a property they own to tourists!

Many people here have at least one full time job plus two or even three part-time jobs and I read in the local newspaper a couple of days ago that Malta now has the largest black economy in the whole of the EU. This comes as no big surprise, but at least one can't knock the work ethic.

Naturally many people complain about the increase in inflation since joining the EU and eurozone but the standard of living has certainly gone up and whether you are in the eurozone or not you have inflation in most of the world [as you all know all too well in the UK].

Work is the only solution. Productive work makes even more sense than just work for the sake of it.. Productive, efficient, profitable to both the owners of capital and their employees makes the most sense of all.

Pure hard solid profitable work over time shall solve most of the economic and social problems we face if we only address the issues sensibly and with a 'pixie dust' sprinkling of fairness to both ourselves and the other nations we trade and share the planet with.

Please quit knocking the EU those who constantly do; it gets rather boring after a while. We inhabit the same planet physically even if you choose to be 'off planet' mentally.

At 9.17 I said "If the euro is devalued, it would wipe out manufacturers everywhere."

I should have said "everywhere else". Siemens have already been making half of our trains in recent years. If the Euro was devalued, then they'd make the lot.

Robert Court "Please quit knocking the EU those who constantly do; it gets rather boring after a while. ..."

You should sign up for emails from John Maudlin - see www.johnmaudlin.com

- but I fear that you wouldn't enjoy them.

I've said it before, but a quite feasible scenario is that it will be France and Germany who throw in the towel. Armed with their own currency (FF and DM respectively), each of them will be able to protect themselves against the ensuing debacle by whatever means they wanted, including devaluation. RIP euro.

I quite like the euro, dammit!

You know it saves a lot of commission and spreads on exchange rates!

It's even what we Brits said we wanted 'a level playing field' as far as buying stuff in the eurozone goes anyway - I can work out whether Italian or Greek or Maltese or Spanish ciggies are cheaper without even having to mental Mathematics or using a calculator or scfibbling on the back of an envelope!

What do you want?

The USD to remain the de facto international reserve currency?

Surely not the GBP?

The Yuang?

I'm down to $44.10 and £0.25 on account - where should I invest them? :)

Some of the comments here remind me of the Nazi slogan posted over slave labour camps. "orbite macht frei" (work means freedom) and it is true that productivity gains could be part of the answer. I submit however that the over-looked, seldom discussed issue that affects the whole planet is the DEBT FINANCING, fractional reserve monetary system, that brings currency into existence as debt without ever creating the interest that must be paid.

This is the main reason the DEBT PYRAMID has grown so large it can no longer be serviced, even at interest rates below inflation! It is also the reason I predict the bailout plan will FAIL because simply adding another layer of already leveraged DEBT only extends the problem, in no way does it solve it, it only pushes further defaults off into the future.

The most laughable part is that all the members are expected to contribute to the bailout fund, including the very countries next in line for handouts, which is fiscal madness pushed to the extreme. This story is far from over.

Myron Martin,

I recently visited the holcaust museum at the 'Ghetto Fighters' kibbutz in Israel.

My spellink isn't too good but I believe it's more like 'arbeit macht frei' rather than going into orbit!

I suppose that once wealth has been 'created' it can't just suddenly disappear unless you count wealth as buildings that can be bombed or lives that have been nurtured for years destroyed.

There's something intrinsically positive in the human spirit and I marvel how people in their late middle-age/early late age managed to not only survive but somehow prosper after losing EVERYTHING they'd worked all their lives before their individual wealth was totally destroyed in WW2.

Truly amazing!

I am sure that the human spirit shall also survive man-made debt mountains of unclimbable heights; if total world debt disappeared tomorrow then there suddenly wouldn't be mass starvation on an altogether massive scale - people would just get on with their lives with some creditors having lost everything and some people free from the burden of debt that had held them back for many years.

Life's not fair and has the tendency to adjust to huge inequalities; I'm neither in favour of people being freed from debt they foolishly took out or for destroying those people or institutions who foolishly lent in the first place.......... but things SHALL eventually work out and let's all hope and pray (if you have a God to pray to) that it can be done without resorting to WW3.

Remember Merkel's words to the German Parliament: "No more money". The rest is just smoke and shiny, shiny mirrors.

Gerry. French banks are on the hook for over £600 billion for loans to the PIIGS. So when they take a 50% haircut, or 100% if there is a default, where is that money going to come from?

More to the point, when economies are made (and that has to come) in the subsidies, to the small farmers, not the big farms above referred to, the French will have to pick up the bill, but then they will fall foul of EU rules not to give unfair preference.

Oh, I forgot, we observe the rules, they ignore them with impunity.

Mr. Court is correct, my German is a little rusty, and he brings up an interesting point. No matter the failures of our monetary system, the amount and availability of raw materials needed to sustain life and an economy does not change as long as people are willing to work. The difference with a more equitable system that would free people from excess debt would simply facilitate trade and remove the pressure and stress of most households finances, but human nature being what it is, people and governments would still find creative ways to leverage themselves into difficulty under any alternate system, however superior in asset allocation.

Peugeot France has just laid off 6000 workers.The € was the biggest vanity project ever created by unelected second rate politicians, most of whom will retire on subsidised fat pensions paid for by us. (Kinnock is one) There was a common currency experiment among Nordic nations about a century ago which lasted 40 years. Can anyone go back and look at how that was disolved; would it give us any pointes?

The Euro has been artificially boosted in value by many Euro Countries holding reserves in Euros. Brown for example, although not taking Britain into the Euro , made the usual Grand gesture , so typical of their politics dumped 450 tons of our Gold reserves and reinvested the dollar proceeds back into Euros. This artificially depressed the price of Gold for a short time ,until the doubts about the Euro began to manifest themselves. Since then Gold has been preffered by many countries as the alternative reseve currency free from inflation devaluation. Since Brown's Gold sell off, which was one of the biggest mistakes ever, worse than the Pension fund annual raid, Gold has gone through the roof in value and is forecast to go way beyond $2000 per troy ounce, as it becomes the only world reserve currency even though Europe and the USA have tried to depress the price When will the Politicians learn you cannot hoodwink the market and if you do the consequences will be catastrophic. I can see Euro Bonds unmarketable unless it has the full German Guarantee on it.

I think we are giving the Euro too much status. The Euro is simply a fixed exchange rate, sort of like the gold standard once was. The great advantage of this is that it is self correcting. If a country spends beyond its means, then they have to correct that, or they default and suffer the severe consequences. It is simply a fixed exchange rate over the Euro zone. Just like the USA is a fixed exchange rate over the 50 states. If California does not change its regulations (passed by the voters), it may very well default -- will the Federal Government bail it out? I don't think so. Some cities in the United States have gone bankrupt. Has the Federal Government bailed them out? -- No.

One of the things I remember learning at an early age was that where ever the banks were lending the most money, that sector of the economy was about to go bust. That has happened with Brazil in the past. It has happened with many other countries, and industries. Banks never seem to learn. They always follow greed. Why should we be expected to bail them out? They made the crap investments (loans), now they should live with it. We should not have to bail them out by paying ridiculous fees, or through taxes. They should have to go to the market and raise new equity to keep themselves going, like any other commercial operations. If they cannot, then they should go under. If they are "too big to fail", then the Government has not been doing their job properly -- that is proof that they are in violation of anti-trust regulations.

The Government needs to provide a system for exchange of money, paying bills, etc. It does not say anywhere that the banks have to be kept in business. It would have been much cheaper for the Government to take over this function and let the banks go bust. They stripped the assets out of the banks through bonuses and dividends, and expect the taxpayer to replace those funds. I do not understand why.

The argument of the banks is that they have to pay their staff these high wages and bonuses to keep these highly qualified people. These are the people that got us into all of this trouble. Are you trying to tell me that they are that good. I seem to remember when I graduated that it was stupidest students that took jobs with banks. Industry did not want them. Who waved a wand and made them brilliant and indispensable? I did not.

Let the banks sue banks like Goldman Sachs. If my memory serves me correctly, they sold the last tranche of Greek debt, when it was already well known that the Greeks were in trouble. Let the investors sue them. Also, if these investors are that gullible, do we really want their DNA in our gene pool? Let them go. The EU should not have to pay for the excesses of any individual state (country). That is for them to sort out. If we want to get rid of some money, then let's send it to countries that have had natural disasters.

The banks have made the sub-prime loans a scapegoat. These loans did not strip the assets out of the banks. These loans did not force the banks to finance long term loans with very very short-term debt. At most you might have lost 30% on the sub-prime loans if everyone was foreclosed, but that would not be the case. Are all of the loans for houses, businesses and property development bad risks. I suspect very few of them are. The reason there are no loans, is that the banks do not trust lending to each other. They are the ones that are not credit worthy, not the individual people. They are paying for this in taxes, and being deprived of loans. I still maintain the position that it was stupidity to have bailed the banks out in the first place. Give people tax rebates to help them, rather than make transfer payments to banks.

Enough for one day.

Snoekie I don't deny the French Banks exposure, but a country that ; Pays it's taxes, builds and buys its own cars, air-planes, grows its own food, generates its own electricity, exports its gypsies, illegal immigrants, rapists, fraudsters etc. and doesn't give away its health services, or pay enormous welfare to all and sundry. That country can recover from a hit to it's banks. No like some...?

We have a faulty system which relies on people to conduct business as usual within it ie obscene salaries & bonuses & until this is eradicated, the problem will present itself again, in another shape & form. None of the banks can afford to pay the monstrous salaries, but if they do not, they are scared that the shysters who caused the problem in the first place, will break their code of silence & no one bank will escape from the explosion.

We can toss & turn as much as we like, but the truth will out, & eventually, we will accept that the banking & financial services industries are inept, & mostly corrupt, & headed by equally inept & corrupt people!

As for the Euro & the Eurozone, not sure when, but RIP!

I am amazed at some of the rhetoric we hear regarding the Euro - to all intents, apparently it is the most significant factor in preventing war in Europe - what does this say about the people from these regions - that they are war mongers? I regard most of these countries as war mongers & their effect on the developing world is still there to see, if you care to look - why should they get away with having raped & plundered the natural resources which did not belong to them in the first instance? It's karmachamelion, time to dance on the grave of the dying Euro or what!

Rosie G

Do you remember all those ordinary people who jumped on the bandwagon of rising property prices?. They also are the ones who signed on the dotted line to borrow the money from those same banks to finance their greed. They are also the same ones who use any credit facilities they can get to buy over priced fashion goods and holidays and maintain lavish lifestyles. Now that they have run out of cash for ordinary day to day goods because they are having to spend so much on the loans, they are borrowing for basics.

And they are the same ones who are now creating the bad debt. Bankers offered, people took.Figures out today show that we are borrowing at 160% of disposable income - and rising. And don't forget we have interest rates at rock bottom - what will happen when they go up again as is inevitable? More bad debt and a further banking crisis.

And what about the enormous borrowing the Euro countries' governments have done in the last ten years? Countries top heavy with civil services and qangos. Money that should have been put into growing the economy to create sustainable wealth creating jobs.

Tme to get our house in order, How easy to make a scapegoat.

But as my mum always said "Cut your coat according to your cloth". In other words - live within your means. It works well.

I am proud to state that I recognise what levels of debt I can comfortably cope with & as a result started to sort a debt management plan, which is nearing the end in the next 6 months.

If we were to follow our political leaders, past & present, everyone would be in enormous amounts of debts, living in never never land.

I am aware that many government policies have resulted in people borrowing more than they can afford but the complete deregulation of a dodgy area of practice (banking) is where we are at. People are encouraged to take on debt - more young people will be in even more debt, should they chose the option of going into higher education - this is something that future generations will realise is something the current government has done to them. Cameron & Clegg will be long gone, but the policies they have forced on the population will be here for future generations.

The housing policies by successive governments have led to increases in house prices that ordinary people on average incomes could never afford - but all those people with unaffordable homes continue to be assisted with the low rates of interest. In effect, people are living in homes they cannot afford because of government policies. All these people who are living in unaffordable homes will vote for Cameron, because its quid pro quo - let us not forget that politicians chose their careers so they can be remembered for something or the other - they do not care whether or not their policies have helped create a new lot of unemployed young people, who have lost all hope for the future.

Living within your means is a good motto, but how many of our younger generations are willing to save up for any holiday, car or house? The politicians & the banking industry together have a ready & captive number of people who will continue to fund their lifestyles on credit, that is where banks make money, & that is what politicians are relying on to keep the economy going.

Ask any saver how much of interest they have accumulated during the last 3 yrs & the answer will be not very much. This too is as a result of government & BoE policy. The population is not going to live within their means because that particular genie is not about to get back into the bottle!

Stephanie Dewar,

Well said (or written)

Rosie G

The euro [maybe you meant EU] didn't help prevent war in western europe since WW2 as it didn't even exist until relatively recently but that was the main raison d'etre for the EU (not eurozone) and it can't be proved that it is the reason we've not had a war in western europe for what must surely be the longest period of recorded history.

Most people would be inclined to agree the EU has been of great help in binding France & Germany together economically and politically (however much it cost us all with the despised CAP).

One would have never thought just a couple of decades ago that what were then Warsaw pact communist countires would now be part of the EU; I think it's absolutely fantastic, but then others would maybe prefer to see the iron curtain back!

Can the euro fight back?

Yes, amidst all the doom and gloom I hope and believe it can.

Can it do so within the present political framework?

No, I believe the individual countries MUST give up their own central banks or they'll all cheat and break the rules they've agreed to (both strong and weak eurozone countries).

Shall this be a bad thing?

That's subjective; good for the euro but bad for countries such as the UK who'll be left out in the cold on the periphary of the world's strongest trading bloc as ever more and more unequal partners of the EU.

Remember that for most new countries joining the EU eventual absorbtion into the eurozone was a pre-requisite condition of joining the EU - the present 17 eurozone members with an additional 10 non-eurozone members will soon likely become more like 20 eurozone members and 7 outside the common currency and I do not believe a 'two-speed' Europe can function smoothly and that would please those totally against the EU as this could cause insurmountable problems of disunity rather than unity.

Robert Court "That's subjective; good for the euro but bad for countries such as the UK who'll be left out in the cold on the periphary of the world's strongest trading bloc as ever more and more unequal partners of the EU."

I read an opinion recently by a Tory eurosceptic MP or MEP in which he said that we buy more from the euro countries than they buy from us. He reckoned that they had more to lose than we had if they created trading difficulties for those outside the inner circle.

If the EU broke up, then Germany's currency would strengthen making their exports more expensive and reducing demand. Manufacturers elsewhere, including the UK, would benefit.

Germany has low unemployment levels and wants to keep it that way - that is why Germany is fighting to keep the pack of cards together.

all the greeks I know (plenty worked there for 3 years ) have no euros they dont care about Europe and want out. There money has been washed up nicely so happy days. What a sorry bunch we have in charge

The people/institutions who have lent to unreliable sovereign countries (not necessarily eurozone) have done so out of naivety , greed and/or a political agenda. As such I have no sympathy for them. My solution to the whole eurozone problem is to declare a day on which each country shall revert to its' own former currency at the rate of one euro to one whatever. All accounts denoted in euros in each country would then be correct in terms of the national currency. This would include all sovereign debt which would also be repayable in the country's own currency, thus, if this falls in value the lender would get an automatic "haircut".

Central banks would have to follow the same rules. No treaties, no supervision by other nations or EU authorities, abolition of EU regulation and eventual need to work reasonably hard to get a reasonable standard of living even in countries now considered to be scrounging off Germany and the like. Existing trading debts , being earned, would be payable in the currency of the outside trader's country.

Well. one can dream.