Future of Euro Is Uncertain, at Best

Posted By Anders On May 17, 2008 @ 00:04 In English, Euromed | 2 Comments

From:[1] EUOBSERVER / BRUSSELS 15.05.2008 - By Lucia Kubosova: Dutch finance minister Wouter Bos speaking at the Brussels Economic Forum on Thursday (15 May) has warned that with a greater burden on public budgets due to rising pensions and healthcare costs, coupled with a diminishing working-age population, three-percent annual deficits are no longer permissible.

Public deficit and debt
are the two key indicators governed by rules underpinning Europe's monetary union, with the permitted threshold for the budgetary spending set at three percent of gross domestic product (GDP) and a limit for public debt at 60 percent of GDP.

But while most EU countries have improved in terms of public expenditure performance – (so that apparently only France is at risk of breaking the 3% upperlimit in 2009) seven out of 15 eurozone states ran a higher than allowed debt last year, including the three heavyweights - Germany (65%), France (64.2%), and Italy (104%).
Graph left from [2] National Treasury Management Agency (Ireland)
These states "will be forced by political pressure to borrow more and increase their budget deficit, with consequences for interest rates and inflation," he indicated, adding: "the real test for the euro is not now, but in ten years' time".

"Therefore, in my view the long-term chances of survival of the euro should be questioned," noted Mr Bolkestein. (ex-commissioner Frits Bolkestein, 2006)

However, business is happy with the Euro and the EU? Surprisingly not!

[3] ICM surveyed 1,000 UK Chief Executives between 11 and 29 September for "Open Europe"
ICM took a meaningful sample of businesses of all sizes - four groups of interviews with 250 Chief Executives each.

At present business thinks the EU is “failing.”
52% agreed with the statement that “The EU is failing. Britain will be more prosperous and secure if we keep the Pound and take back powers from the EU”. Just 36% agree with the statement that “The EU is a success.

The US is often criticized for being too lax on its budgetary deficit. But just compare this [4] graph (right) with the debt in percent of the Gross Domestic Product with those of EU countries: You will see the US performs as well/badly as an average EU state

Increased regulation is seen to have outweighed the benefits of the Single Market
Despite the Commission’s pledge to reduce regulation, there is a very strong perception that the burden of regulation imposed by the EU is still increasing. Interestingly, this is not just a typical ‘small business grumbling’ – the perception of increasing regulation is strongest among the largest

Overall, 59% think the burden of EU regulation is increasing, 35% think it is staying the same and just 4% think it is decreasing. However, among the largest businesses, (250+ employees) a stunning 70% think regulation is increasing, 27% staying the same and just 2% decreasing.

Whom do we trust?
Trust    Not Trust   Net
The European Court of Justice 66  29 + 37
MPs in Westminster 42 55 -13
British Cabinet Ministers 42 55 -13
The Council of Ministers 30 54 -24
The European Parliament 34 61 -27
The European Commission 31 65 -34

Business thinks Europe is set to decline in importance in the world economy. Its prospects are regarded as being equivalent to those of Africa.

Comment: The EU is an artificial construction without popular support – which is also seen from the very low turn-outs in EU elections, a thing the EU fears very much in the 2009 elections.

According to a [5] poll on May 1, 2008,  by the BdB German Banking Federation and published in the Berliner Zeitung newspaper, more than half of those surveyed think the euro is to blame for an increase in prices in recent years. In Germany the euro has the nickname "teuro" - a play on words combining euro and "teuer", the German word for expensive.
About 34pc of Germans want to ditch the euro and bring back the deutschmark.

As for the solidity, as a layman I cannot see that the euro is better founded than the weak and plummeting US dollar. As was [6] admitted by EU Commisioner Almunia the US dollar area even has the advantage of higher productivity than the euro area - and a younger population than the euro area - the population of the USA having a  [7] median age of 35 years, that of the 15 old European countries being 38 - and this difference will increase in future..

The [8] fertility rate in the EU was 1.48 in 2003. [9] This graph shows this rate to be clearly higher in the USA.

So the present dollar weakness must have other causes than strictly economic ones. I would guess at certain wealthy bankers´speculation. [10] These speculators possess so much [11] money, that they can cause the euro to plummet any time they want to score their fat gains - as it was just after the introduction of the Euro, when the euro´s value crashed from 1.18 dollars to 0.62 dollar, as they did in 1929 (Wall Street Crash), as [12] George Soros did in 1992 with the British Pound,  as they did in the subprime crisis and the [13] Northern Rock and Bear Stearns bank crises.

In this respect the EU is no safe haven: The bigger the currency, the bigger is the hunk for them!
In the euro zone the national states are excluded from regulating their interest rates. At present, Germany would like to increase the interest rate out of fear of a high inflation, while the South European countries demand lower interst rates. So the euro interest rate remains stable - and everybody remains dissatisfied!

The euro project could have been a good and healthy one - had it not been for ideology. Today the euro is a colossus with feet of clay due to immense national debts and increasing grumbling at the bureaucracy associated with it - tomorrow it will be chaos due to the accession of undisciplined 3. world economies from the Uniom for the Mediterranean.
The associted immigration will , of course, decrease the median age of "Europeans".

However, production is not just a matter of quantity. Today it is a matter of quality. Unfortunately the import of persons from the 3. world has not been a labour enrichment/relief - just a gigantic [14] burden for the  social state and [15] here. Due to Muslim unwillingness to integration it will remain that way - more and more so the greater the coming [16] Muslim immigration.

So, my advise to the Danes before a poll on the introduction of the euro in Denmark: Keep the Danish krone and avoid the future bankrupt estate that the euro will be, when joined by the "partner" countries from North Africa and the powder keg of the Middle East in the [17] Union for the Mediterranean and its Sharia banking. Remember what Dutch Finance Minister Bos said : "The real test for the euro will only come in 10  years.


Article printed from Euro-med: http://euro-med.dk

URL to article: http://euro-med.dk/?p=929

URLs in this post:
[1] EUOBSERVER: http://euobserver.com/9/26146
[2] National Treasury: http://www.business2000.ie/cases/cases_7th/case21.htm
[3] ICM surveyed 1,000 UK Chief Executives : http://www.openeurope.org.uk/businesspres.pdf
[4] graph: http://zfacts.com/p/318.html
[5] poll : http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/03/cnger103.xml
[6] admitted by EU Commisioner Almunia: http://euro-med.dk/?p=913
[7] median age: http://www.globalbritain.org/BNN/BN26.pdf
[8] fertility rate in the EU: http://ec.europa.eu/employment_social/news/2005/mar/demog_gp_en.html
[9] This graph: http://bp0.blogger.com/_ngczZkrw340/R2PFfWlCyhI/AAAAAAAACrs/fhRh1_bO6Eg/s1600-h/comparative+fertilit

[10] These speculators: http://euro-med.dk/?p=488
[11] money,: http://www.bibliotecapleyades.net/sociopolitica/esp_sociopol_rothschild03.htm
[12] George Soros: http://euro-med.dk/?p=110
[13] Northern Rock and Bear Stearns bank crises: http://euro-med.dk/?p=764
[14] burden for the  social state: http://borsen.dk/nyhed/81323/
[15] here: http://danmark.wordpress.com/2007/07/15/immigration-costs-in-sweden-amount-to-almost-297-pc-of-the-p

[16] Muslim immigration: http://ec.europa.eu/external_relations/euromed/conf/naples/index.htm
[17] Union for the Mediterranean: http://euro-med.dk/?p=565