Will the European Union and the Euro Die?


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Profile Dr Imaginario
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Message 1141611 - Posted: 17 Aug 2011, 14:53:15 UTC

After the summit between the French President and the German Chancellor, I had a clear view that Germany and France are more focused in their own political agenda than to solve the crises that they somehow also created.
Germany and France have more power now than the European Union institutions, and is amazing to see that those institutions specially the European Central Bank don’t have arguments or counter measures, or better the will to find solutions to the crisis that some European countries of the Euro-zone are falling or struggling against.
The only recommendation is to cut expenses, reduce the deficit, but where are the ideas to promote economic growth and sustainability? Does Europe really want to end the welfare State? Does socialism is such a plague that must be ended, and the only path is this neo-liberalism?
There will be a point that In the Euro-zone a choice will have to be made. To Move forward for a Federal Model and finally have a common ground in a lot of hot topics, or the countries continue with their own agenda.
In my point of view I don’t think a future for the Euro or for the European Union with the second option.

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Message 1141615 - Posted: 17 Aug 2011, 15:00:00 UTC

Firstly I wonder whether it is worth combining this thread with the existing "Eurozone Crisis" one??

But it is interesting to hear from someone in Portugal about this. What is the feeling in your country about what is happening? What are the thoughts about being a poor relation to Europe, financially speaking?

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Message 1141624 - Posted: 17 Aug 2011, 15:27:02 UTC - in response to Message 1141615.

This is the problem of being a newbie here. I didn’t realize that was already a tread about the issue.
But my feelings about the crisis if of somehow impotence, as I see that no matter sacrifices are imposed on Miss and Mister Tax Payer, the common man don’t see any results and just get basically frustrated.
The worse feeling is to feel that a country like mine is bond to economic directives from Germany and France that are not promoting the economical growth that a country like mine needs.
If you look to your neighbor the Republic of Ireland, you will find the same problem, no economical growth and just the idea of cutting the deficit, mostly due to the increase of Taxes.
Also when I saw in the news about the UK riots, I saw that even a country outside the Euro, like the UK faces the same social problems as in a country like Portugal. Maybe is not a question about being richer but is all about how open and exposed is your economy. This the UK and Portugal have in common. We are two countries that have very open economies to the exterior. In case of Portugal the economy is being hit because of the opening of the market to Chinese and Indian products that are just labor intensive, and that where basis of the Portuguese industry.

The UK economy is being hit in other sectors and for other reasons; nevertheless the effects are the same, as the European Union is mainly protecting French and German commerce.
Going back to Portugal, we still have a long way to go, until we start to close the gap between countries like the UK, but I don’t think that it will be with this kind of anti-deficit measures that it will go there. For almost a decade that our economy is struggling because the state only increases it’s expenditures but can’t find a way of turning the tide on economical growth.
One thing is for sure, there will always be rich and poor countries or in a more sensitive way, less rich. However a country that invests in is human resources and protect their own population for me will always be rich in some way.

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Message 1141682 - Posted: 17 Aug 2011, 18:53:27 UTC

Not a problem my friend, come on over and say what you think.
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Profile Michael John Hind
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Message 1141687 - Posted: 17 Aug 2011, 19:05:29 UTC - in response to Message 1141624.

However a country that invests in is human resources and protect their own population for me will always be rich in some way.


Investing in it's human resources is what come from having a sound educational
and training system. Much like the UK once had. Protecting your population
I assume you mean "employment" wise. If so this is much harder to do. This
was what happened in the 30's during the depression and it lead to all
countries operating a market protectionist system. The latter caused the
depression to go deeper and last longer than it needed to. But of course, what
would both of us prefer...obviously market protection if it meant we would
both stay in employment even if meant our neighbours lost their jobs..
....put it down to pure human survival instincts.

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Message 1141878 - Posted: 18 Aug 2011, 0:48:25 UTC
Last modified: 18 Aug 2011, 0:53:23 UTC

Of course it is a reality that those economically leading nations would consider their own interest first. If numerous EU countries keep dragging the others then probably like France and Germany they begin to isolate themselves from further economic slowing risks. Norway and Switzirland very possibly pre-considered current German position and they did not join the EU.

But likely EU will finally to evolve into some USA and China competitor force.
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Profile Chris SProject donor
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Message 1142000 - Posted: 18 Aug 2011, 9:26:30 UTC

Switzerland has a history of being neutral as during WWII. One reason its banking system is so popular.

Profile Dr Imaginario
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Message 1142003 - Posted: 18 Aug 2011, 9:52:23 UTC

Switzerland apart from being Neutral and having a very popular bank system, they are also very powerful in some industry sectors.
Just to give an example the pharmaceutical sector and the food sector (everybody knows Nestle).
Another thing that will be a strong factor for the non entry of Switzerland in the EU is their tax system. Switzerland has the lowest corporate income tax rates is all Europe. Some companies like Procter and Gamble, Carrefour and others that have moved their European head quarters to Switzerland are being an average of 6,2% Income tax while the average on EU is around 23,2% (2010 figures).
This difference would be a huge shock for EU countries, especially France, Germany and the UK.
I still remember when Ireland had the tax rate around 12% Most of European countries wanted to take actions against Ireland, as they were attracting to many companies to them and some European Corporations where thinking about moving her headquarters there so they could benefit from lower taxes. However the EU where able to block somehow this moves. But when the big corporations found Switzerland, and as they are outside the EU, then some of the directives would not apply and now every year Big corporations change or think about changing headquarters to cities like Geneva.
The only downside of this equation is that Switzerland is not a cheap country and the average salary is quite high when compared with other countries. So you need to be a huge company and a very profitable one to absorb these costs and still have a benefit from the tax reduction.
Nevertheless taxes are an important competitive advantage between countries, and again like in most topics in EU there is no agreement around this. After all this years, the only tax that is really European, as it’s part of the EU budget is VAT, and even so there is a lot of differences between countries.

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Message 1142008 - Posted: 18 Aug 2011, 10:15:00 UTC

We've been borrowing against the future for so long now there may not be an easy way out. In the past it is at about this point that country A starts blaming country B for all of their problems and everyone else starts lining up on one side or the other for a big fight. Hopefully in this new "information age" we are in the people who end up doing the fighting will refuse to play the game.
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Message 1143289 - Posted: 21 Aug 2011, 2:24:12 UTC
Last modified: 21 Aug 2011, 2:24:33 UTC

No, the EU and the Euro won't die but what you will see is a major change to the European Union financial structure. They have figured out that you cannot have a common currency without having a single, unified organization for financial management. The way the EU operates now it is a loose federation of independent nations. Similar to the way the United States was before the Federal government unified the currency and imposed regulations on how States operated financially.

Europe is probably going to move to a unified organization that will have more control of the way each country handles their budgets.
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Message 1143402 - Posted: 21 Aug 2011, 8:50:08 UTC

That might happen within the 17 Euro Zone countries, but no in the 9 not in the EURO.

I certainly hope our politicians don't continue to be as spineless as they currently are, and continue with their semi-independence when the latter happens.

Let the Euro Zone sort out the EURO.
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Message 1143404 - Posted: 21 Aug 2011, 8:55:10 UTC

Is the Green Pound still being used? I know the ECU was replaced by the Euro in 1999.

Exchange rate used by the European Union (EU) for the conversion of EU agricultural prices to sterling. The prices for all EU members are set in European Currency Units (ECUs) and are then converted into green currencies for each national currency.

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Message 1143473 - Posted: 21 Aug 2011, 15:38:09 UTC

No, but for the purposes of the CAP and ESF an exchange rate is agreed at the beginning of each year, as a successor to the green £UK.


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