15 May 2013

dollars to doughnuts

● Isn’t it ironic. One of the avowed functions of chaining ourselves together in a big club was to provide counterweight to the increasing power of the USA. Instead, by running itself in il-liberal (and hence inefficient) fashion, and thus keeping its economies relatively suppressed, Europe has probably entrenched American advantage still further.
I’d say it’s dollars to doughnuts that in any impending global boom, our cousins across the pond will get the lion’s share of the benefit.

● Those who integrated more tightly still, by sharing coinage, have fared even worse, since they lack one of the equilibrating mechanisms available to those with their own currency: a falling exchange rate when things are going badly, giving a competitive advantage to exports.
It’s true of course that certain ‘wicked’ north-Europeans have enjoyed facing what is, from their point of view, an artificially low rate. There seems little doubt, however, that the Mediterranean states are facing a rate that is significantly higher than would otherwise be the case – with the result that their problems are exacerbated, rather than alleviated.