One for the armchair economists

[f0rd]

http://www.policyexchange.org.uk/pages/wolfsoneconomicsprize.cgi

 

250,000 Euros if you can "articulate how best to manage the orderly exit of one of more member states from the European Monetary Union".

 

Only real problem is that the prize is in Euros so will be worthless by the time they award it to the winner…

[andyofborg]

simple really, germany and possibly france need to leave.

 

they are both big enough to weather the storm which would follow, though given their strength there might only be a shower

[I1L2T3]

In other words £250,000 for whoever can suggest a way of not hurting the banks if countries leave.

 

This is not about an orderly outcome for citizens - governments and banks have already shown their willingness to wreak absolute havoc on them.

 

The solution is really pretty simple - the debt can never ever be paid back so huge swathes of it have to be written off. But that is going to hurt banks, individuals, and pension funds. At the end of the day though they are only going to get hurt because of shockingly bad investing decisions. Those bad decisions need to be punished not rewarded. Time soon to take the pain.

[biotechpete]

In other words £250,000 for whoever can suggest a way of not hurting the banks if countries leave.

 

This is not about an orderly outcome for citizens - governments and banks have already shown their willingness to wreak absolute havoc on them.

 

The solution is really pretty simple - the debt can never ever be paid back so huge swathes of it have to be written off. But that is going to hurt banks, individuals, and pension funds. At the end of the day though they are only going to get hurt because of shockingly bad investing decisions. Those bad decisions need to be punished not rewarded. Time soon to take the pain.

 

Seems to me that's a pretty simple one to do though. All you need to say is any state which leaves will still owe their debt in Euros not in their new currency, though they would be free to restructure the debt into the new currency at whatever rate they can get.

 

Got to say, I'm with Andyofborg though. The best way to save the Euro is to kick the Germans out, print a load of bank notes and give it to the people to cover the savings they'll lose when the banks go bust.

 

As our leaders have said quite clearly and correctly, the fundamental problem in Europe is that they are not nearly competitive enough. Partly this is due to the influx of cheap goods from China which holds its exchange rate artificially low but also partly due to the overgrown and massively expensive bureaucracy (though I suspect another word might better reflect its corrupt and fundamentally undemocratic tradition).

[HeadingNorth]

As our leaders have said quite clearly and correctly, the fundamental problem in Europe is that they are not nearly competitive enough. Partly this is due to the influx of cheap goods from China which holds its exchange rate artificially low but also partly due to the overgrown and massively expensive bureaucracy (though I suspect another word might better reflect its corrupt and fundamentally undemocratic tradition).

 

Also, in fairly large part (at least in some European countries) because they still have the grossly inefficient working practices that helped to bankrupt our own country back in the mid seventies, before Thatcher was finally able to kill them off.

[biotechpete]

Also, in fairly large part (at least in some European countries) because they still have the grossly inefficient working practices that helped to bankrupt our own country back in the mid seventies, before Thatcher was finally able to kill them off.

 

Sure, I think that's a problem in some, like Greece (where if the media, and my Greek colleague, are to be believed lots of money is also lost to corruption).

 

In others for example Italy, it is in the main a pretty modern country and they have been damaged to some extent by speculation rather than a fundamental flaw in their economy. But also, in my mind (perhaps only there), backward and even communist working practices are not in themselves a problem unless you are open to competition from global markets.

[I1L2T3]

Sure, I think that's a problem in some, like Greece (where if the media, and my Greek colleague, are to be believed lots of money is also lost to corruption).

 

In others for example Italy, it is in the main a pretty modern country and they have been damaged to some extent by speculation rather than a fundamental flaw in their economy. But also, in my mind (perhaps only there), backward and even communist working practices are not in themselves a problem unless you are open to competition from global markets.

 

A big difference between Spain and Germany in terms of competitiveness is wage inflation - carefully controlled in Germany, rampant in Spain. As HeadingNorth says different union approaches can explain this.

 

http://www.bbc.co.uk/news/business-16290598

 

Germany has done rather well out of the Euro experiment it seems.

[Vague_Boy]

simple really, germany and possibly france need to leave.

 

they are both big enough to weather the storm which would follow, though given their strength there might only be a shower

Absolute nonsense.

 

Who would then bail out the hopelessly insolvent PIIGS? Belgium? Estonia? Malta?

 

If the process is managed badly it would threaten European savings, employment and the stability of the international banking system.

Leaving the Eurozone might be the best thing for Germany but it would hardly produce an "orderly exit" or be the best thing for "European savings, employment and the stability of the international banking system".

[Longcol]

Leaving the Eurozone might be the best thing for Germany but it would hardly produce an "orderly exit" or be the best thing for "European savings, employment and the stability of the international banking system".

 

Explain please.

[andyofborg]

Absolute nonsense.

 

Actually it's not.

 

The result of one of the weaker economies leaving the euro would be catastrophic for them. The talk was something like 50% of GDP for Greece.

 

One of the current problems is that the size and efficiency of the larger, more efficient northern european ecomonies swamps the rest and any export boost which comes from a currency devaluation goes to them rather than the weaker ones.

 

If one or more of the stronger economies leave then the market response is not likely to be as bad and they also have the reserves to better stand any other problems which might arise. The euro could then be devalued which would benefit the exporters and internal manufacturers of the remaining countries allowing them to start on an economic recovery. If they were to restructure their economies at the same time then the eurozone could reform with everyone as more equal partners.

 

Who would then bail out the hopelessly insolvent PIIGS? Belgium? Estonia? Malta?

 

The IMF, same as now

 

Leaving the Eurozone might be the best thing for Germany but it would hardly produce an "orderly exit" or be the best thing for "European savings, employment and the stability of the international banking system".

 

The international banking system is pretty much doomed anyway. Unless someone can find a clever way to write off most of the worlds debt or find a way to produce a massive boost in demand in a debt free manner.