Keeping Britain out of the Euro was about the only good thing Gordon Brown did for Britain.
Brown was Chancellor of the Exchequer when the Euro coins and notes went into circulation on 1st January 2002, and ancient and traditional currencies such as the Franc, Peseta, Deutsche Mark and Guilder were got rid of in exchange for Monopoly money.
But Brown decided that it would be best for Britain to keep the Euro, despite Prime Minister Blair wanting Britain to adopt it. And, a few years after its introduction, Brown again assessed Britain's possible membership of the Eurozone, but again decided that it wasn't the right time for Britain to join.
Many other nations, such as the French and Germans (who seem to think it their duty to boss other EU nations around), have often called the British "bad Europeans" for having the audacity to keep their centuries old Pound (those attacking the British for not joining the Euro need to study the events of "Black Wednesday" of 16th September 1992, when the British withdrew from the ERM - the forerunner of the single currency - after Britain was unable to keep sterling above its agreed lower limit. This withdrawal allowed Britain to control its own currency in a way that members of the ERM or Euro cannot). Even the Americans wish the British to join the Euro.
But now it seems like the British - and other EU members which also refused to join the Euro, such as the Danes and the Swedes - were right to snub the Euro after all and that some Europeans and the Americans must wake up to the reality.
Several Eurozone countries - most notably Greece, Spain, Portugal, Italy and Ireland - are suffering a severe financial crisis and the Euro is seriously weakening. But these countries which have adopted the Euro are finding it particularly hard to combat ther economic problems as they have no currency which they themselves can control. For instance, they cannot control their own interest rates. They are controlled by the European Central Bank, and all countries with the Euro have the same interest rates. Interest rates which are beneficial for one country, therefore, will not be beneficial for another. Britain, though, can set its own interest rates to suit itself.
Now, several economics experts are predicting that the Euro - and maybe even the EU itself - may collapse within the next five years.
And the British can look on and say: "I told you so."
Hubris and why chickens are coming home to roost for the euro's deluded cheerleaders
By Andrew Alexander
10th February 2010
Daily Mail
Will the Eurozone still be around in five years' time? With Greece, Italy, Portugal and Spain now suffering a severe financial crisis and with the euro seriously weakening, I think the prospect that it survives in its present form is most unlikely.
Indeed, the single currency looks like weakening further as a result of record levels of short-selling - the controversial system in which traders make a killing by 'selling' euros they don't actually own and buying them back at a later date more cheaply.
The crisis has echoes of 1992, when the financier George Soros made $1 billion by selling sterling and drove the pound out of the ERM.
Will the Eurozone still be around in five years time?
These four so-called 'Club Med' countries have been finding it desperately hard to borrow. Their effective credit ratings are dire.
Of course, there's nothing novel about the causes. The countries' governments have spent too much and borrowed too heavily. This sort of policy, which Gordon Brown characterises so cheekily as providing economic 'support', can only end in disaster.
Germany and France (the core countries in the 16-member Eurozone) are suitably alarmed. In response to their stern demands, the Greek government has instituted tough plans for a freeze of public pay and a reform of taxes. These proposals have not convinced everyone.
Other Club Med governments hope - and, indeed, believe - that the rich and powerful Germany will somehow foot the bill! However, Berlin yesterday refused to countenance a bailout, albeit for the moment.
An economic crisis and soaring state debt in Greece have resulted in tough government measures, including salary freezes and tax hikes
How this crisis is managed over the next few days is vitally important. Here we have the world's second largest currency in real trouble. A double dip in the recovery from the credit crunch has always been probable, certainly for Britain.
But if a currency the size of the euro is no longer trusted, international markets are likely to prove more unstable. A consequent desire to play safe would then prolong the recession.
For some of us writing at the time of the Eurozone's formation just over a decade ago, the current crisis has been all too predictable. Other currency unions, we pointed out, had been tried in history and always fallen apart.
A particular flaw in having a 'one-size-fits-all' currency covering the rich and the poor, the cautious and the ****less, is that no member nation has its own currency which it can devalue or revalue in an attempt to extricate themselves from this crisis.
At least devaluation would, among other things, provide a breathing space while better financial management was gradually put together.
However, the only way a country could devalue would be if it left the Eurozone. This may sound dramatic, but such a move would be no more drastic in administrative terms than joining in the first place.
But if the four Club Med countries were to break free, or even do no more than just threaten to leave, all sorts of questions would be raised about other fringe members of the Eurozone or those expecting to join.
In other words, the whole United Europe project, aiming at one currency, one financial authority, one set of employment polices and one foreign policy would come under threat.
Events are showing that Britain was right to keep the Pound
There are other countries, apart from the Club Med four, which are hovering on the fringe of the Eurozone and for whom the current crisis offers a sudden reality check.
For example, the Danes (who are more sensible than their government) have no enthusiasm for the single currency, but their leaders seem intent to try to end the country's opt-out and launch a new bid join the Eurozone.
Meanwhile, the influence of the Eurozone spreads further, with Montenegro using the currency - even though it is not a member. Estonia, Latvia and Lithuania are supposed to join soon. Poland has expressed an interest.
All these countries will be having second thoughts about becoming members of a system which is now fraying at the edges.
Once, it seemed so attractive to countries' leaders to wrap the strength of a world currency around their nation. But not so now.
Victims of hubris, the Eurozone's original cheerleaders deserve this current crisis.
Britain's financial crisis of 16th September 1992 - "Black Wednesday" - forced Britain to leave the Exchange Rate Mechanism, the forerunner of the Euro. But this then allowed Britain to have control of its own currency, and Black Wednesday would have been a big factor in Britain's snubbing of the Euro
When they began to recruit member countries for the single currency, they laid down a set of basic rules about the soundness of national budgets before they could qualify to join. These were sensible enough.
But in their eagerness for enlargement (as part of their pursuit of a United Europe in which they would be the main voices), the founder members allowed these rules to be broken.
The problems were visible from the outset. For example, neither Greece nor Italy's national finances were in a good enough condition to merit joining. But the greater ideal of a Eurozone prevailed over financial common sense. Economics gave way to politics, as it so often does. Proof, also, that creative accounting is not confined to dodgy public companies.
With the euro now under siege and the financial markets betting heavily that Greece's crushing debt could drag down the existing single currency system, it is possible that the world would actually be a better place without the Eurozone.
Just imagine: the main national currencies would still have their independence and command respect.
Admittedly, Italy and Greece would be suffering financial problems - which would have old sages sighing and saying they never much liked the lira or the drachma anyway, nor perhaps the Spanish peseta. But the rest of the world would get on as best it could.
But by having signed up a basket of dubious currencies, the Eurozone provided a classic example of how the weakness of one nation's finances can spread to another.
Of course, all this makes one wonder what sort of position Britain would be in now had we joined the Eurozone, as almost came to pass.
Tony Blair was keen, but Gordon Brown, warned off by some Treasury studies, argued it was a step too far.
Had we become members, we would have lost our financial independence and would now be under the supervision of the European Central Bank.
Tony Blair, left, and Gordon Brown disagreed on whether or not Britain should join the Eurozone, with then Prime Minister Blair wanting Britain to join and then Chancellor of the Exchequer Gordon Brown saying it was a step too far
If the Eurozone is wilting under its first real test, what does it say about the EU in general? No country has ever left, because politicians believe it gives them a much valued seat at the top table.
This explains why the euro has always been popular with politicians. But EU power has always been in proportion to its apparent economic strength. With that now waning as Europe frantically seeks a way out of its debt crisis, the EU will command less unity and less power.
Countries will divide between those who think that any sacrifice - especially a bail-out from Germany rather than their own drastic belt-tightening - is worthwhile to preserve the system and the great European plan.
Meanwhile, for Britain, membership of the EU has done nothing much more than spawn countless regulations which are part of a grand design to have the same laws, however futile, operating throughout all member countries.
I am convinced that no trade or other agreements have been achieved through EU membership which would not have been achieved through normal inter-government agreements.
By contrast, the costs of our EU membership remain both financially and politically high.
The costs would, of course, be even higher had we joined the Eurozone, as the EU enthusiasts wanted, and which would have meant that we, too, would be now involved in rescuing the Club Med and dreading the markets' harsh verdict on the euro.
dailymail.co.uk
Brown was Chancellor of the Exchequer when the Euro coins and notes went into circulation on 1st January 2002, and ancient and traditional currencies such as the Franc, Peseta, Deutsche Mark and Guilder were got rid of in exchange for Monopoly money.
But Brown decided that it would be best for Britain to keep the Euro, despite Prime Minister Blair wanting Britain to adopt it. And, a few years after its introduction, Brown again assessed Britain's possible membership of the Eurozone, but again decided that it wasn't the right time for Britain to join.
Many other nations, such as the French and Germans (who seem to think it their duty to boss other EU nations around), have often called the British "bad Europeans" for having the audacity to keep their centuries old Pound (those attacking the British for not joining the Euro need to study the events of "Black Wednesday" of 16th September 1992, when the British withdrew from the ERM - the forerunner of the single currency - after Britain was unable to keep sterling above its agreed lower limit. This withdrawal allowed Britain to control its own currency in a way that members of the ERM or Euro cannot). Even the Americans wish the British to join the Euro.
But now it seems like the British - and other EU members which also refused to join the Euro, such as the Danes and the Swedes - were right to snub the Euro after all and that some Europeans and the Americans must wake up to the reality.
Several Eurozone countries - most notably Greece, Spain, Portugal, Italy and Ireland - are suffering a severe financial crisis and the Euro is seriously weakening. But these countries which have adopted the Euro are finding it particularly hard to combat ther economic problems as they have no currency which they themselves can control. For instance, they cannot control their own interest rates. They are controlled by the European Central Bank, and all countries with the Euro have the same interest rates. Interest rates which are beneficial for one country, therefore, will not be beneficial for another. Britain, though, can set its own interest rates to suit itself.
Now, several economics experts are predicting that the Euro - and maybe even the EU itself - may collapse within the next five years.
And the British can look on and say: "I told you so."
Hubris and why chickens are coming home to roost for the euro's deluded cheerleaders
By Andrew Alexander
10th February 2010
Daily Mail
Will the Eurozone still be around in five years' time? With Greece, Italy, Portugal and Spain now suffering a severe financial crisis and with the euro seriously weakening, I think the prospect that it survives in its present form is most unlikely.
Indeed, the single currency looks like weakening further as a result of record levels of short-selling - the controversial system in which traders make a killing by 'selling' euros they don't actually own and buying them back at a later date more cheaply.
The crisis has echoes of 1992, when the financier George Soros made $1 billion by selling sterling and drove the pound out of the ERM.
Will the Eurozone still be around in five years time?
These four so-called 'Club Med' countries have been finding it desperately hard to borrow. Their effective credit ratings are dire.
Of course, there's nothing novel about the causes. The countries' governments have spent too much and borrowed too heavily. This sort of policy, which Gordon Brown characterises so cheekily as providing economic 'support', can only end in disaster.
Germany and France (the core countries in the 16-member Eurozone) are suitably alarmed. In response to their stern demands, the Greek government has instituted tough plans for a freeze of public pay and a reform of taxes. These proposals have not convinced everyone.
Other Club Med governments hope - and, indeed, believe - that the rich and powerful Germany will somehow foot the bill! However, Berlin yesterday refused to countenance a bailout, albeit for the moment.
An economic crisis and soaring state debt in Greece have resulted in tough government measures, including salary freezes and tax hikes
How this crisis is managed over the next few days is vitally important. Here we have the world's second largest currency in real trouble. A double dip in the recovery from the credit crunch has always been probable, certainly for Britain.
But if a currency the size of the euro is no longer trusted, international markets are likely to prove more unstable. A consequent desire to play safe would then prolong the recession.
For some of us writing at the time of the Eurozone's formation just over a decade ago, the current crisis has been all too predictable. Other currency unions, we pointed out, had been tried in history and always fallen apart.
A particular flaw in having a 'one-size-fits-all' currency covering the rich and the poor, the cautious and the ****less, is that no member nation has its own currency which it can devalue or revalue in an attempt to extricate themselves from this crisis.
At least devaluation would, among other things, provide a breathing space while better financial management was gradually put together.
However, the only way a country could devalue would be if it left the Eurozone. This may sound dramatic, but such a move would be no more drastic in administrative terms than joining in the first place.
But if the four Club Med countries were to break free, or even do no more than just threaten to leave, all sorts of questions would be raised about other fringe members of the Eurozone or those expecting to join.
In other words, the whole United Europe project, aiming at one currency, one financial authority, one set of employment polices and one foreign policy would come under threat.
Events are showing that Britain was right to keep the Pound
There are other countries, apart from the Club Med four, which are hovering on the fringe of the Eurozone and for whom the current crisis offers a sudden reality check.
For example, the Danes (who are more sensible than their government) have no enthusiasm for the single currency, but their leaders seem intent to try to end the country's opt-out and launch a new bid join the Eurozone.
Meanwhile, the influence of the Eurozone spreads further, with Montenegro using the currency - even though it is not a member. Estonia, Latvia and Lithuania are supposed to join soon. Poland has expressed an interest.
All these countries will be having second thoughts about becoming members of a system which is now fraying at the edges.
Once, it seemed so attractive to countries' leaders to wrap the strength of a world currency around their nation. But not so now.
Victims of hubris, the Eurozone's original cheerleaders deserve this current crisis.
Britain's financial crisis of 16th September 1992 - "Black Wednesday" - forced Britain to leave the Exchange Rate Mechanism, the forerunner of the Euro. But this then allowed Britain to have control of its own currency, and Black Wednesday would have been a big factor in Britain's snubbing of the Euro
When they began to recruit member countries for the single currency, they laid down a set of basic rules about the soundness of national budgets before they could qualify to join. These were sensible enough.
But in their eagerness for enlargement (as part of their pursuit of a United Europe in which they would be the main voices), the founder members allowed these rules to be broken.
The problems were visible from the outset. For example, neither Greece nor Italy's national finances were in a good enough condition to merit joining. But the greater ideal of a Eurozone prevailed over financial common sense. Economics gave way to politics, as it so often does. Proof, also, that creative accounting is not confined to dodgy public companies.
With the euro now under siege and the financial markets betting heavily that Greece's crushing debt could drag down the existing single currency system, it is possible that the world would actually be a better place without the Eurozone.
Just imagine: the main national currencies would still have their independence and command respect.
Admittedly, Italy and Greece would be suffering financial problems - which would have old sages sighing and saying they never much liked the lira or the drachma anyway, nor perhaps the Spanish peseta. But the rest of the world would get on as best it could.
But by having signed up a basket of dubious currencies, the Eurozone provided a classic example of how the weakness of one nation's finances can spread to another.
Of course, all this makes one wonder what sort of position Britain would be in now had we joined the Eurozone, as almost came to pass.
Tony Blair was keen, but Gordon Brown, warned off by some Treasury studies, argued it was a step too far.
Had we become members, we would have lost our financial independence and would now be under the supervision of the European Central Bank.
Tony Blair, left, and Gordon Brown disagreed on whether or not Britain should join the Eurozone, with then Prime Minister Blair wanting Britain to join and then Chancellor of the Exchequer Gordon Brown saying it was a step too far
If the Eurozone is wilting under its first real test, what does it say about the EU in general? No country has ever left, because politicians believe it gives them a much valued seat at the top table.
This explains why the euro has always been popular with politicians. But EU power has always been in proportion to its apparent economic strength. With that now waning as Europe frantically seeks a way out of its debt crisis, the EU will command less unity and less power.
Countries will divide between those who think that any sacrifice - especially a bail-out from Germany rather than their own drastic belt-tightening - is worthwhile to preserve the system and the great European plan.
Meanwhile, for Britain, membership of the EU has done nothing much more than spawn countless regulations which are part of a grand design to have the same laws, however futile, operating throughout all member countries.
I am convinced that no trade or other agreements have been achieved through EU membership which would not have been achieved through normal inter-government agreements.
By contrast, the costs of our EU membership remain both financially and politically high.
The costs would, of course, be even higher had we joined the Eurozone, as the EU enthusiasts wanted, and which would have meant that we, too, would be now involved in rescuing the Club Med and dreading the markets' harsh verdict on the euro.
dailymail.co.uk
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