May 16, 2006

The Euro collapse

Back before the introduction of the Euro sceptics argued that it could never survive without political integration. Many of the Euro proponents said that this wasn't true, that it was just a way of reducing transaction costs and increasing free trade. Turns out they where wrong according to Paul de Grauwe, professor of economics at the University of Leuven in Belgium and an adviser to EU Commission President Mr Barroso
"I think that in the long run, without a political union, the eurozone just will not hold; there will be too much conflict, too much tension between the different member states and in the end, some countries will want to pull out," he says.

"In fact, I can be even more explicit: if we do not move forward at a political level, then it's quite sure the euro will collapse."
The pro-Euro argument was exactly the same as was used to get the UK into the EEC as it was then in the first place. That it was just a free trade agreement. That turned out to be false as well since "40 per cent of new regulation comes from Europe" (at least) there is definantly a large political element to the EU.


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