March 01, 2007

Euro arguments

This New Statesman article caught my eye as good fisking material. It manages to get through an entire article with only one haft decent argument for what it is proposing, but since it is proposing that we join the Euro that is unsurprising.
My concerns about the currency never came to fruition. Now the pound looks antiquated and sets us uncomfortably apart from the rest of Europe.
With uncomfortably higher growth, and uncomfortably lower unemployment than the other big EU economies.
The euro has become the world's favourite - and most stable - currency and no country has lost its identity.
Yes, still no sign of a EU demos forming.
We need, therefore, to reopen the debate, for many reasons. First of all, it would make economic sense to consumers not to have to change money when they travel. France and Spain are not just the world's top holiday destinations, they're ours, too. If only half of us visit mainland Europe just once a year, at a 3 per cent exchange commission, that is a conversion tax of £5.4bn alone.
Yes lets make sure that we screw the entire economy to save a little money on a once yearly activity, that we then won't be able to afford. Not that the savings would be anything like the £5.4bn quoted as is pointed out in the comments:
if that's 3 percent of spending abroad on holidays, as you imply, then total spending would be £180bn. If half of us go abroad each year, that's £6,000 spend per head or £24,000 for a family of four. Or to put it another way, £180bn is about 15 percent of total GDP, so about 25 percent of private sector GDP. 25 percent of all our income spent on holidays?
But back to the article.
Britain is magnificently overpriced. With transparency, "never knowingly undersold" John Lewis would be handing out refunds constantly. Its Levi's 501 jeans at €96.46 compare badly to those priced €75 on the mainland. Calvin Klein's perfume at €80 is €10 cheaper there. A trendy Mandarina Duck wheelie bag at €244.78 in John Lewis? Just €185 in Barcelona. Catch a movie later at the Odeon, and that €14 seat would be half the price.
A nice selection of average consumer goods there but at least he finally has an argument with a little substance to it. Being able to perform price comparisons more easily would be good for the market and the Euro can help this. As can Google, but Google also lets you do it for free and without screwing up the economy though imposing the wrong interest rate and thereby reducing everybody's ability to buy anything.
There is no evidence to suggest that our "special relationship" with the US would deteriorate.
The European defence initiatives initially championed by Blair will have an impact though by reducing the ability of our armed forces to work closely with the americans due to incompatible weapons logistical systems. That is if our European partners would dian to allow us to do anything with the hated yankees.
We have never been invited to join the dollar.
Britain was given the chance of a free trade agreement with the USA, which we had to turn down as we no longer have the power to create trade agreements separately from the EU.
However, our special relationship with Europe would improve beyond measure, putting us back in lead position.
Britain has never, not once, been in a lead position in the EU. We have always been on the fringes tolerated for the money and resources we bring. There is absolutely no evidence that joining the Euro would change this.
Moreover, despite Gordon Brown's business regulations
Most of which are not actually Gordon Brown's but the creation of some bureaucrat, either in Brussels or Whitehall, imposed on Britain without the ability for elected British parliament to do anything about it.
and taxes (and the euro has had no effect on individual countries' tax regimes),
Except the most bureacratic, complicated, and fraud prone of all taxes, VAT. VAT is a requirement of EU membership and the EU controls the minimum level at which it can be levied.
most companies hoping to trade in Europe would prefer to build their factories and financial centres here, rather than the employer's nightmare that is the rest of Europe.
Which is why we still have the highest level of investment in the EU, and London remains one of the world's chief financial centres despite Britain not being in the Euro.
The Irish have learned this. Weren't they considered third world before the euro?
No, they weren't. The Celtic Tiger started to prowl years before the Euro began thanks to reductions in Irish tax rates. They are not doing quite so well now though.
And what of nationalism? Despite practically running the British cabinet, the Scots are angling for a break-up.
Yes and a party dedicated to the break up of the UK could well become the largest one in the Scottish Parliament. Forming a common national identity takes time, despite a common currency, full political integration and even a common language 300 years has not been long enough to form one between England and Scotland. That does not hold out much hope for the EU, with it's many many different languages and cultures.
One thing dividing us is our currency.
So a common currency is a bad thing for political unity? Hardly a ringing endorsement for the Euro.
The pound is too English in Scotland, while the Scottish pound is anathema in English kebab shops. A euro, endowed with respective national imagery for the English, Welsh and Scots, would bring us together.
So a common currency in Sterling is bad while a common currency in the Euro would be good? Because ...
How many of us notice the difference between a German eagle and a Spanish King Juan Carlos euro coin? But they do, and we will.
Ah ... so the differences between the common currency that the English and Scottish currently use are divisive, but when imbued with EU magic they will bring people together.
Switching currency would also provide a welcome nightmare for money launderers. Bank robbers and drug dealers would have to bank it to convert it. We are seeing this legitimising effect further afield, as former Soviet republics choose the euro over the rouble.
The accession 10 actually chose their own currencies, which they almost all still have and don't look likely to get rid of in the near future.
How many of our criminals would be able to hide away in Spain with a truly single currency?
Plenty, they will just bank their money in Switzerland or the Caymans as they do now.
Then there are mortgage rates. House price rises would be tempered by the transparency of sharing a currency.
Shopping for a house is rather different from shopping for jeans, for one thing you cannot pick up a house and walk away with it. Being able to more easily see that houses are cheap on the Baltic coast is not really going to change your buying options if you work in Swindon.
But eurozone mortgage rates have, on the whole, been almost half ours.
Because our economy needed different rates to that of the Eurozone. The bank of England doesn't pick these numbers out of a hat you know. Deliberately setting them too low would guarantee stoking up an even worse property bubble than we have now, like the bubbles that exist in Spain or Ireland. A property bubble is not a good thing.
By pushing rate decisions further away, they become so depoliticised that they just become the price of borrowing - not something that our bank changes every time our "local" chancellor messes up.
Or rather interest rates will not change when our "local" chancellor messes up and the needs of the economy changes, this is not a good thing.
Low interest rates make us think more seriously about saving. And we need to save.
We may need to save more but low interests make people less likely to save as they get less return on the savings. Low interests make people more likely to take on debt as debt cost less.
However, the most important consideration has to be the future of British businesses.
Currently being strangled by the red tape that spews out of the democracy bypass set up by the EU.
None benefits at present from clinging on to the pound. On the contrary, I cannot think of a business that would not benefit if exchange commissions and fluctuating currencies disappeared.
Only if they trade internationally, which is only 10% of the economy does, and only haft of that with the EU. However 100% of the economy would be subject to the effects of getting the wrong interest rate, and they would not be pretty.
The euro has surpassed the dollar to become the world's number-one choice. If you are building your product in China using oil from Iran (from next month) your partners will all trade in euros. Currency risk and exchange costs disappear.
Except that China uses the Renminbi, which happens to be pegged to the Dollar, not the Euro. So this trade would not be free of currency fluctuations. Using his logic it would be more accurate to say that were you to build your product in China using oil from almost any other oil producing country in the middle east except Iran then everything would be conducted in dollars or currencies pegged to the dollar so we should adopt the Dollar as our currency. However this is a pretty fatuous argument either way as Oil is a fungible commodity, so you will always end up getting it from where it is lowest priced.
In short, the pound makes no sense for anyone wanting to see a United Kingdom
Because a common currency is bad for creating a stable polity, so long as its Sterling and not the Euro obviously.
for anyone going on holiday anywhere (I took euros to India in January as if they were dollars);
Lucky you, I guess that you and your family also spent the equivalent a years wages for the average private sector worker if your earlier numbers are to be believed. With that much money floating around they would be willing to take it in seashells in order to get a cut of the action.
for businesses wanting to relocate to Britain
which is why they are flocking to Britain
for anyone interested in stamping out fraud and ill-gotten gains;
Ye gods! The EU stamping out fraud. This is an organisation that hasn't had its accounts signed off for over a decade, where the auditors think 9 out of 10 transactions are suspect, where everybody from the Commission to lowly MEPs have the noses firmly in the trough. It is a fraud magnet.
for any business operating in the UK
Because having interest rates that better relate to the local economy is such a hardship, What is really makes no sense for anybody wanting to operate a business in the UK are the reams of EU regulations and directives that spew forth every year.
And the longer we hold off, the weaker our entry will be.
Thanks to having an interest rate set to suit local conditions better every year our economy has out paced that of the Eurozone making us an ever more attractive prize for the EU to pick over. So of course our bargaining position is getting worse.
Gordon Brown wanted to join the euro for the wrong reasons and gave up the fight for the wrong reasons. He began by seeing it as a way of federalising Britain, and ended up being corrupted by our little-Britain Treasury and the ultimate corrupter - power itself.
Or rather he realised that by handing over the economy to the EU the enormous power that he wielded to change the country thanks to his agreement with Tony Blair giving him a free rein over the treasury would suddenly evaporate. But he would still get the blame when everything went wrong. The Euro is not just an economic question it is one of politics as Gordon knew.
David Cameron, before he, too, allows the establishment to rein in idealism, must shed the Conservatives' entrenched hostility and step up to the debate. The things a new prime minister can do, before "they" get to you, are almost the only things worth being prime minister for.
I guess that "they" must be especially powerful at the moment having taken over the minds of the majority of people in France, Spain, Italy, and Germany. Flee! Flee for you lives, "they" are coming!
The euro is now inevitable because it is the best option available. There is no more time to waste.
The Europhiles favorite argument is left to the end. Resistance is futile, you will be assimilated. Never mind the little things like the economy or democracy.


Post a Comment

<< Home