Italy. EURO crisis gets deeper over Italian worries

[capt_buzzard]

The sense of crisis in European institutions deepened today when an Italian government minister said the country should consider reintroducing its own curency.Welfare Minister Roberto Maroni said it was 'economic suicide' for italy to remain in the EURO.

The Germans want back the Mark.
Austria their schilling.

And we Irish want back our Punts.




Vote No to EU.

[Tombstone]

I was wondering if the EU thing was going to work. (Per my last posts on this subject.) I was educated by some strong replies here on FG - and they were good replies.

*But, I'm a student and admirer of human nature and my hunch about the EU and its success is following my cynical path.

[capt_buzzard]

Tony Blair, British Prime Minister is not giving the people a chance to vote in a referendum on the constitution.

Ireland will vote later this year in november. Buzzard will follow France and Italy and vote No.

[Tombstone]

Originally Posted by capt_buzzard

Tony Blair, British Prime Minister is not giving the people a chance to vote in a referendum on the constitution.

Ireland will vote later this year in november. Buzzard will follow France and Italy and vote No.

Roger on that.

[capt_buzzard]

I don't agree with the EURO, or EU and all it stands for. The Irish Republic should remain with Britain and the United Stated.

[Philadelphia Eagle]

I do a little international currency dealing from time to time and, at present, there is heavy speculation against the EURO as investors increasingly question whether or not Euroland and the ERM can continue to operate efficiently.
The problem for many members of Euroland, and this applies particularly to Ireland and the other smaller economies, is that as a member of the ERM Ireland has no control over its own interest rates - these are imposed upon the Irish Central Bank by Brussels. With the Irish (and other) economies growing rapidly over the past few years as a result of EU capital injections, inflation is a real fear and the Irish government is powerless to act in the traditional way to choke off rising inflation by raising interest rates.
It's a growing dilemma which more and more EU countries are facing - the latest one being Italy.

[capt_buzzard]

Originally Posted by Philadelphia Eagle

I do a little international currency dealing from time to time and, at present, there is heavy speculation against the EURO as investors increasingly question whether or not Euroland and the ERM can continue to operate efficiently.
The problem for many members of Euroland, and this applies particularly to Ireland and the other smaller economies, is that as a member of the ERM Ireland has no control over its own interest rates - these are imposed upon the Irish Central Bank by Brussels. With the Irish (and other) economies growing rapidly over the past few years as a result of EU capital injections, inflation is a real fear and the Irish government is powerless to act in the traditional way to choke off rising inflation by raising interest rates.
It's a growing dilemma which more and more EU countries are facing - the latest one being Italy.

Just for you Eagle www.sbpost.ie/

[Philadelphia Eagle]

Thanks for the link, Buzz. It does seem that the social framework of the EU is becoming a bit tattered around the edges.
As I said, my involvement and interest have been purely financial ones but, of course, if the financial supports don't hold together it's a short step to social disintegration.
Using the 'crystal ball' system, the first major financial problem is likely to come when one of the smaller economies - Portugal or Ireland perhaps finds that it has to act in its own national interest to defuse a rising inflation problem by raising interest rates on its own and thereby breaking ERM rules.
Once that happens in one country others are likely to quickly follow suit and the ERM will be effectively dead and buried. There are likely to be increasing calls by individual nations for a return to their own currencies which their governments will find politically difficult if not impossible to ignore.
Meanwhile, the UK can say with some justification, 'I told you so'
The UK, in my opinion, never had any intention of joining Euroland and, again in my opinion, they were quite correct.
There is absolutely no way that a 'hands on' economist like Gordon Brown would ever agree to relinquish state controls of the British economy to beaurocrats in the EU. It will not happen as long as he's around.
The problem, of course, is one of size - the smaller they are the more vunerable they are which was the 'raison-d'etre' for forging them together in the first place.
It is perhaps worth noting that the 3 largest economies in Europe (Germany, France and UK in that order) combined equate to only 15% of the size of the US economy and therein lies the problem. The EU has got to come up with a workable plan to combine the strengths of the individual economies without diluting individual national soverignties.
That's my take on it anyway, viewing it from afar and from only one position - that of an investor.
Perhaps you guys there in Europe see things differently.

[Tombstone]

Philly Eagle,

Well said! The only thing I can add is that I believe that the dangers of inflation and de-valuation of any European currency will not be caused by these events - with or without the EU. They/We will get pinched by the rising competition for commodities - oil, concrete, steel, etc. Europe and the U.S. are competing for these valuable resources. Competing against China, India, South America, and SouthEast Asia.

There is only so much to go around per calendar year.

[Philadelphia Eagle]

Yes we are - TOMBSTONE and, as you say, there's a finite amount to go around.
A strong, sensible EU is, I believe, not only in Europe's interest but in ours as well.
But these Brussells unelected beaurocrats are likely to cause the whole ediface to self-destruct unless and until they start living in the real world.
They have apparently become out-of-touch with the average person there to a mind-boggling extent.
One example - the ill-fated proposed EU constitution document had no fewer than 448 (yes 448) clauses! The Constitution of the United States of America has 5.