The euro is a disaster even for the countries that do everything right

Also i don't think that managing's Icelands economy is easier, i would say it's harder.

Iceland has 300,000 people, it's economy is pretty much based on fishing aluminum and seasonal tourism.

It's a country in which when a bank goes bust the central bank goes out with it, when a large company goes bankrupt it can result in the unemployment rate jumping into the double digits..

Having 18 million people is a very big advantage over having 300,000, you have the wealth of those 18 million as a collateral not to mention a much healthier risk diversity.

I also find it pretty insincere to brush off economic problems with the half-sentence "but those should have been manageable". Aren't there lot of nations with economic problems that aren't managable (in the sense of averting a shrinking economy in the course of a few years), even though they have their own curreny?

Finally, on the small scale, traveling is so much easier if you don't have to worry about currrency. No need to get cash in the foreign currency in advance. No need to worry about exchange rates. No need to worry about your bank adding crazy exchange fees. You can compare price to what you're used to without having to do any mental (or awkward mobile phone) arithmetics. Border regions and travelers profit imensly from the Euro.

This is pretty obvious, but econmics pieces on the Euro routinely forget to mention it.

    > If they were devaluing their own currency, surely their
    > trade partners would be concerned with dealing with
    > them, unsure what their money would be worth a month
    > from now

See: http://study.com/academy/lesson/how-currency-changes-affect-...

It forces the politics to be smart because taking a very stupid decision will cause your currency to be attacked on the markets. It was a sane regulator which lacks in today's Euro countries.

If I'm not mistaken, that's what futures in exchange markets are for.

Exports are equal to imports over the long term (tourism is basically a form of export).

Also, the article is not about Greece. It's about Finland and the Netherlands, and how they have been doing comparing to Iceland.

Germany's GDP is where it was in 2008; France is where it was in 2007, with France having ~10.5% unemployment.

Finland has been in an eight year recession/stagnation combination, with zero growth. Their unemployment rate has gone from 7.5% three years ago, to 9.5% today. Their household income to debt ratio has doubled since 2000, to 120%.

Italy has seen three recessions in seven years, with an unemployment rate of 12%.

Greece has collapsed.

Spain has 23% unemployment, Portugal is 14% (and those aren't the U6 equivalent numbers, just the headline).

The Netherlands economy hasn't gotten any bigger since 2007, and they now have one of the highest household debt levels on earth, which will continue to crimp their economic growth prospects severely.

Ireland's household debt ratio is one of the five worst in the world. Their unemployment rate is nearly 10%, which is a six year low.

Austria, Estonia, Slovakia, Slovenia, Lithuania, Latvia have seen zero growth since 2007/2008.

Simultaneously most of the Eurozone countries have seen a significant expansion of household debt over 10 to 15 years, as they try to prop up their standard of living with debt.

The only bump the region has seen economically since 2007, has been via currency devaluation and debt monetization, which has chopped down the Eurozone standard of living by perhaps 20% in exchange for a brief burst of low growth.

I'm not sure by what basis one would judge that it's working well at all.

[1] https://en.wikipedia.org/wiki/Vladivostok

The big federally funded programs (military, social security, healthcare, infrastructure) take some pressure off the state's budget.

And because US citizens have less state identity than they identify with US the wealth transfers are easier to bear.

The us citizens that will say "I am American from Colorado(or any of the other 49)" are more common than EU people that will say "I am European from Germany (or any of the other 20+ Eu countries)"

Monetary union has of course always implied ever closer union and the gradual dissolution of nation states - full political and fiscal Union. So the squabbling over who will fund Greece is rather silly in this context, if you want a single currency and market you must accept all the consequences which follow. That will take quite some time though, and as with the formation of the U.S. this is often a messy process.

1. In the US, states aren't responsible for bailing out banks the Federal Reserve is. You don't see things like Ireland having to bail out a bunch of insolvent international banks.

2. In the US you see about 100-200 billion a year in transfer payments. I've come to believe that these are essentially compensation paid to states with weaker economies to compensate them for having to do business in dollars.

3. Social Security and unemployment insurance are Federal not, not state programs. And exception is state pensions, where there are indeed problems.

4. Most states are limited in the ways they can borrow money and don't run deficits that are large percentages of GDP.

5. Politically there is a difference. With Greece when I talk to Europeans there is this a reflexive desire to impose collective punishment on the Greeks. You just don't see that in the US. I think that frees US policy makers to take practical measures that aren't available to the Europeans. Consider Puerto Rica, about 40% of the population of Greece, half the total debt. Just said, they're broke. As an American... oh well sucks to be a creditor. But the Federal Reserve isn't going to cut off banking in Puerto Rico and force them to do a fire sale of civil assets like the EBC.

One main problem also is that anything coming from the EU has a bad reputation, the EU is perceived to be very bureaucratic and top-down (they are perceived to be too far from the average guy and not listening). It's not only in the UK, no-one wants to do a actually do a survey because they fear the results.

It took you 100 years, 10 depressions and 1 civil war to figure out how that needed to work..

To make it more concrete, when Louisiana has financial problems, the first remedy for Louisianans(???) is to move to another state. The next remedy is for the federal government to step in and inject funds into the economy, which is pretty much what they do, taking those funds from wealthy states such as New York and California. This works, because if the federal government hangs Louisiana out to dry, they will potentially lose seats, and potentially the presidency, come next election, so even though it annoys the rich states a little, the best political strategy is to provide as much financial support to Louisiana as possible without pissing off the rich states too much.

In Europe this is not the case. Indeed, this is precisely the problem that has been debated over recent weeks. The rich states (err, state, because Germany is about it at the moment, although I suppose you could count in the UK as well) refuses to pump more money into Greece's economy. They consider the situation to be Greece's problem, and they aren't going to do anything to help. Politically, there is no impact on German leaders to take this stance - or even worse, there is a political advantage to take this stance, as only Germans vote for German political leaders. Socially, with two very different cultures, and two different languages, there is not much by way of social cohesion. There are not huge numbers of mixed German / Greek families capable of looking across the border and seeing "us", not "them".

Imagine a European political structure that was truly integrated: There is a European president that commands the European military, and controls the European budget which comes directly from taxes that the European government levies on it's people, instead of the budget being made up from funds allocated to the European government by it's member state governments (which is the case today). In such a case, the European president would be much more willing to listen to Greece's case than the German Chancellor is today, and we wouldn't have this crisis.

That in a nutshell is the difference between the US and Europe. It has long been the UK's biggest criticism of the Euro, and is on record as being the reason they decided to not join the Eurozone (no financial union without political union).

I'm not sure you would convince Ireland, Portugal, Spain, Italy, Greece that more Europe is good for them considering how bad it has been so far. ( we have hurt you, sorry, just let me be in charge and everything will be good now )

For the rest of the countries, Germany has taken the image of dictator of Europe, meaning that more Europe means more Germany telling you how to live your life for Germany's pleasure. Of course that's BS, but Germany is the go-to scapegoat and as they don't campaign anywhere else than Germany, so no matter how true that is, that is going to stick in people memories for decades.

To make things worse, the linguistic and cultural composition of Europe is much more diversified. This means a much higher friction for internal migrations, which would help balance economic mismatches. Moving say from Italy to Poland or from Greece to Germany to work requires a huge investment in language acquisition.

Another effect of language barriers is the difficulty of a paneuropean political discourse. In this respect, I am quite grateful to Varoufakis for communicating extensively in English and allowing me to access his and Syriza's message (whether I agree with it or not) out of the simplifications and potential distortions of my country's media.

If there was one official European language, as primary, it would be easier to unite the people. Language is the greatest divider. Just look at Belgium, or Spain/Catalonia, France/Corsica, it is still dividing people.

I don't even think Google Translate would help, because it could well be mainly the result of different languages causing different systems of thought.

So yes, Germany is doing well, at the expense of the rest of the Eurozone.

And what I mean by that is that a very small powerful minority entrenched at the top of a countries hierarchy or banking system do things for their own benefit that positively or negatively affect millions of others.

And then the media reports on these actions as if it was a _country_ doing something. And the main reason I hate it is because if you don't understand what happened in the past then you are not able to prevent bad things from happening again or happening elsewhere.

What I also dislike about articles like this is conflating tax increases and government spending cuts under one umbrella of 'austerity'. If for example Finland increased taxes more while Iceland cut more spending, is the recovery due to devaluation of the krona (btw Iceland imports more than exports) or better domestic demand as people had more money to spend? They also claim Iceland did 12x the 'austerity' Finland did, so maybe it helped after all? That's what should be investigated.

That is not to say euro is not to be blamed, but not for the reasons in this article.

What you're suggesting here is a bit different:

  > So we have no idea what would have happened if
  > every country in Europe still had its own currency
  > and tried to outdevalue each other

As soon as the state gives citizens access to international financial products, and allows them to move money internationally, it can no effectively control national FX rates. If it were to try it, enterprising citizens would model the real value, and use commodities or similar to arbitrage the peg.

Since the 1970s, there has been a migration of countries moving off fixed exchange gearings to flating economies, driven by this dynamic. Some went willingly (Australia), others tried to ignore the inevitable and found themselves forced to it (UK).

China has seen the writing on the wall on this and appears to be on an arc towards floating the renmimbi. The nationalist lingo about this will the their hope that it will become a reserve currency (what actual value it has to be used as a reserve currency in a well-oiled system is unclear - probably none). The real story is that they have to do it if they want to continue transitioning to a full import/export economy. They're already leaking heavily (look at the amount of US debt they buy to prop up the peg), and that problem can only get worse as their middle class and financial sectors become more confident.

The Euro was a masterful play by German policy makers for maintaining social stability beyond reunification. It works differently to the Chinese mechanism but has a similar outcome: it removes purchasing power from rich Germans, and forces the price down of the goods being produced by poor Germans. Why does Germany still have a strong industrial sector? They chose this over having a strong financial sector. Instead of rich Germans being angry at vast unemployment and benefits in the weaker parts of their own country and thinking about splitting, they have high employment across the nation and get to look down on neighbours instead. But it's not so good for the neighbours. There have been some positive outcomes - the goal of joining the euro has probably had a strong positive effect on good-governance in many countries who had to work hard to join.