The EU is facing a structural problem - dedication to a common currency - that will prove their undoing.
Their hope was to keep the U.S. at a financial disadvantage. That's over.
The EU is about to face economic reality.
Italy's Elections are a sign of things to come.
Their hope was to keep the U.S. at a financial disadvantage. That's over.
The EU is about to face economic reality.
Italy's Elections are a sign of things to come.
A common currency creates a situation of perpetual interest rate imbalance.
Interest rates will be too low in countries where wages are rising and too high in countries where unemployment is rising.
Interest rates will be too low in countries where wages are rising and too high in countries where unemployment is rising.
Stronger, more fiscally disciplined EU economies are not only subsidizing weaker EU countries that choose to engage in more reckless monetary policy and actions – they essentially encourage them to do so.
The newly formed Italian Government is already speaking out against these intractable problems. themarketswork.com/2018/06/03/the…
The European Union is a political structure – a politically desired outcome. It is not something driven by free markets – although these same markets are driving global integration.
Like all politically driven outcomes, the European Union is doomed to ultimate failure if it’s not concurrently supported by market forces.
At some point the political is overwhelmed by the hard realities of the economic.
At some point the political is overwhelmed by the hard realities of the economic.
The analogy of our states versus the countries comprising the EU is a common but mistaken rebuttal for several reasons.
Friedman “It is worthwhile for a group of independent countries to adopt a single currency when (a) the economic shocks that hit the individual countries are similar and (b) labour is highly mobile among the countries.” The United States generally meets this test. EU less so.
America has its banking institutions regulated at the federal level. Each member country in the EU regulates their own financial institutions. Bank failures in California are a federal government problem as opposed to a California problem – not so in the EU.
Lastly - and importantly - our federal government makes up a huge bulk of our overall governmental spending. Not so in Europe, where the EU’s budget is dwarfed by the governmental budgets of its member nations.
These differences are real and important.
These differences are real and important.
