Feb 10, 2023·edited Feb 10, 2023Liked by Philoinvestor
Great take, very comprehensive! Thank you!
I still believe all will be fine and better to have EUR, EU/EZ ... the cost of not having is greater than the alternative, not that it is perfect or so :).
I agree with Mav ... since Euro funding, loads of bears and gloom & doomers ... yet EU/EZ evolved very well ... did all evolve 'equal'? no, that is utopia ... but as a whole, the pie is bigger & stronger ... is it perfect? No ... is capitalim perfect? No, but the best imperfect system we have ... taking imperfections/flaws to a state of impeding doom and gloom is not the proper way ... same in relationships be it work, personal etc ... but very easy to do and pick upon
Do you have any comments about the contents of my essay or are you just writing whatever comes to mind? My essay wasn't arguing for communism vs capitalism. Do you disagree with the points I made about the problems that Europe is facing?
But actually, you prove some of my points entirely without realising it. You say that it did not all evolve equally. Well maybe those unequal ones will eject themselves from the Eurozone?
The things I mentioned above are not "imperfections", they are massive structural problems in the EU. If you can't see it then that's ok.
yes, EU did not all evolve equally ... just like west and east Germany did not though was the same cake after ww2 and not an eu/ez thing ... the question is, how would have the countries evolved without eu/ez? Way more 'unequal' and inefficient ... my point is, issues in Europe are mainly blamed and caused by the Eu/EZ when there are 100 other variables ... I believe it helped, not damage ... how and by how much? nobody can quantify ... nor the benefits nor the damage ... but net, a good assumption is that it did help
Then if you believe that you need to say where and at which point you believe that NET, it's not a positive. Things are bad for the EU, everyone agrees even EU leaders - when will it be a net negative?
If you cant tell me specifically where it's a net negative, you will just move the goal posts when/if things just get worse.
I come from a country that came into Eu as one of the last ... only saw benefits for me and citizens friends local and 'foreigners' ... problems around ? yes, just like in a family ... solvable or it's working as is? yes ... Bigger without? yes
just saying that since EU all I heard via 'research' is the end of it and the structural problems, without saying the mega benefits ... (capitalism/communism was just an analogy in the imperfection, nothing on your take) ... 50% divorce rate = big structural problem in the 'marriage' community ... hence always gloom and bloom on EU/EZ system is kind of unwarranted ... let's start with the good things, then point flaws and then offer recommendations
Well what are the benefits for the EU? Do we need an EU to trade between us? Do we need a common currency, EU expansionism, conflicts of interest, the strong vs the weak, one central bank and one monetary policy and directives that arent applied by member states to trade between us?
conflicts of interest = worse without eu/ez ... all neighbours 'the enemy'
strong vs weak = worse dispersion without
one central bank with one currency, that is very tricky ... countries with various output gaps ... but yeah, would have each FX with their own really solve the main issue ? productivity and investment (where eu/ez capital flows/FDI helped for sure)?which one stronger? idk
start with the basics: freedom to travel for holidays or visit relatives without visas and waiting like an idiot at the borders ... able to find a job and no permit needed ... otherwise, without job mobility would have been worse ... not exchanging 20+ currencies and losing via spread and shady FX street houses as crossing the continent
Very well written essay. The Euro-Zone is a debacle of epic proportions. A common currency is to strong for economically weak countries and to weak for economically strong countries. Nothing will ever change that. The ECB is just trying to keep the Euro-Zone alive by printing an endless amount of money and that will ultimately end in a massive inflation (as we are seeing right now). The failure of the Euro is not a question of "if", but a question of "when".
I enjoyed the essay as a concise breezing through the last 15 years or so. A couple of points, if I may:
1) Geopolitical ambivalence is a permanent feature (could be a bug, but not necessarily). When ex-Yugoslavian countries went at each other's throats in the 90s, some thought that EU's hammer-time had come. What followed was an embarrassing dividing and bickering, till NATO entered the scene. Yet the EU continued, expanded and actually deepened.
2) You mention, but somewhat downplay, the institutional - not exactly "imagination" - let's say "inclination" of the EU bodies to "charge to the void" when the shit hits the fan. ESM was an ex-nihilo quasi-fiscal authority, formed at the outset of the Greek saga (first as EFSF). Then, as you correctly note, the ECB, a traditional, treaty-assured inflation fighter went "whatever it takes", and did so only with the steady backing of the European Court of Justice (even at the face of the German Constitutional Guardian in 2019-2020). Covid-19 brought forth new fiscal-like tools (NGEU).
So tensions yes, even rifts, but also ever-expanding institutional "glue". Now if the citizens' European convictions indeed strengthen, or not, that is the question - I think.
Regarding monetary disintegration history, I still find this UBS piece top-notch: A brief history of break-ups (Deo et al, 11 Oct 2011).
I certainly agree with all your points, but I add another dimension to them. You made 2 points that argue towards the dynamic that EU was strengthened after crises. Does that mean that will continue to be the case? Will the process continue to trend upward? Will the next "tests" also be passed? This is what I am arguing in my essay.
I do not at all downplay neither the EFSF/ESM or Draghi's policies but rather touch upon the "sweeping under the rug" dynamics that they create. Every action has a reaction, and the more complex the system the more "unintended consequences" are created correct?
Institutional glue for now yes, but the glue is unsticking. It's obvious from their short-termistic actions, and all the things I argue in my essay above.
Regarding the EU convictions of citizens - certainly a very important variable and simply from the polls we see an increasing trend of protest from them.
There are two sides to the coin about new fiscal tools like NGEU, or asset-purchase programs from the ECB. They could reinforce the upwards trend or they could be a false breakout that fades and moving south... In the end, it is confidence in the European idea that will decide the result (up or down).
Points landed and well taken (I focused more on parts of the essay, it seems).
Indeed, this crisis-to-crises stepping can become unstable and prone to accidents, but I feel I would still put the bar high (?). Strong agree that it all boils down to the "confidence in the European idea".
Great take, very comprehensive! Thank you!
I still believe all will be fine and better to have EUR, EU/EZ ... the cost of not having is greater than the alternative, not that it is perfect or so :).
Have a great weekend!
Mav
Thank you for the comments Mav!
I agree with Mav ... since Euro funding, loads of bears and gloom & doomers ... yet EU/EZ evolved very well ... did all evolve 'equal'? no, that is utopia ... but as a whole, the pie is bigger & stronger ... is it perfect? No ... is capitalim perfect? No, but the best imperfect system we have ... taking imperfections/flaws to a state of impeding doom and gloom is not the proper way ... same in relationships be it work, personal etc ... but very easy to do and pick upon
Do you have any comments about the contents of my essay or are you just writing whatever comes to mind? My essay wasn't arguing for communism vs capitalism. Do you disagree with the points I made about the problems that Europe is facing?
But actually, you prove some of my points entirely without realising it. You say that it did not all evolve equally. Well maybe those unequal ones will eject themselves from the Eurozone?
The things I mentioned above are not "imperfections", they are massive structural problems in the EU. If you can't see it then that's ok.
yes, EU did not all evolve equally ... just like west and east Germany did not though was the same cake after ww2 and not an eu/ez thing ... the question is, how would have the countries evolved without eu/ez? Way more 'unequal' and inefficient ... my point is, issues in Europe are mainly blamed and caused by the Eu/EZ when there are 100 other variables ... I believe it helped, not damage ... how and by how much? nobody can quantify ... nor the benefits nor the damage ... but net, a good assumption is that it did help
Then if you believe that you need to say where and at which point you believe that NET, it's not a positive. Things are bad for the EU, everyone agrees even EU leaders - when will it be a net negative?
If you cant tell me specifically where it's a net negative, you will just move the goal posts when/if things just get worse.
I come from a country that came into Eu as one of the last ... only saw benefits for me and citizens friends local and 'foreigners' ... problems around ? yes, just like in a family ... solvable or it's working as is? yes ... Bigger without? yes
just saying that since EU all I heard via 'research' is the end of it and the structural problems, without saying the mega benefits ... (capitalism/communism was just an analogy in the imperfection, nothing on your take) ... 50% divorce rate = big structural problem in the 'marriage' community ... hence always gloom and bloom on EU/EZ system is kind of unwarranted ... let's start with the good things, then point flaws and then offer recommendations
Well what are the benefits for the EU? Do we need an EU to trade between us? Do we need a common currency, EU expansionism, conflicts of interest, the strong vs the weak, one central bank and one monetary policy and directives that arent applied by member states to trade between us?
conflicts of interest = worse without eu/ez ... all neighbours 'the enemy'
strong vs weak = worse dispersion without
one central bank with one currency, that is very tricky ... countries with various output gaps ... but yeah, would have each FX with their own really solve the main issue ? productivity and investment (where eu/ez capital flows/FDI helped for sure)?which one stronger? idk
start with the basics: freedom to travel for holidays or visit relatives without visas and waiting like an idiot at the borders ... able to find a job and no permit needed ... otherwise, without job mobility would have been worse ... not exchanging 20+ currencies and losing via spread and shady FX street houses as crossing the continent
Very well written essay. The Euro-Zone is a debacle of epic proportions. A common currency is to strong for economically weak countries and to weak for economically strong countries. Nothing will ever change that. The ECB is just trying to keep the Euro-Zone alive by printing an endless amount of money and that will ultimately end in a massive inflation (as we are seeing right now). The failure of the Euro is not a question of "if", but a question of "when".
Thanks for the feedback and the comments Roman.
Seems to me that demographic collapse will eventually lead to this issue coming to a head.
May be measured in decades, but I doubt the EU as it stands today outlives me.
Hey Philo,
I enjoyed the essay as a concise breezing through the last 15 years or so. A couple of points, if I may:
1) Geopolitical ambivalence is a permanent feature (could be a bug, but not necessarily). When ex-Yugoslavian countries went at each other's throats in the 90s, some thought that EU's hammer-time had come. What followed was an embarrassing dividing and bickering, till NATO entered the scene. Yet the EU continued, expanded and actually deepened.
2) You mention, but somewhat downplay, the institutional - not exactly "imagination" - let's say "inclination" of the EU bodies to "charge to the void" when the shit hits the fan. ESM was an ex-nihilo quasi-fiscal authority, formed at the outset of the Greek saga (first as EFSF). Then, as you correctly note, the ECB, a traditional, treaty-assured inflation fighter went "whatever it takes", and did so only with the steady backing of the European Court of Justice (even at the face of the German Constitutional Guardian in 2019-2020). Covid-19 brought forth new fiscal-like tools (NGEU).
So tensions yes, even rifts, but also ever-expanding institutional "glue". Now if the citizens' European convictions indeed strengthen, or not, that is the question - I think.
Regarding monetary disintegration history, I still find this UBS piece top-notch: A brief history of break-ups (Deo et al, 11 Oct 2011).
Thanks for your feedback Michalis!
I certainly agree with all your points, but I add another dimension to them. You made 2 points that argue towards the dynamic that EU was strengthened after crises. Does that mean that will continue to be the case? Will the process continue to trend upward? Will the next "tests" also be passed? This is what I am arguing in my essay.
I do not at all downplay neither the EFSF/ESM or Draghi's policies but rather touch upon the "sweeping under the rug" dynamics that they create. Every action has a reaction, and the more complex the system the more "unintended consequences" are created correct?
Institutional glue for now yes, but the glue is unsticking. It's obvious from their short-termistic actions, and all the things I argue in my essay above.
Regarding the EU convictions of citizens - certainly a very important variable and simply from the polls we see an increasing trend of protest from them.
There are two sides to the coin about new fiscal tools like NGEU, or asset-purchase programs from the ECB. They could reinforce the upwards trend or they could be a false breakout that fades and moving south... In the end, it is confidence in the European idea that will decide the result (up or down).
A pleasure Philo,
Points landed and well taken (I focused more on parts of the essay, it seems).
Indeed, this crisis-to-crises stepping can become unstable and prone to accidents, but I feel I would still put the bar high (?). Strong agree that it all boils down to the "confidence in the European idea".
Yes, we never know what will actually happen in the "end".
With all these dynamics and complexities flowing around, the system is tough to predict! Thanks for your comments, lets keep in touch.