Project for Philosophical Evaluations of the Economy |
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Eight reasons in favor of the EURO
Taking on the anti-Euro-speculation, drafted and published on May 5, 2010
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As you know Noah denkt™ does not like to mince words. So, one day after a worldwide sell-off in stocks, it’s our
pleasure to announce that we firmly believe in the EURO’s capacity to survive the current onslaught. Here is why:
Taking on the anti-Euro-speculation, drafted and published on May 5, 2010
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As you know Noah denkt™ does not like to mince words. So, one day after a worldwide sell-off in stocks, it’s our
pleasure to announce that we firmly believe in the EURO’s capacity to survive the current onslaught. Here is why:
- The creation of the EURO in 1999 and 2001 wasn’t an irresponsible move by haughty politicians but
satisfied rather a reasonable need that existed in the European community. At the time it was not only
necessary to eliminate the burgeoning exchange rate risk that European Union member states were
suffering from, but it was also important to create a new stimulus for further European integration. After all,
it is the nature of the European project that it continually needs to move on and cannot sustain itself just by
resting on its earlier laurels. In fact, a prolonged standstill in this project would sooner or later lead to a loss
of impetus and thereby prepare the ground for future disintegration. This would be extremely costly not just
for Europe, which is why we would be prepared to argue that, in the unlikely event of the worst truly coming
to pass, a worldwide government intervention in support of the EURO would be justified and warranted.
- There is probably no better sign to measure the relevance of the EURO against than the state of the
German-French relationship. Never before in history has there been a deeper friendship between the
French and German society than is the case now. That in itself is indicative of the success that the
European integration project, and hence the EURO, has had.
- We should also not forget that it was particularly the banking and business community which at the time of
the creation of the EURO supported the introduction of the new currency. One would have to presume that
there was serious foresight going into their stance at the time and that it weren’t short-term goals that
animated their analysis then.
- Noah denkt™ is ready to admit that, at the time of the creation of the EURO, we were only lukewarm in our
support for the new currency. We did, in deed, recognize then that it might be a somewhat risky move to
introduce this new currency without having implemented a unified, EURO-wide financial government. The
fact though, that our opposition to the new currency wasn’t in any way categorical or heated, leads us to
presume that the present attack on the EURO won’t be long-lived either.
- But it isn’t the past only which speaks towards the sustainability of the EURO. It is also the present that
inspires us to believe in its long-term viability. After all, it is to a large extent the very same people who
failed to adequately identify the sub-prime bubble right (Standard and Poor, the majority of hedge funds,
Goldman Sachs and others) that are now betting against the EURO. That in itself should encourage us to
be hopeful about the EURO’s future. In fact, it is somewhat ironic that too many people will eventually have
to realize that they came down on the losing side again just for trying to avoid making the same mistakes
that wreaked havoc on them earlier on (during the financial bubble).
- We should also bear in mind that it would be strikingly unfair if the final outcome of the present recession
would eventually be that the most painful part of it was caused by well-meaning politicians and not by
greedy Wall Street bankers. After all, it wasn’t the politicians who tried to con others into buying positions
that ultimately turned out to be untenable. Instead they were private sector finance institutions that couldn’t
care less about the common good and thereby created a substantial part of the current government debt.
- There is more than circumstantial evidence though that is working in favor of the EURO now. There is also
the fact that the economic prospects of Spain (whose default would in deed be the final straw to break the
EURO’s back), are not nearly as dire as markets like to view them now. In that, we would like to remind our
readers that the Spanish economy is heavily active in the solidly growing economies of Latin America
(Mexico, Brazil). In fact, the Spanish influence in a country like Mexico (slated to grow by 4% this year) is so
overwhelming that a leading magazine there (“Proceso”) described this as the second “conquista” of Mexico
by Spain. And a look at the situation on the ground supports that claim. After all, it isn’t just Telefonica that
is a leading player in Latin America’s communication market. It is also Mapfre that is actively involved in the
local insurance market, BBVA and Banco Santander that dominate the regional banking industry, CAF that
is the main provider of metro and suburban trains in the region, and Iberdrola and Repsol that are
partnering with local energy players. All this, and the Wall Street Journal Americas gets it right here (see its
article: “América Latina es la tabla de salvación de España” (May 3, 2010)), will eventually help Spain to avoid the
worst.
- Finally, we should also not forget that a large part even of the left-leaning society in Spain is pushing its
government towards a more active and determined austerity stance. In other words, the chances for a
successful budget restructuring are way better that the lost souls of S&P seem to believe it.
| © Landei Selbstverlag, owned by Wilhelm ("Wil") Leonards, Gerolstein, Germany. All rights reserved. Reminder: Noah denkt™ is a project of Wilhelm ("Wil") Leonards and his Landei Selbstverlag (WL & his LSV). Consequently, all rights to the texts that have been published under the Noah denkt™brand name are reserved by WL & his LSV. The commentary and the reasoning that was provided on this page is for informational and/or educational purposes only and it is not intended to provide tax, legal or investment advice. It should therefore not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security or any issuer by WL & his LSV or its Noah denkt™ Project. In fact, WL & his LSV encourage the user to understand that he alone is responsible for determining whether any investment, security or strategy is appropriate or suitable for him. And to leave no doubt as to what this means we urge our user to also note our extended Legal Notice. |
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| Keywords: the future of the EURO, defending the EURO, feasibility of the EURO, success of the EURO, the introduction of the EURO currency, the sustainability of the EURO, the EURO experiment, in favor of the EURO currency, rescueing the EURO currency, |