As the political situation seems currently to leave any option open, I'd like to start a vote on this. What's your opinion, is it realistic that the European Monetary Union is dissolved in the near - mid term future (say next 5 years) ? I'd say No - But what do I know ?
No, I think the chance for a EU MONETARY UNION unwind is very small. If some of the EuroZone countries think they can do better with going back to their national currencies, I'd say sure, go ahead. About the real issues, as I wrote in the past, 80% of the constitution existed already in the various treaties. So as far as economic policy is concerned, there is no change. As far as I can tell, ECB focus was more on a stable currency, rather than "stimulation" (if one can call "stimulation" the helicopter money and the resultant mania in housing in US, a non-productive asset financed with debt, which will probably become a big burden for the average US citizen in the future unless this debt is inflated away via USD currency devaluation). During the last few years, ECB has refrained from "competitive devaluation" (by printing money from thin air, like Japan and China). As such, Euro rose too fast too much and this took its toll on competitiveness. ECB has kept interest rates at 2% for a long time, which I'd think is quite stimulative. It's quite obvious, in hindsight, that EU has done a poor job in how they handled the Constitution / Referendum. Maybe it's better that way, I believe that democracy works better, when people get more involved. Comparatively, the orwelian "Ministry of Truth" in US has had much more success convincing its subjects that the night is day and black is white (using overdoses of FUD). PS: I think only EU-residents, who have FIRST HAND knowledge of the sentiment and issues as it applies to their own country, should be voting in this poll. I wouldn't dare to offer an opinion about a similar poll, if it was about e.g. US or India or Canada or Australia.
You can be sure that tensions will come up. It is clear that in spite of all incantations to the contrary, the EU is a advanced socialist bureaucratic monster. Historical inflation by the current Euro participants sends a clear message. Their backbenchers are greedy as ever. Ole-Commie Joschka Fischer's and Red Buddy Schroeder's playgarden even exceeds inflation limits these days! Euro, wither dost thou go? The answer should be obvious. Dunno about the US$. Police services to the world cost money. Possibly equally afflicted.
Europe falling apart? The recent votes in France and Netherlands should be seen as critiques. Nobody is about to leave existing treaties.
NO of course, the question itself is rather stupid with all due respect the euro is becoming a real alternative to the dollar in financial markets and has brought great benefits to the people of the EU. There are just too many useless bureaucrats in Brussels making too many decisions for the people and that's what the NO vote is about IMO, also another reason for the NO is the refusal of many Europeans particularly in France to give up their socialist nanny state system and the fear of cheap labor coming from the new members.
This WSJ article addresses some underlying realities faced by Europe. REVIEW & OUTLOOK The European Disease Economic anxiety is a product of the welfare state. Friday, June 3, 2005 12:01 a.m. EDT No one knows for sure to what extent economic anxiety influenced the decisive "Non!" by French and Dutch voters against the new European Union Constitution this week. But one thing is certain: The French and much of the rest of the European Union have much to be economically anxious about. The French unemployment rate has hovered around 10% for nearly a decade, and almost half of the jobless have been out of work for at least a year. If the U.S had an unemployment rate as high as France, there would be about six million more non-working Americans--the equivalent of placing every worker in Michigan on the jobless rolls. Our point here isn't to engage in gratuitous French-bashing. The truth is that the economic anemia afflicting France has become the standard bill of health to varying degrees in virtually all of the nations of Old Europe, particularly Germany and Italy. Once upon a time the intellectual elites in Europe and the U.S. trumpeted the economic accomplishments of European social welfare state policies. Today the conclusion is nearly inescapable that this economic model simply doesn't work to create jobs, wealth or dynamism. Two Economic Models Rates for 2003-05 (1Q) U.S. EU Unemployment 5.6% 8.7% Growth 3.7% 1.5% Source: OECD As the nearby table shows, the U.S. has substantially outperformed Old Europe in wealth and job creation. The economic growth rate of the European Union nations since 2003 has limped along at about half that of the U.S. In the 1980s and '90s the U.S. created about 40 million new jobs; Western Europe created some 10 million, well over half of which were in the public sector. If this divergence in economic performance continues for 40 years, the American worker will be roughly twice as wealthy as his European counterpart. The Europeans have created a vast constellation of domestic policy interventions that are cloaked in the seductive rhetoric of compassion, fairness and cultural sophistication. These policies include highly generous welfare benefits for the unemployed; state ownership and subsidy of key industries (such as Airbus); rules that make it difficult to hire and fire workers; prohibitions against closing down plants; heavy protections of labor unions against competitive forces; mandatory worker benefit packages that include health insurance, child care allowances, paid parental leave, four to six weeks of vacation; shortened work weeks; and, alas, high taxes on business and labor to pay for these lavish benefits. In sum, European nations penalize work and subsidize non-work, and, no surprise, they have gotten a lot of the latter and far too little of the former. By contrast, the U.S. model--allegedly cruel and "laissez-faire"--has done much better both by economic growth and worker opportunity. The frustrating irony is that, at the very moment in history when Europe's model is in disrepute, many U.S. politicians still want to emulate it. In Congress today there is some bill to provide virtually every social welfare benefit that Europe now offers. And the Congressional Budget Office predicts that if America's federal entitlement programs are not reined in, by 2030 government's share of the U.S. economy will close in on 50% of GDP, or even more than Europe's share today. The good news is that at least Washington has begun to debate how to reform these programs. Which brings us back to the future of the EU. We have consistently supported European integration, especially the liberalizing and efficient force of the euro. But most of the economic maladies that face France and Germany today are incidental to whether the EU itself gains or loses power in the months and years ahead. In many ways the European Union has always been the right answer to the wrong question. The common market was originally established with economic goals in mind: to reduce trade barriers (which has been a good thing), followed years later by a single, stable currency (another good thing). But the Brussels bureaucracy has to this day purposely ignored the Continent's central ailments: high tax rates, bloated welfare benefits and industrial policies that pick winners and losers, usually the latter. Those topics are essentially taboo in Brussels, which has pursued an economic "harmonization" strategy in part to inhibit the benign impact of tax cutting and tax competition among member countries by creating a de facto multi-state cartel. The nations that have prospered the most in recent years--Ireland in the 1990s, now the nations of Central Europe--are those that have resisted the harmonizing orders. Europe is now paying a high price for this failed experiment with welfare state socialism. Today's populist revolt against economic integration in France and Germany suggests that these nations remain mysteriously impervious to the need for change. A bigger mystery is why some American politicians are so intent on repeating Europe's mistakes.
Please consider my point, that a great deal of what you read in mainstream media is actually fabricated in the Ministry of Truth. To convince Americans that they've actually won the birth lottery ticket. These fabricated figures include CPI, unemployment etc. I've posted several times about CPI. There are some pretty convincing studies which suggest that the real unemployment in US is closer to 8-9%. Which is closer to EU figures (still US is a bit better than the 10-12% of many of EU's countries). Btw EU countries also do some tricks to understate true unemployment, e.g. they have large "vocational training" programmes, where the long-time unemployed is supposedly trained for 6-12mo and during that period he also receives a "salary" (lower than base wage). Those people are not in the unemployed stats, but in reality they're not GAINFULLY EMPLOYED by the market. And remember, that many of the jobs created in US during the last few years after the bust of hi-tech bubble, have been created because of the housing bubble, which isn't a sustainable phenomenon. A very important aspect of why US has been so successful in previous decades, was because the system was based on 'meritocracy' (at least more than most other countries) and allowed social-mobility (i.e. a smart, hard-working person could come in America and 'make it' financially, the 'American Dream'). So America attracted some of the best minds from Europe, Asia etc to study in US universities, do research etc. It seems that this trend has changed during the last several years. (Fewer students in American universities http://www.elitetrader.com/vb/showthread.php?s=&postid=622772&highlight=foreign+students#post622772 ) IMO, in case of the EU-citizens bashing the Euro, people are mistaking the changes on global competition because of the addition of >1bn people (China, India) in the global marketplace, as being the effects of the currency itself (as those changes happened over the same timeframe Euro was introduced).
Difference is prosperity between Europe and America will get larger and larger at an increasing rate over the next 30 years as new advances in energy, medicine and technology will make American productivtiy soar at even higher rates then we have seen in the past while Europes productivity lags more and more behind us. Europe will not change and will keep its old way of doing business in order to protect its way of life. America will embrace these new technologies as the workforce is afforded more and more opportunity to increase their standard of living. The wild card is after all of these European baby boomers die off what kind of leadership will replace them? In a few years all those who remember Hitler will be dead. There will be no one left to tell the tales of old. Will the discontent give rise to a new tyrant?? John