The Euro

Politicians treat us all as if we're dumb. They'd love us to believe that the Euro is an economic project. It isn't - it's a political project, one of the necessary steps to the creation of a European super state. However the politicians know that if they were to admit this it would never be approved so instead they're dressing it up in fancy clothes and hoping we won't notice until it's too late.

The fancy clothes are all they want us to focus on - the fancy clothes are the benefits of not having to change currencies when we travel within the EC. In economic terms these are insignificant but we're going to hear a lot about them because it's something that everyone can easily understand. They're hoping that because we'll accept the logic of those benefits we'll assume that they're also telling the truth when they say there will be other benefits. And they're hoping we'll think they're telling the truth when they say that we can't afford to be left out. Well they're wrong - we can. We're better off outside (if you want to read more about the economic benefits of staying out then follow this link.)

It was as obvious as night and day that in a market where there is limited employment mobility that the "one size fits all" interest rate policy would have problems (eg is a Greek going to go to Ireland or a Spaniard to Norway to get a job ?). Countries like Ireland are booming, countries like Germany are technically in recession. One needs to raise interest rates, the other reduce them. And yet neither can set their interest rate to suit their own requirements. If the politicians who dreamt up this madness were selling cars would you buy one ? (these same politicians and their unelected, unaccountable European Commission lackeys have just demoted a senior accountant when she complained that there were no adequate controls and accountability on billions of EC expenditure - heaven forbid anyone should interfere with their gravy train).

Only today I learnt that they're going to start allowing countries to increase their budget deficit above the limit. A limit that's there, I remind you, to ensure that the Eurozone countries' economies, remain "convergent". Already the cracks are showing and it's becoming obvious that the "one size fits all" suit doesn't fit some. It'll get worse. Lack of control over interest rates and consequent tinkering within the Euro zone with other limits will result in rising inflation and unemployment in Euroland. The UK should stay out of it and avoid getting caught up in the nasty side-effects. If the government has any sense it'll use "the 5 economic tests" to avoid even asking the "Your Majesty's government recommends we join" question (in reality the tests are no more than smoke and mirrors that can be made to show anything the Downing Street chief magician wants them to show).

Want to get rich quick ? - wait till the problems compound, sell the Euro short, and retire on the proceeds (know how much money you could have made on Black Monday by doing exactly that ?).

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