Is the mutual Euro finally paying off?
by cthiemonge on May 6, 2013 - 1:11am
I have mainly written on employment this year and also on the Euro crisis. I think most of the news was bad, but there seemed to be some good news for countries like Germany. Because of the financial crisis, thei borrowing costs have drop significantly and so they have to pay less to raise money in markets. The government saved money also because of low interest’s rate with the European Central Bank. The fact is that the difference between borrowing and loaning is inexistent. The money they get doesn’t come from the tax payers. Also the fact that all the countries share the same money went down to be a good thing. If they had separated, they would have lost billions and billions. When they gave money to countries in bad conditions, they were in fact giving themselves money, because they would help the euro get better and stronger. If it was another currency, they would not have gained any advantage. Let’s say they gave 100 billion borrowed to the bank, they will have to give back let’s say 120. But the money they have will fluctuate to 130 while they will still have to give back 120. It is a bit more complicated than that, but the moral is that when I said that the Euro was a bad idea and penalizing the countries, I was wrong and maybe we should consider our individual currency. Because it is really complicated, you should think about reading Jan Strupczewski’ article for more details and better explanation.