Economics Applicant Thread UCAS 2012

The euro, as a single currency, is dividing Europe and should be abolished.

Agree/ Disagree, Discuss.

Without trying to sound too pervy...welcome, ladies.

Pretty hefty debate. To start off with, getting rid of the Euro would be a massive upheaval and would undermine the fragile state of the European recovery. However, in the long term localised monetary policy might be helpful to tackle the specific issues for each separate economy - because the institutional structures of economies differ so much, a central monetary policy committee can find it hard to please all economies involved, particularly when larger economies like France and Germany put pressure on the ECB to make decisions favouring them, even when they could be detrimental to suffering economies like the 'PIIGS'.

You basically have already said everything I wanted to say

Lol, I'm a girl too, but I'm a 2013 applicant who's bored enough to casually stalk this thread

I reckon you should take the inititivae next year as Tateco has done and start the thread The lads wont know whats hit them

I remember doing this a couple of weeks ago on the Bristol offers thread...it was very interesting to see the general mood; a bit of an eye opener
Ah cool You've probably come across a fair few things then...

Pretty hefty debate. To start off with, getting rid of the Euro would be a massive upheaval and would undermine the fragile state of the European recovery

Pretty hefty debate. To start off with, getting rid of the Euro would be a massive upheaval and would undermine the fragile state of the European recovery. However, in the long term localised monetary policy might be helpful to tackle the specific issues for each separate economy - because the institutional structures of economies differ so much, a central monetary policy committee can find it hard to please all economies involved, particularly when larger economies like France and Germany put pressure on the ECB to make decisions favouring them, even when they could be detrimental to suffering economies like the 'PIIGS'.

I hope I haven't chosen something too political to begin with.

Surely a single currency trying to cope with the widely divergent economies of the industrialised North of Europe with the agricultural based Southern part of Europe is madness.

If the greeks default and return to the drachma, their exchange rate would be significantly weaker allowing them to export far more and to get their economy growing again. They're not going to have a massive export boom while their currency is so overpriced. And the Euro isn't good for Germany either. It has become a "feeder" nation propping up the fiscal recklessness of the "barbarian" south. Do the germans, who are creating all the growth in Europe, not deserve the higher standards of living that a higher valued currency would bring them.

Can you elaborate on the "massive upheaval" of the fall of the Euro and how it would lead to a "fragile recovery". We have a fragile recovery already and any loss of trade in the euro area would be insignificant compared to the increase of trade for countries like greece from the places where the money is in the developing world like China.

I may have to take your advice there
Yes you've all been very helpful, although I have to say I've heard a lot more about econ Cambridge than E&M

I did actually write more if you look back at it, just edited it afterwards

While the Euro has some problems regarding the examples you highlighted (with two extremes of Greece and Germany), it has been helpful for some intermediate economies to ease trade with other countries in the Euro area and boost their own growth, without the 'stability' of the Euro from the larger countries involved this may be compromised.

I'm just off to bed, but I'll respond to what you (and anyone else) says in the morning. I'd really like to keep this debating going if we can and delve into other areas. For cambridge I think the interview is probably going to be (grades dependent) the biggest factor on whether we get in. So if we can improve our ability to think on the spot and discuss varying economics issues we'll really boost our chances. So if anyone can think of a question to follow on from this one then that would be great! But I think there is still loads to talk about here. Night.

I hope I haven't chosen something too political to begin with.

Surely a single currency trying to cope with the widely divergent economies of the industrialised North of Europe with the agricultural based Southern part of Europe is madness.

If the greeks default and return to the drachma, their exchange rate would be significantly weaker allowing them to export far more and to get their economy growing again. They're not going to have a massive export boom while their currency is so overpriced. And the Euro isn't good for Germany either. It has become a "feeder" nation propping up the fiscal recklessness of the "barbarian" south. Do the germans, who are creating all the growth in Europe, not deserve the higher standards of living that a higher valued currency would bring them.

Can you elaborate on the "massive upheaval" of the fall of the Euro and how it would lead to a "fragile recovery". We have a fragile recovery already and any loss of trade in the euro area would be insignificant compared to the increase of trade for countries like greece from the places where the money is in the developing world like China.

If the greeks default and return to the drachma, their exchange rate would be significantly weaker allowing them to export far more and to get their economy growing again. They're not going to have a massive export boom while their currency is so overpriced. And the Euro isn't good for Germany either. It has become a "feeder" nation propping up the fiscal recklessness of the "barbarian" south. Do the germans, who are creating all the growth in Europe, not deserve the higher standards of living that a higher valued currency would bring them.

I pretty much agree with you. But (as a German) I must say that the Euro benefitted us in all aspects. We are an export nation, exporting mainly cars and steel and therefore a common currency like the euro is the easiest way to increase our exports. If we go back to our old currency (Deutsche Mark) it will damage our economy due to other countries not being able to pay for our exports. Also other nations like Italy will have increased debts in Dollars if they go back to their old currency because it would also be devalued... But I agree, the euro is not a good solution. You just can't have a currency union with countries that have such different economies. Either we go all the way and create a "european government" that controls the economies within the eurozone, or we all go back to our old currencies. But only going half way will not help any of us in the long run. Because we all know, in the long run we are all dead

Mind if I butt in?

I believe the Euro works well between the countries with stable markets. If abolished, the differences in exchange rates would hamper trade and possibly reduce productivity. Letting Greece default may increase exports, but exports counts for only a very small slice of Greece's GDP. The new Drachma would decrease in value due to economic fundamentals making their external debt burden even larger. As the price of imports increase, inflation will rise leading to stagflation. In addition, away from the Eurozone, countries will be far less inclined to support Greece with external finance as it affects their own economies far less.

I also think the Euro is quite a good thing for smaller economies involved as its stability is important the ECB is more likely to support smaller countries that are suffering (for example buying government bonds from Greece to drive down the yield), having said that, it is definitely a trade-off as they are not able to fine-tune their monetary policy.

The Euro being in places is a sort-of obligation for larger, more stable economies to contribute money and advice when necessary to smaller, struggling economies. In terms of improving equality within the Euro area in this sense it is good. However, if the larger economies do not contribute then it may decrease equality, with larger economies lobbying the ECB into making policy decisions that will favour them.

Not at all!

Surely if Greek defaults, it won't have any debt and will thus have significantly reduced its debt burden. Or is there something I'm missing?

I think we all agree that the Euro allows trading to run much more smoothly. In the case of Holland, which is a trading economy, this is particularly true.

The real question is: is the Euro inherently problematic due to the fact that it is really hard to have one common political ideology to go alongside the Euro? That tells me that problems facing the Euro have to be solved from a political stance and that, economically, the Euro is not as bad as it seems.