It was supposed to bring economic prosperity and stability, but it has done exactly the opposite..
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Voices to ditch the euro are getting louder. Not only in the really depressed economies of the eurozone periphery, like Spain and Italy, but now also in core countries like Germany. We’re pretty sure that had people known what would happen, the euro would never have been introduced.
It’s interesting at this juncture to review the different supposed advantages for the euro, as it will turn out that on pure economic grounds, the case for the euro is pretty weak, and always has been.
Completing the Single Market
The Single Market project aim is to remove barriers to trade between EU member countries. That entails quite a lot, it’s not just tariffs and quotas, it’s mostly differences of regulation that prevent European economies from merging into a seamless market. There is still quite a lot to be done here (trade in services, for instance), but having a single currency was seen as a logical extension.
Indeed, having different currencies can be seen as just another trade barrier, not only because of the transaction costs involved, but the uncertainty they create for cross border trade and investment. This is true, but the transaction costs were never really that significant, and it is possible to hedge against currency movements. [Read on here]
