Will European Monetary Union be disbanded?

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Author Topic:   Will European Monetary Union be disbanded?

Saras posted 06-22-99 02:40 AM ET
Well, go ask Mr.Prodi. Italy's economic mess (unemployment, inflation, high debt and deficit) could, in theory, force Italy out. If Italy goes, credibility of Euro will be hurt forever, and EMU will break as ERM did. Ideas?
Roland posted 06-22-99 03:21 AM ET
Yes... keep the emphasis on "in theory"...
Saras posted 06-22-99 03:40 AM ET
Roland, I'm sure you can do better. What do you THINK will happen?
GaryD posted 06-22-99 04:10 AM ET
Naw theyll just keep relaxing the rules and resetting the various levels
Roland posted 06-22-99 06:21 AM ET
...keep relaxing the rules...
Where have they relaxed the rules ?
Saras, regarding the points you mention:
unemployment - about average
inflation - about average
high debt - yes, but convergence on debt levels is the least important factor
high deficit - 2,4 % of GDP...
Another point has been made regarding the fact that Italy's economy isn't doing well despite a sharp decrease in interest rates. But that's a dramatic change for Italy and it's way too early to look for the effects.
Saras posted 06-22-99 07:22 AM ET
unemployment - about average
inflation - about average
high debt - yes, but convergence on debt levels is the least important factor
high deficit - 2,4 % of GDP...
Well, seems like unemployment and high deficit is the problem of ALL EMU countries... hehehe...
But the issue I was trying to provoke (again, perhaps too vaguely) is that these kinds of statements by officials hurt the credibility of EMU quite substantially, and eventually they might think about disbanding...
DanS posted 06-22-99 11:35 AM ET
I doubt EMU will be disbanded. Everybody knew the Italians would have trouble keeping in line deficit-wise, so I'm sure there were contingency plans. Right?
Roland posted 06-22-99 02:24 PM ET
Well, seems like unemployment and high deficit is the problem of ALL EMU countries... hehehe...
Really?
Saras posted 07-01-99 04:47 AM ET
With Italy's GDP coming in with higher than expected figures, the outlook for Euro and Italy, the crappiest economy in the EMU, improves, so probably Euro is here to stay.
Side note: it would help a lot of people in Lithuania if EUR would rise to 1.09-1.15 since our currency is pegged to the USD via a currency board.
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Author	Topic: Will European Monetary Union be disbanded?
Saras	posted 06-22-99 02:40 AM ET Well, go ask Mr.Prodi. Italy's economic mess (unemployment, inflation, high debt and deficit) could, in theory, force Italy out. If Italy goes, credibility of Euro will be hurt forever, and EMU will break as ERM did. Ideas?
Roland	posted 06-22-99 03:21 AM ET Yes... keep the emphasis on "in theory"...
Saras	posted 06-22-99 03:40 AM ET Roland, I'm sure you can do better. What do you THINK will happen?
GaryD	posted 06-22-99 04:10 AM ET Naw theyll just keep relaxing the rules and resetting the various levels
Roland	posted 06-22-99 06:21 AM ET ...keep relaxing the rules... Where have they relaxed the rules ? Saras, regarding the points you mention: unemployment - about average inflation - about average high debt - yes, but convergence on debt levels is the least important factor high deficit - 2,4 % of GDP... Another point has been made regarding the fact that Italy's economy isn't doing well despite a sharp decrease in interest rates. But that's a dramatic change for Italy and it's way too early to look for the effects.
Saras	posted 06-22-99 07:22 AM ET unemployment - about average inflation - about average high debt - yes, but convergence on debt levels is the least important factor high deficit - 2,4 % of GDP... Well, seems like unemployment and high deficit is the problem of ALL EMU countries... hehehe... But the issue I was trying to provoke (again, perhaps too vaguely) is that these kinds of statements by officials hurt the credibility of EMU quite substantially, and eventually they might think about disbanding...
DanS	posted 06-22-99 11:35 AM ET I doubt EMU will be disbanded. Everybody knew the Italians would have trouble keeping in line deficit-wise, so I'm sure there were contingency plans. Right?
Roland	posted 06-22-99 02:24 PM ET Well, seems like unemployment and high deficit is the problem of ALL EMU countries... hehehe... Really?
Saras	posted 07-01-99 04:47 AM ET With Italy's GDP coming in with higher than expected figures, the outlook for Euro and Italy, the crappiest economy in the EMU, improves, so probably Euro is here to stay. Side note: it would help a lot of people in Lithuania if EUR would rise to 1.09-1.15 since our currency is pegged to the USD via a currency board.