Understanding the Euro with Charles September 11, 2011 at 4:06 pm

Getting out of the Euro

Goodness, I like Charles’ comment to my previous post more than the original. Let us indeed go with the Geuro (pronounced ‘gyro’; it has got all the meaty countries in it) consisting of Austria, Estonia, Finland, Germany, Luxembourg, the Netherlands, Slovakia and Slovenia; and the Feuro (pronounced ‘furo’; the countries in it are going to take a bath) for Belgium, France, Portugal and Spain. As Charles says, if Belgium splits, then Wallonia has the Feuro while Flanders goes with the Geuro.

I’m not entirely sure I buy the line about Italy having to be out, though; or at least (sorry Charles), I don’t see the argument for excluding Italy as more persuasive than the one for excluding Spain. Indeed, the top half of Italy would perfectly naturally fit with the Geuro countries. It’s the bottom half that causes the issues…

One Response to “Understanding the Euro with Charles”

  1. Thanks David. We’re flattered.

    Spain’s in because of its unwavering commitment to the euro project. Questions as to whether they are able to run their economy for the long term might equally be referred to the risk management people at French and German banks – but everybody had a stake in making rapid growth look good. In Italy, everything becomes subordinate to the never-ending political circus (although your Liga Norte plan has legs, as would sending Andalusia back across the Straits).

    But most importantly, the Eurovision voting showed that it belonged with the feuros. Their nubile, crooked-toothed entry got picked as number one by both Portugal and France – a favour which was returned, I might add) while not making top ten in any other country. This dumb exercise in mediocrity trumps any academic analysis of the survivability of a monetary union.

    And besides, if the rout continues it would be convenient for Credit Agricole (say) to have some sort of exchange rate predictability before asking Mr. Botin to step up to the plate.

    Thanks again.