Bomboclaat_Babylon t1_j1ytkxl wrote on December 28, 2022 at 12:12 PM

Reply to comment by mnbvcxz123 in ELI5: Why can’t we have a universal currency? by Walmartpancake

>The Euro is a good counter-example for why international currencies are dangerous. Countries that have adopted the euro have seen tremendous economic and political power move outside their own country as a result.

I'm going to have to disagree here. The reason Greece and Italy are dependent on Germany and France isn't the currency unit, it's that they're shit at running thier economies and then they just take bailouts and keep blaming the people that bail them out. They could get their shit together and be economic leaders, they choose not to. Blame game is just easier.

rose_reader t1_j1yujen wrote on December 28, 2022 at 12:23 PM

To offer a third perspective, the Mediterranean countries have an intrinsically different approach to life than their northern neighbours. Trying to harness Germany and Greece together under a single monetary unit was always a bonkers idea - if you harness a racehorse and a plowhorse together, neither will be able to achieve its goal.

The mistake of the German financiers was to put the ideal of a united Europe over practical considerations.

tiredstars t1_j1z0b08 wrote on December 28, 2022 at 1:24 PM

This is really not true, for Greece at least. Greece's economic policy and performance pre-financial crisis certainly wasn't great, but it wasn't shocking. Post financial crisis, it had a disastrous economic policy imposed on it, known as "extend-and-pretend" - keep giving temporary relief for debt, insisting on public spending cuts (which tanked the economy further) and pretending that things were going to work. This was so disastrous (both for Greece and the eurozone generally) that the IMF, of all institutions, ended up coming out in opposition to it.

Exactly why these policies were imposed is a bit more complex than "German bankers" and links to institutional design and politics in the EU. Though "German bankers", and the reluctance of Germany to admit to how exposed its banks were to the financial crisis, is part of it.

Bomboclaat_Babylon t1_j1z1kzv wrote on December 28, 2022 at 1:36 PM

Greece runs a bad economy. Full stop. They have too many state owned enterprises. Too much red tape. Too many social programs. And guess what? They had to ask for money because they ran the economy into the ground. If you ask for money, the lender has to believe they can get it back, but the EU didn't even believe Greece could ever really pay it back. They have given tons of free money and relief over the years and the Greek government knows they'll keep getting free money. In return, ya, they have less clout and the major economies look down on them, and make demands. Demands they couldn't make if Greece fixed it's economy and became an asset rather than a liability. Both Italy and Greece are run by the older voting block that demands free money and services for old people that they can't cut off / are unwilling to cut off. So they keep voting for anyone who says they can keep their defunct economies doling out money when the only way to do that is to keep borrowing. So the lenders then say well I'll give you money if you do XYZ to fix your economy so we think we can at least get something back. But then they don't do it and the politicians point at Germany and Euros for all their political problems as a scapegoat. If Greece had it's own currecny it and left the EU it would have been bankrupt already decades ago. When they joined in 2001, the USD to GRD was 1 to 320. As soon as they joined the EU there was a boom in confidence (because they were now backed by Germany and France and the UK), and then they started spending like crazy and haven't stopped. They need to make major changes to their economy, but it's not politically expedient. So they take money and blame the EU. You don't want strings attached? Stop borrowing money and fix the economy.

mnbvcxz123 t1_j2bbz4l wrote on December 31, 2022 at 12:08 AM

US corporations keep taking gigantic bailouts, but it's not a problem for the overall US economy because the US can just print more money to cover the bailout.

If US corporate bailouts had to be paid in rubles (for some reason), that would give Russia a tremendous amount of leverage over the US economy, even though they have nothing to do with the US. And there would be nothing the US corporations could do about it.

That's basically what happened to Greece, and will happen to any nation whose currency is the euro.

Bomboclaat_Babylon t1_j2cb0b6 wrote on December 31, 2022 at 4:38 AM

Nope. Ps., why doesn't Alabma leave the US and make it's own currency so that it can't be "controlled" by California or New York? Truth is, it helps to be in a larger market as well as having some downsides. The Euro isn't what makes Italy have crippling red tape that makes any IT company unworkable. California isn't what made Alabama the poorest state. It's the choices they make.