Firstly, Northern European countries are getting stronger economies, but Mediterranean countries (France included) have been getting weaker and weaker. The North has more efficient productivity and less costs on capital, putting the Mediterranean are in a tough spot. Secondly, Italy, for example has an unemployment rate overall of 12.7%, and unemployment involved with youth workers is at a shockingly high 42%. Italy's debt is also approximately 130% of their GDP (to put that into perspective, the United States' debt is approximately 100% of GDP). They are extremely uncompetitive, and it is sadly going downhill from here for Italy. Another problem for them is that they do not have high productivity and low costs of capital, while on the other hand, Germany does. France is also just as uncompetitive as Italy, if not worse.
With this divergence in eurozone economies, the euro will have absolutely no economic stability for them in the long run, initiating a possible crisis to come in the future.
It really is a shame to see the Mediterranean countries of Europe hurt the value of the euro for both of the eurozone economies. It is clear that Italy and France have some serious issues that they're going to have to deal with. I believe that it would be very beneficial for us Americans to closely monitor economic activity in both France and Italy. We can learn from the mistakes that these two countries have made in the past to ultimately better ourselves.
ReplyDeleteI think your right about the Euro not having economic stability in the long run. The problem isn’t just the debt crisis or which country is handling their debt better. The Eurozone is made up of 18 different countries like you stated who share the same currency, but they all have different cultures, philosophies, history, and economies. Due to their differences you can see how difficult to those dissimilar countries to ever work together with one unified voice.
ReplyDeleteThe case of Italy and France may show the difficulty of a common currency unit. Within the euro area, there is a huge gap between rich and poor,so as Dylan said, U.S can learn a lot from euro case. In the case of Italy, the goverment did not work at all, so nobody can trust Italy. The debt is not so bad thing,bcause a govermennt needs to investment and debt to acieve a economic growth. Japan can be applied by that case.
ReplyDeleteIt is true that the euro will have absolutely no economic stability for them in the long run. I think labor problme should be improved and each euro countries should map out its economic strategy again.
The point that Ntwari brings up is an extremely valid one in my opinion. The Eurozone consists of several different countries and he differences in cultures (political, social and economic) really does not bode well for the stability of the Euro. Due to all the differences coming to terms on economic policies and what would be the best course of action regarding the stability of the Euro, it does not seem that the Euro will hold up for much longer.
ReplyDeleteExactly, I agree with all of your points. With all this economic instability in the eurozone, I think these European countries would be much more beneficial to individual currencies for each countries. Bien I completely agree, too many cultural differences and philosophies influencing the eurozone. We see the benefit and problems the euro provides the eurozone, so this divergence is gonna cause a mass crisis again eventually. Either that, or work through this, and kick out Italy and France
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