WSJ.com is available in the following editions and languages:
Thank you for registering.
We sent an email to:
Please click on the link inside the email to complete your registration
Please register to gain free access to WSJ tools.
An account already exists for the email address entered.
Forgot your username or password?
This service is temporary unavailable due to system maintenance. Please try again later.
The username entered is already associated with another account. Please enter a different username
The email address you have entered is already in use.Please re-enter the email address.
From time to time, we will send you e-mail announcements on new features and special offers from The Wall Street Journal Online.
Create a profile for me in the Journal Community
Why Register?
Privacy Policy | Terms & Conditions
As a registered user of The Wall Street Journal Online, you will be able to:
Setup and manage your portfolio
Personalize your own news page
Receive and manage newsletters
Receive and manage newsletters
Keep me logged in. Forgot your password?
You can connect your Facebook profile with WSJ.com to share articles, comments, and other activity with your friends.
Digg
Europe’s common currency, battered for more than a year by a sovereign debt crisis, is unlikely to survive the next decade in its current form, the Center for Economics and Business Research warned Friday.
In a list of top 10 predictions for 2011, the CEBR, a U.K.-based think-tank, gave the euro a slim one-in-five chance of being preserved in its present incarnation as the legal tender for the 16 nation currency bloc. That number will increase to 17 on Monday, when Estonia accedes to the euro zone.
The organization sees brewing debt problems in Spain and Italy as the catalyst for a new downturn. While economists have long warned that Spain and Portugal are two of the most vulnerable economies in the euro zone, Italy’s heavy debt load — approximately 115% of GDP — and sluggish growth have made some analysts wary about the country’s long-term prospects.
Douglas McWilliams, the CEBR’s chief executive said in a statement that the specter of a full-fledged break-up can’t be completely ruled out. “I suspect that what will break up the euro will be the failure of most of the countries to take the tough medicine necessary to make their economies competitive over the longer term,” he said.
Even as he said Germany would be the “economic superstar” of the Western hemisphere in 2011, McWilliams added a grim prediction that “this could be the year when [the euro] weakens substantially towards parity with the dollar.”
Yahoo! Buzz
MySpace
Digg
del.icio.us
NewsVine
StumbleUpon
Mixx
Error message
Always suspicious about predictions of obscure ‘think-tanks’ especially when they originate from the UK, that isn’t even a member of the EURO-zone. Not the first time and surely not the last time the demise of the euro is predicted. Simply won’t happen, too many reasons it won’t. No reasonable european politican from the right nor the left is putting the EURO in question. The EU will take a step by step approach in tackling the issues, like it has always done.
A common fiscal and monetary (and I add basic social, defense, environment etc) policy is a complete utopia, as it involves exactly the issue which is breaking de Eurozone apart. If, the difference between a country and a conglomerate of countries is that in the former, a large part of the economy is treated on a federal (or central) level, as defense, Medicare and thousand other issues, as it is in the case of the US. To pay for it, all citizens pay the same percentage of federal, which is by far the largest tax, as well as medical benefits etc, etc. Consequently, the states with a population with higher income are SUBSIDIZING the poorer ones!! This, anyone considers just and acceptable for any US (or UK, India or Australia) citizen. Why?? Because they have a certain amount of solidarity between citizens.
But, of course, Europe lacks such sense of solidarity, most especially the lower educated majority of the population. Phrases as appearing in the blogs “” why I shall pay for these lazy strangers” describe the reality as it is: People with many hundred, even thousands years different traditions, language and customs, consider anyone different as an alien, not a fellow European. And let be candid: they have reasons to do so!!
Let's remember what happened in the past century: Artificially assembles between peoples only somewhat different (by far not so many and so different as in the EU) fall apart after living together dozens of years: Yugoslavia, Czechoslovakia, not to speak of the European Russian Empire (czarist or communist), all of Slavic origin),. And Belgium is on the verge to do so!. And this did not happen because one group was discriminated by the other! Switzerland is an exception, which works because of their particular mentality and small number there and was achieved very slowly and progressively during centuries.
So, even if to break up the Eurozone (not the EU which could be adjusted) will be extremely traumatic, but if situations as in Greece and Ireland appear magnified elsewhere, and a not so mild recession as the past one appears overlaying, this could lead to an outright catastrophe. Better to do it soon, when it can still be managed!
What is dollar’s chance of survival?
Periphery countries have long used the printing tax to supplement revenue. They are not used to operating without it, and may not be able to adjust. The housing bubble, and subsequent credit crises, that excessive printing of credit produced magnifies their public deficits.
Currency debasement is an ever popular game among rulers. It depends on the marks (err, citizens) being oblivious to the various deceptions used.
Real Time Economics offers exclusive news, analysis and commentary on the economy, Federal Reserve policy and economics. The Wall Street Journal’s Phil Izzo and Sudeep Reddy are the lead writers, with contributions from other Journal reporters and editors. Send news items, comments and questions to realtimeeconomics@wsj.com.
Read more Economics coverage.
WSJ.com is available in the following editions and languages:
Read Full Article »