[Info-vax] HP stopping VMS paper documentation ?

[JF Mezei]

AEF wrote:

> Being on the Euro makes it impossible for a country to use monetary
> policy to fix things. And one country's problems makes things worse
> for others, resulting in domino spiraling. 

Canada experienced a similar problem one or two recessions ago. Ontario
was hurting badly, Québec was neutral, and western provinces were doing
well. The Central bank didn't quite know what to do. Lowering interest
rates to help Ontario might create inflation due to the west doing well.
Raising interest rates to control inflation would hurt Ontario.

I think we are seeing ta similar problem in Europe where Germany is
doing well, but other countries are really hurting.

If all of Europe were doing bad, then the Euro mechanisms would work.
But because the central banker has to cater to very different economic
situations between Germany/France and the PIGS, it is very hard to do
anything that will help one without hurting the other.

For as must as people are saying the Euro is doomed, it still trades at
$1.33 USD, so the currency is far frm being declared "weak".

> The Euro makes a bad
> problem much worse. If countries had stayed with their own currencies,
> we wouldn't have a Euro crisis. Etc.

The USA doesn't see this problem because its currency is a "standard".

But consider if Greece had borrowed from american banks in USD. Say its
monthly payment is USD $1000. Whenever the greek currency drops in value
against the USD, it means that USD$1000 will cost the greek government
much more in its local currency. And that means either higher taxes and
increased debt or bankrupcy.

So when a countrty has foreign held debts, lowering the currency to help
eports is very dangerous because it also increases the debt payments the
country needs to make.

By being in the Euro, Greece has access to Euro-denominated lenders so
its monthly payments are not affected by movement of the european currency.

So having your own currency and being able to devalue it doesn't always
work.