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Monday, June 16, 2003

News From the Fatherland

In my case it's a pretty weak 'fatherland' called the Uk, where we are more accustomed to the 'wishy washy' compromise, in contrast to the 'stronger' national feelings of some continetal EU societies. But still the news is from the Uk and comes from my brother. The 'attach' is from some unknown 'loony' voice in a distant newspaper, but the point is worth considering: if the UK joined the euro, and the euro subsequently lost its value to an important extent, what would happen to the enorous UK overseas liabilities?

I enclose a rant from a newspaper letter. However sometimes rants may be interesting and the point about sterling as a reserve currency vis a vis the euro may be worthy of further investigation. As I intimated to you in my recent e-mail, maybe the raising of the ERM stipulation is that Europe does not want sterling in the euro with the present changed euro conditions. Is this because they may fear an inherent instability in sterling affecting a now more stable euro?

Second interesting bit of news on German radio business section yesterday is that turnover in Gastaette (these are the normal pub/eating places) has fallen this year by 10% This is a hell of a lot and bear in mind my point about instability as regards employment in the service sector ie the possible speed of change and that most new jobs are creatred in the service sector. This is one to watch I think.

Also worthy of watching is the present bond bubble. Make comparison with the forcing down on returns especially in the US and the Japanese situation especially as regards long term interest rates. Then think the instability created by a 1/2% rise which we consider small but as a percentage ot total interest rate is huge.

As regards your demography, it is noteworthy that none of the english europhiles have mentioned the chaos in France this week with the strikes, the problems in Germany, and the fact , I think I am right in saying from my radio listening, that the Austrian parliament has just agreed to a 10% reduction in pensions and a 2 year working life extension. The future beckons, or not!!

Finally as regards migratory flows, I think it is worth looking a the position from north to south in the UK over the past few years and the prognosis and the effect this is going to have on the internal labour market. The introduction of regional pay is going to produce perhaps social problems in the UK let alone across Europe.

Now for the 'loony' rant:

The case against the adoption of the Euro goes beyond industry. The entry price is that we deposit 80 per cent of our gold reserves with the Central European Bank. The other EU member states' coinages were not world reserve currencies, so overseas countries held small amounts for everyday trading only. Having embraced the, Euro, the EU countries were easily able to meet their overseas liabilities for their now worthless currencies from their 20 per cent residual gold holdings. But the pound sterling is a reserve currency and every other country holds billions of cash and securities. If we surrender 80 per cent of our gold to Europe, our residual 20 per cent reserve will be insufficient to meet our liabilities to worldwide holders of enormous worthless sterling SUMS. We'll be obliged to cede our North Sea oilfields, national treasures, key companies, overseas holdings and bases.

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