The Euro by: David Marsh
The book, “The Euro: The Politics of the new Global Currency”, by David Marsh is the basic inclusive political and economic account for the introduction and development of the Euro. Presently the Euro is the dominating currency for almost sixteen European countries and the global second largest preserved currency. The author of the book, David marsh narrates the stories of the competitions, scheming and the deals that resulted into the currency for Europe. He further gives an analysis and deficits of the Euros first decade existence (Marsh, 2009). While the Euro represents the achievement of the political will, huge force arises on the single currency. Marsh from his findings underrates the significance of Euro in the global economy, specifically for the United States of America and the British Economic influential.
How the Euro has potentially weakened the prospects for deeper political (not merely economic) union in Europe.
It was back in the year 2002, that Euro came into existence as a real currency, a time when Germany was rated poorly economically. This was because of the introduction of poorer countries into to the EU that led to an increased cost of the EU. In the article Germany’s Status as reliable partner under threat, by Market Watch new release on May 3 2010, it was reported that, Euro had weakened the prospects for deeper political Union in Europe for its stabilization requires that Germany had to cut on their exports to other countries and instead increase the internal demand for its products (Ilargi, 2010). It was because of this that the country had to reduce the links that the country had with others to strengthen the value of the Euro. This as a result cut the ties that Germany had established with these other countries, which were poorer.
How the legacy of French and German relations toward each other shaped the planning and development of the Euro, the politics behind the final decision to proceed to the common currency, and final authority granted the European Central Bank as it came to evolve between 1999 and 2009.
The legacies of the French and German associations towards each other have created the setting up and expansion of the Euro. This is because; they came up with a declaration, which aimed at reinstating calm and supporting the Greek Prime Minister Papandreou, programmer of cutting on the budget and its structural modifications. The statement quoted that all the sixteen countries that use the single currency including Greece had to have a synchronized action in the defense of the financial steadiness in the European countries as a whole. This was viewed as a powerful political signal by the citizens of these countries, that the counties that dominated the currency, that is France and Germany had take action in the reinstatement of the assurance in the currency. They had include Greece in their statement but and there were no funds, which were to be given to Greece for it had not made any requests. Despite the fact that they had come up with a strategy in the restoration of the Euro, it was evident that they would not succeed in their project for there was no pecuniary union that would prosper without political union. The union of the three countries that is, Germany, France and Greece lacked, integrity.
Why the Euro nonetheless continues to thrive as a global currency and the implications this carries for the EU having global power projection.
In spite of the financial crisis that is experienced in most of the European countries, the Euro thrives as a global currency for Germany has decide to weaken the Euro just like many other countries do. This is because the country was largely affected by the contraction of trade I the past years. It was also because of the decrease in the value of the US dollar by 30% that resulted into the financial crisis in the European countries. This is because a decrease in the value of dollar meant that even the citizens of the European countries would prefer the American goods to the goods found in their country. Germany decided to weaken the dollar to a point where it is at parity with the US dollar or even to some extent above it. This will in turn solve the problems face in Europe with the effects of the financial crisis. The political leaders of Germany are taking advantage of the crisis in Greece in the achievement of their goal.
The New York times released on February 13, 2010, have reported that the Euro is falling a part and people are wondering the reason as to why the Germans have no problem with the weakening of their currency. Ironically, the people have no idea that it was a plan for the political leaders to stabilize their currency by weakening the value of their currency to increase the consumption of their products (Ney York Times, 2010).This is because; they are in competition with the United States of America. The Euro is having global projection for it is not about to fall apart. Germany has made sure that they boost the trade of the European countries against other countries in the world for it is the only way to maintain the union. Currently, Germany and France are solving their market issues without any help from other countries. This was in spite of the two countries being the overseas lenders to Greece they would also have recognized the dangers that would have been faced by the entire European Union with the exit of Greece from the Euro. It was because of these strategies adopted by German and France including Greece to weaken the Euro that thrived the Euro as a global currency. This was aimed at boosting trade in the European countries that would later augment the value of the currency.
How the current global recession and Western credit crisis has influenced Europe in basic we ways differently than would have likely happened without the Euro as a common currency.
The current global recession and western credit has influenced Europe in basic ways differently than would have likely happened without the Euro as a common currency. This is because the members of the European Union thought that by having a common currency, they would establish political union amongst themselves. This is not what happened, for according to the article A Fistful of Euros released on January 24, 2010; Spiegel reported the problems analyzed by the EU would be put into investigation by the IMF and the credit ranking agencies. The issues to be dealt with will not only be limited to the euro zone imbalances but they will be extended to global competitiveness (Hugh, 2010). The European Union that expected that the euro zone imbalances would have decreased in time, they in turn increased with the course of time. This was an implication that the institutional environment in which the common currency was functioned was sternly underprovided and it required immediate advancement. The advancement of the Euro was the best way out for it meant that the people were ready to face he reality that the Euro needed enhancement to do away with the imbalances other than plummeting them.
In conclusion, it can be drawn that despite the fact that, German tried as much as possible to reduce the imbalances that were as a result of the introduction of the common currency, it was not the best way out. This is because the Euro required a form of advancement other than weakening the value of the Euro currency. Marsh made it clear that dominating countries of the Euro such as France and Germany with Greece include dealt with the situation by weakening the currency to match that of US dollar to boost the trade, which was not the approach to use. The Euro crisis was because of Germany, which was still in a financial crisis coming together with other fifteen poorer countries to have Euro as a common currency. This meant that the imbalance that existed in the European Union was because of the imbalance of the financial stability of the sixteen members of the European Union.
In the article Germany’s Status as reliable partner under threat, by Market Watch new release on May 3 2010, it was reported that, Euro has weakened the prospects for deeper political Union in Europe for its stabilization requires that Germany had to cut on their exports to other countries and instead increase the internal demand for its products. The New York times released on February 13, 2010, have reported that, the Euro is falling a part and people are wondering the reason as to why the Germans have no problem with the weakening of their currency. In the article A Fistful of Euros released on January 24, 2010, Spiegel reported the problems analyzed by the EU would be put into analysis by the IMF and the credit rating agencies. The issues to be dealt with will not only be limited to the euro zone imbalances but they will be extended to global competitiveness.
Hugh, Edward, Euro zone Imbalances Weaken the Euro and Undermine Euro Area Cohesion, A Fistful of Euros, January 24, 2010. Print. May 6, 2010. http://fistfulofeuros.net/afoe/economics-and-demography/eurozone-imbalances-weaken-trust-in-the-euro-and-weak-euro-area-cohesion/
Market Watch, Germany’s Status as Reliable Partner under Threat, May 3, 2010. Print. May 6, 2010. http://www.marketwatch.com/story/german-reputation-for-reliability-on-line-2010-05-03?reflink=MW_news_stmp
Marsh, David, The euro: the politics of the new global currency, Indianapolis, IN Yale University Press, 2009. Print.
New York Times, No Money but Plenty of Fudge, February 13, 2010. Print. May 6, 2010. http://faithfultotheline.wordpress.com/tag/euro/