Monday, January 26th, 2009...4:10 am

Want to Join the Euro? The Criteria’s Pretty Maastricht Y’Know.

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Pile of Euro banknotesSo, the Euro, the up-and-coming currency of the world, and in my eyes, very soon to become the reserve currency of choice over the Dollar.

As a Brit, I do very much love the designs of our banknotes, I think the title image along the top proves that point… the designs are very nice, and by and large, that’s all anyone else in Britain really gives a toss about, since we can safely say that the opportunity cost for the UK to join the euro right fucking now would essentially be negative (that’s means we should join)

As things are going, we’re edging ever closer to the possibility of a sovereign debt crisis, not that we’ll actually have one, but it would certainly raise financing costs to an uncomfortable level, which is generally bad for us all, especially when the economy of the UK is so finely in tune with the rest of the EU that we might as well be Frankfurt, so in this sense, Sterling is not helping us at all, and its painful devaluation is certainly putting the pressure on.

That said of course, the recent appreciation of the US Dollar will be shortlived; with the immense and expansive expansion programs planned by the Obama administration, financing for that debt will become increasingly difficult, and in a time when they’re on the offensive against China; one of the biggest purchasers of Treasury securities – Biting the hand that feeds you one might say.

In any case, the Keynesian expansion planned for the US is certain to make investors realise that US assets and economic growth are essentially crap, and capital outflows from USD to foreign assets should almost certainly resume, just as soon as they hurry up and realise this, that is if China don’t give them the push first and start a strategic shift from T-bills to European assets – as it is they’re already offloading their long-term Bonds into short-term ones which almost certainly signals China is positioning itself to be able to make a very hasty retreat from the Dollar as and when they want to, and naturally Asian banks will follow the money and join the bloodbath.

Not that I’d like to suggest that the UK is without its inherent risks either, though the comparisions between us and Iceland are rather over the top… assuming the rules on the Maastricht criteria can be bent a little (and in the current climate, it would be in the interests of both the UK and all in the Eurozone for us to become a member) then the UK should certainly pile in and shore up some of its financing risk this way, not to mention provide currency stability to its citizens.

So, if you’re British, please, write to your MP, tell them you want the issue of the Euro back at the forefront of politics and for reasoned, open debate to be held on weighing up the benefits of a hasty membership.

A few years ago, I was against the Euro in light of the expanding economy of the UK and lack of massive bank insolvency, but that was then.

In the words of Keynes; When the facts change, I change my mind. What do you do, Sir?

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