The mood has shifted.
By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.
Europeans are finally learning to love the euro, it seems, at least according to the latest edition of the Eurobarometer, which is published twice yearly by the European Commission: 64% of the respondents, representing 16 out of 19 Eurozone economies, believe that having the euro is “a good thing for their country,” the highest proportion since 2002, and up from 56% in 2016. Only 26% of respondents thought it was a bad thing.
A further 74% of respondents said that the euro is a good thing for the EU as a whole, the highest proportion in the 2010-2017 series. This is somewhat ironic given that even the ECB conceded this week that the main idea behind the euro as a driving force for regional economic convergence has produced, let’s say, mixed results, having essentially failed where it mattered the most, in Southern European economies:
“It is striking, however, that little convergence has occurred among the early euro adopters, despite their differences in GDP per capita. In contrast to some initial expectations that the establishment of the euro would act as a catalyser of faster real convergence, little convergence, if any, has taken place for the whole period 1999-2016”
Nonetheless, the results of the survey point to a marked improvement in Europe’s love affair with the single currency, as growth in the Eurozone has reached its highest level (a forecast 2.6% for 2017) since the financial crisis began 10 years ago.
It’s a world away from the prophecies of doom and gloom that proliferated this time last year, when it seemed that Europe was on the cusp of an unprecedented anti-euro backlash that could even pose an existential threat to the currency bloc. Since then elections in the Netherlands have returned a solid pro-EU coalition while French voters scorned arch nationalist Marine Le Pen in favor of Emmanuel Macron, arguably the most Europhile president in France’s history.
In Germany Angela Merkel may be having difficulty forming a new government after inconclusive elections in October, but according to the Eurobarometer, it’s not due to public discontent with the single currency: 76% of the German respondents said the euro is a good thing for Germany, up 12 points on 2016. Even in Italy, whose economy has been one of the worst performers in the world since adopting the euro and where banks have been dropping like flies in recent months, 45% of respondents view the euro as a good thing for the country, compared to 40% who believe it’s a bad thing.
In fact, in only one of the 16 countries featured in the survey does a majority of respondents hold a negative view of the euro. That country is Lithuania, where 36% of respondents think the euro’s a good thing, down six points from last year, while 48% think it is bad.
One of the main reasons for the euro’s seeming lack of popularity in the Baltic country is the impact its adoption had on inflation, which has surged from -2% (as in deflation) in 2015 to just over 4% today. Almost all respondents to the survey (94%) believe that there were price increases during the changeover period, with as many as two-thirds (67%) saying the increases were across the board.
Lithuania’s negative experience could end up influencing events in other former Warsaw Pact countries that are currently in line to adopt the euro. They include three members of the Visegrad Group, Hungary, Poland and the Czech Republic, which are already strongly anti-euro. In Hungary little more than half of the population favor euro adoption; in Poland, the EU’s biggest Eastern member, it’s less than 40%, while in the Czech Republic little more than one-fifth of the population support joining the Eurozone and only a third say being an EU member is a “good thing’’.
But as happened in Lithuania three years ago, the countries’ business and financial elite are determined to drown out the naysayers. Indeed, at the company level, euro-adoption has already begun: Czech businesses more than doubled the use of the single currency to pay local suppliers in the past five years to 18 percent. Most big property deals in Poland are already done in euros.
With the exception of Denmark and the UK, which have opt-outs on euro membership, all EU members are contractually bound to join the single currency once they meet all the criteria, whether the people of the country want it or not. In his annual State of the European Union speech, the European Commission President Jean Claude Juncker presented a vision of a post-2019 EU where some 30 countries — compared to today’s 19 — would be using the euro, with an EU finance minister running key budgets to help states in trouble.
It’s a dream that appears a lot less pie-in-the-sky than it was 12 months ago, especially with eight out ten Eurozone citizens apparently agreeing on the need for significant reforms to improve the performance of the economy.
The Commission will be more than happy to oblige. Just yesterday it unveiled a sweeping reform package aimed at completing the bloc’s monetary and economic union. It included a proposal to transform the Eurozone’s bailout arm, the highly opaque European Stability Mechanism (ESM), into a European Monetary Fund that will essentially function as a democratically unaccountable institution, tamping down on deficit spending by troubled Eurozone economies in return for bondholder bailouts.
The EU executive arm’s proposals also include plans to appoint a Eurozone economy and finance minister who would simultaneously serve as a Commission vice president and chair the Eurogroup, as well as create EU budgetary instruments to support the economies of countries using the euro. Such policies seek to further cement the Commission’s authority to impose budgetary rules and structural reforms on member states at whim and without democratic control.
But as long as the Eurozone economy continues to cruise at a moderate speed, fueled by the €4.41 trillion Mario Draghi’s ECB has splashed out on asset purchases of just about any quality, most countries and their elected governments appear happy to tag along for the ride. And for those who don’t, well, they can be shown the door, as the leader of Germany’s SDP party, Martin Schultz, threatened today in a bombastic speech calling for a fully operational United States of Europe — after his party got hit hard during the last election and walked off with just 20.5% of the vote. Clearly, the mood in Brussels and many European capitals has shifted over the last year. By Don Quijones.
One of Germany’s largest companies is trying to buy Monsanto, which changes everything. Read… The EU (with Help from Germany) just Made Monsanto’s Day
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.
Pro Tip: Believe none of what you hear and half of what you see.
Yeah and I totally believe DEC internal election polls too.
Just w a i t till the bills need to be paid by the poor working taxpayers…
Does anybody really believe the Greeks are repaying their loans ?
How about the Italians? The Spaniards for that matter?
Don’t let me laugh!
The € is a complete JOKE.
Quote: “With the exception of Denmark and the UK, which have opt-outs on euro membership, all EU members are contractually bound to join the single currency once they meet all the criteria, whether the people of the country want it or not.”
I was a bit surprised by this, are you sure it is Denmark and not Sweden that is exempt from this contract? Sweden still has a free floating currency, whereas the Danish krone has been pegged to the euro for decades.
At any rate, thank you for this and other valuable insights you share on this blog.
I believe, it’s correct. Denmark opted out, but just like Switzerland or Sweden, it’s forced to follow the line of the ECB, or face a sharp revaluation of the krone.
It is Denmark that opted out. Sweden is bound by treaty to accept € but Stockholm has stalled ever since, because the disintegrating Swedish wellfarestate is dependent on the ability to weaken their krona to paper over the real state of Sweden with failing health care ( for example women about to give birth are flown to Finland due to failing resources ), failing care for the elderly, failing schools, failing courts, police retiring from large areas of Sweden ad nauseam. Swedes are indebted over their ears, some people with 100 year mortgages, a “yuuge” housing bubble, over 100k of pensioners living below poverty level, a lot in such small country …And Sweden will have to pay for all migrants they have recieved and there are general elections at the end of 2018
Btw, Denmark’s krone is bound to the € similar to the way the currencies of the Baltic states were bound first to the DM, then to the €
Police retreating not retiring. Autocorrection …..
Is that an on-the-ground account? I would not be totally surprised given the intellectual level of the so-called ruling elites in the “successful” western countries.
Yep, but it is even worse than that. The latest is that the Swedish official church in Gothenburg is providing shelter during winter for homeless people, but homeless ethnic Swedes aren’t allowed in, only the people Swedes label EU migrants ( Gypsys from Romania and Bulgaria ) and migrants from MENA are provided with shelters, ethnic Swedes, well, those have to fend for themselves. I am not kidding ! One fact is that the Swedish system is tweaked in such a way that elderly migrants that have never provided anything to the Swedish pension systems are able to retire with higher pensions + benefits than ethnic Swedes ( mostly women ) that have been working hard and paying their share all their lifes.
A real fact is that Norwegen has officially announced that they have plans ready for the Norwegian army tol close the borders to Sweden in case Sweden comes apart at the seams, in Denmark they openly talk about Sweden as a greater security treath than Putin’s Russia, while they are whispering about the same thing in Finland, but not yet stating it in public like the Danes do….
Denmark has an exemption (opt-out) regarding the EMU. This was agreed when the Danish voters voted no to the Maastricht treaty (and then were “given” a re-vote). Sweden, eg the Swedish politicians, never asked for an opt-out from the EMU when negotiating accession to the EU in 1994. However, during the debates in the Swedish Parliament the government promised that it would always be up to Sweden to decide if she wanted to join the EMU. This led to a referendum in 2003. All the major political parties, the labour unions and the employers union all argued for a yes. The yes side had a budget that was at least 10 times larger than the no side. However, the Swedish voters were more intelligent and self-reliant than their “masters” ever believed and the referendum resulted in a 56-42 win for the “noes”.
Thus, the Swedish monetary policy of a floating currency, which was forced on an unwilling government during the currency crisis in 1992 continued – successfully I might add. Sweden was one of few countries in the EU that managed to stay afloat during the most recent financial crisis.
The latest poll in Sweden regarding the euro indicated that 17% would like to join the misbegotten currency, and more than 67% would like to keep the national currency. OTOH 56% of the sample supported Sweden’s membership of the EU. Sigh!
“ie” not “eg”
When you’re distracted by massive inflows of people from other countries who want to change the way you live and expect you to pay for it, the concept of the Euro and all it implies (negative rates, Target 2 issues, EU control issues, it’s illegal to complain issues, massive debt issues) is less of a concern.
Happy to not live there.
As the wise man said, “well they WOULD say, that wouldn”t they?
Mandy Rice-Davies on the Christine Keeler /Profuma affair about Lord Aster who denied knowing Keeler or Davies. When James Burge, the defence counsel, pointed out that Lord Astor denied an affair or having even met her, she replied, “Well (giggle) he would, wouldn’t he?” (often misquoted “Well he would say that, wouldn’t he?”) / wikipedia
And poor old Christine passed away a couple of days ago.
Using the euro day-to-day is probably a huge advantage considering all the various foreign currencies merchants & consumers (and tourists) had to deal with. The news regarding bank debt/failure and other scare stories “appear” to have proven somewhat untrue (a Greek or Cypriot might view this somewhat differently).
The bad news is all that bad debt is stacking up on the ECB balance sheet, and sooner or later, there will be a reckoning. All the economic imbalances are still there, they’re just disguised.
It is a huge advantage and add SEPA to this it is still more advantageous. In addition, it caches hot coals under the behind of merchants because it is easy to compare prices elsewhere to those at home
The € has drawbacks, but the benefits outweights those. As always, a coin has got 2 sides.
Depends on if you like to have a country, or just a zone.
Or a state(as in state of New York)
dollar in decline vs euro
more dollars are needed to buy euro
I highly doubt the Euro is as liked as the poll states. I’m not sure why anyone listens to these poll anymore.
I’m in Europe, and have been throughout this.
Obviously I cannot speak for others, let alone the whole, but the Euro where it is liked is not comparable to how traditional currency was liked. Figure the difference between ” Would you like a thousand Euros? ” and ” Does the Euro represent what you stand for ? “. Obviously again, the political aim is to fudge the two together, but as EU is quite empty of character except ” progress “, well it is not exactly a rousing survey, in any sense. It is more like ” Have you accepted we have the money (for now) ? “.
They all like the Euro because they are getting some thing for nothing. As long as they can keep stretching their Target 2 balances they are creating money from thin air. Everything seems good first when money is printed from thin air. What could go wrong?
The Germans think they are building up nice credit balances. Those on the other side are getting German goods for nothing. The Germans are in for the rude awakening that the others are no in a position to pay back the debts they have incurred in equivalent goods and services.
One day the Germans will wake up a figure out they were working hard to support the other’s lifestyles.
Even if these debts are never repaid, Germany will turn these claims into direct control of the host’s economy, like in Greece. So it is a win-win for them.
The truth is that we southern people are subsidizing the german life-style. First by allowing them to use a currency which is artificially low compared to the old deutschemark, next via (public) debt service and finally via bail-outs. Or do you really think that the aim of the sovereign bail outs was not to save the germans and french banks?
Agree with you Hiho. However, if it does go downstream, then the Germans will be left holding the short end – maybe it is their due. Euro is a terrible currency at real level, especially for the south.
The idea of one country winning vs another on issues like trade and the euro is misleading. It’s always part of one country that gains and another part that loses.
The wealthy tend to benefit tremendously in an environment where labor is cheap – at a cost particularly to the middle/lower middle class workers.
Those heading governments across the Eurozone benefit from it and see no cost – particularly as their class are the prime beneficiaries of easy central bank policy aimed at raising asset prices while keeping wages and consumer-driven inflation low. The regions with struggling workers and dying industries are all too easily ignored, until it comes to election results.
The Citicens of club med love the Eur As it removes the ability of their governments to keep on devaluing their currency, so savings, against the rest.
The Citicens of the North are coming to seriously question it, as they are the ones who could be paying for club med to live on the beach in the sun with their taxes, For ever.
Nirp isn’t devaluation?
Be serious, and start by criticising the framework.
“Be serious, and start by criticising the framework.”
I DONT FEEL LIKE WRITING A BOOK ON THIS NOW. I CAN. A very long one.
What I wrote, is from the perspective of the People on the Street in Greece and Club med. As opposed top the People on the Street in the North, who are paying form it.
Note I say “People on the Street” not Brussels Euro Trash Politicians, and Globalised Vampire Corporate Administrators, sipping Champagne, “People on the Street” pay for.
Greece should have left the EUR, It would solve many problems for it quickly.
In the referendum for that, the peopel voted to stay in the EUR, (Against the wishes of the Leftist populists in power in greece) for 1 simple reason
R1. Under the Eur, the greek State. Can not continually Default and Devalue their currency, to goose their economy. Which is what it has done regularly. Since the fall of the Ottomans. Remember greece fathered Modern State Default in the west. Before the rise of what became The Roman empire. .
1 Currency union, without fiscal union, is an insanity. That must eventually fail, as did the LMU.
2 The Waring tribes of Mainland Europe. Will NEVER unite. unless forced to.
3 The Euro was deliberately brought in to being, out of sequence ( Before the completion of banking and fiscal union) as a WEAPON. To force the Waring tribes of Europe, to further unite, with out another major war in Europe.
4 What has seriously derailed the process, and revealed the Obvious to the populace. Is than in 2008. When Greece turned an American correction event, into the GFC. (As the rug became to small to hide the Mountains of financial lies under it).
Was the arrogance and ignorance of the National ( As in 1 European Nation) Socialist Dictators in Brussels. Who when faced with any Complex or Serious Issue. Always scream “EVER CLOSER EUROPE IS THE ANSWER”. Then try to force this on the populace.
Only and idiot (or a group of them) Attempts, or continues to Attempt, to forge ahead with a project, that has financially, and Nationally negative, short term aspect, for much of the population. In Constrained economic times.
Unless they wish to feed ammunition, to Regional and Nationalist Populists.
5 Brexit is a feature of the Eur problem. National ( As in 1 European Nation) Socialist Dictators in Brussels. Wanted gone of England, as England would not bow to their dictatorial moves which would place Whitehall The Crown and English law subservient to Brussels.
It is a move that will seriously damage both groups and has awakened the politicians in the East. Whom having Escaped Moscow. Do not wish, as the English do not ,to see it replaced, by the same creatures in Brussels, that formally inhabited Moscow.
Again the arrogance and ignorance of the National ( As in 1 European Nation) Socialist Dictators in Brussels. Is behind this problem also, as again.
Only and idiot (or a group of them) Attempts, or continues to Attempt forge ahead with a project, that has financially, and Nationally negative, short term aspect, for much of the population. In Constrained economic times.
Unless they wish to feed ammunition to Regional and Nationalist Populists.
6 Bigger continuous regulation and currency blocks, not smaller and more disjoint, are the way forward in a Globalised world. Particularly when they share the same, land mass, Basic religion, and Basic culture.
7 Germany may be paying the Bill’s. However the Threat of Dictatorship in Europe, emanates from Brussels, not Berlin.
The EUR has NEVER been.
1 Simply a currency
2 About a simple currency union.
Between macron and brexit fiscal union and political union could be closer than ever. Brexit and maybe dexit and even swexit is a good solution to the euro crisis. Once the objectors are out of the club the eu can get on with its federal superstate.
Is the Devaluation of the “Peoples Savings” at the expense of savers, to benefit the “State Borrower” and sometimes Bank’s, as the “State Borrower”. Gets more “free money” from NIRP.
I don’t argue with what you write there.
The point is I am tired of seeing one country or subset of countries blamed. Fiat and fractional lending are also political tools and in this case they are in the hands of unknown forces. There is nothing “wrong” in a country choosing a path of currency devaluation as part of its social/political balance – it is not the ethic that we all agree with, including myself… but if that is the framework a country chooses then so be it.
Even then, Greece was happier under the Drachma than Euro in my opinion, and there was a later vote to exit…which was ignored by its government.
What we have now is that laxity of devaluation at EU level… it is product of the decision of all participating nations, and accountability ( of the elite) is nowhere to be found. If you take away the checks and balances of national currency, it creates a whole new world, one that is as open to plunder as it is to trade.
It takes two parties to do a bad deal. Those “Citizens of the North” should perhaps stop fixing their “KPI’s” by first lending to people that they damn well know will not be able/willing to pay the debt this time also and then blaming/punishing the victims for their vendor-financing scheme when it blows up!
I happen to live in the North. Self-righteous Snot-rollers and Navel-defluffers almost to a man; nobody here will deal with what their eyes and hearts tells them. A personal daily annoyance is having meetings with useless people which seems to be tolerated well beyond reason!
It is not surprising at all that they are being overrun by migrants because they are so easily taken advantage of, it is just getting ridiculous to see all the contortions made to not be “otrevlig”. They are asking for it, basically, and when you are asking for it, you cannot later complain in good faith!
“Those “Citizens of the North” should perhaps stop fixing their “KPI’s” by first lending to people that they damn well know will not be able/willing to pay the debt”
Those “Citizens of the North” dont lend to anybody. Their States governments and Banks Possibly still do.
The ECB Does.
Those “Citizens of the North” Just get the bill’s for it.
Your attitude to those Simple “Citizens of the North”, shows why the Euro and possibly even EU must divide into south and north, or fail.
They dont owe you, Many of them owe ME. As you don’t like them you should go back where you came from, or to a place with people you like. With your Family. Instead of complaining about them, whilst taking their job’s.
It’s about control.
Look at the countries destroyed by unwanted immigration, because they are mandated to accept illiterate and culturally incompatible masses.
The disobedient countries tend not to use the Euro.
Hubris also grows in the form of a bubble.
The EU has perhaps followed the trajectory of Mussolini’s Italy.
As was rather well said at the time:
‘At first they believed and hoped for the future; then they grew a little cynical, but still hoped; finally they believed in nothing, but there were still some great little scams going in the short term……’
The Italian Empire sent the peasant grandmother of a friend to Libya as forced settler – at least she went from half-starving in Lombardy (‘polenta and ditchwater’) to being better-fed and housed in Africa.
The survey results seem distinctly lukewarm to me.
The more the EU shouts about Unity, ie with Brexit, the more one doubts the solidity of this new Reich.
as for confidence, money is a public utility and no one loses confidence in what electricity can do for their lives, but they occasionally get angry with the power company.
The single currency is on it’s way to bankrupt Spain and Italy because without being able to devalue the currency they use, they see no exit to the crisis.
Wasn’t the EU & the one currency the brain child of the few elite, with the view to playing the lesser fools.
Aren’t there always those who believe themselves to be smarter & the more worthy, those chosen by the gods.
Wasn’t the EU an imperative to keep things as they were financially – for the straggling royals & their lackey aristocrat freeloaders ?
It was never going to work because it was set up for the wrong reasons.
Dommage, Dommage, .. man.
That is what I also note, it is like an opportunistic grab that tries to take corrupt advantage of a Europe that only wanted basic peaceful coordination, not total management and forced integration.
It is the wording of poll questions that matters most.
How about this question: If today your country could join Eurozone would you vote yes? I seriously doubt Italy, Spain, Portugal, Greece, citizens would sign on.