The Euro - a dead idea

Ok so it is very easy to be clever in hindsight, but the idea of one currency being used in 16 very different countries with very different economies and thus economic needs was surely madness.  The problem is that by sharing one currency exchange rates are fixed between these nations - no way of a currency devaluing to make exports more competitive or rising in value to make imports cheaper i.e. the economy adjusting to cope with the specific needs of that economy.  Secondly and just as importantly, member countries have given away control of their interest rates (a key tool in managing your economy).

It's easy to make these comments today, the day when the news is full of the EU 'bail-out' of Ireland.  Irelands strong economic growth in recent decades has long been used as a case study for the success of the Euro project, but now it is clear that such growth was unwise and unsustainable.  When the global economy was growing Ireland experienced a huge property bubble - house prices rising very rapidly due to very low interest rates - yep remember set by the European Central Bank.  Interest rates were way lower than Ireland needed them to be & quite simply their economy overheated and grew too fast.  As soon as the credit crunch hit and property prices started to fall just slightly then the banks who had granted all those mortgages started to look shaky in face of defaults (mortgage holders struggling to meet their monthly repayments) and when property prices are falling the bank simply can't get it's money back by repossessing the house - there won't be enough equity left.  So Ireland's government has had to invest something like 45bn euro to keep their banks afloat.

Right now when Irelands economy is in trouble it needs very low interest rates to stimulate some growth, but again fixed by European Central Bank Irelands interest rates are double what they are in Britain (ok still low but not low enough); & while the British pound has devalued by about 25% over the last 3 years to make our exports more attractive overseas, helping the UK economy out of our mess Irelands exchange rate to it's key trading partners is fixed.

Now a loan will be issued by Europe to Ireland to patch up the issues, and in return Ireland will have to promise to a series of tax and spending revisions that Europe agrees to.  Key to these changes that Ireland are likely to have to agree to is raising of it's currently low levels of corporation tax...  Making Ireland comparatively less competitive to international investors - no doubt helping other euro zone nations...  So being part of the Euro not only caused the problem, but now is preventing the real solution to the problem, and in bail out the larger Eurozone countries are insisting on changes that will help their own economies!!
I'm pretty thank ful that Britain is nothing to do with it, but then yes we are - we will pay about 9bn euro to help bail out Ireland as a consequence of their Euro membership.  Admittedly this is a self serving act given how much trade we do with Ireland but ironic none the less.