...London were full of Europeans on their (unimaginably long) holidays, acting with apparent disregard for the dire predictions in the press of a European Union (EU) on the verge of bankruptcy and dissolution. Meanwhile, financial markets backed off from their attacks on the PIGS (Portugal, Ireland, Greece, and Spain) while those porcine countries moved forward with significant reforms, slashing their deficit and debt levels. German growth in the last quarter has driven eurozone growth to above U.S. levels, giving pause to euroskeptics and glee to euroboosters on both sides of the Atlantic. And yet the EU is far from out of the woods. The past two years of global economic upheaval have sorely tested the EU’s Economic and Monetary Union (EMU) and its crowning achievement, the euro. At base, the problem is simple: the EU is an outlier in political and economic history, and markets do not know what to expect from its unique combination of a single currency and separate nation- states. The eurozone crisis reveals the challenges of the EU’s sui generis political status—no longer a mere collection of nation-states, yet not a fully fledged federal entity. What, then, should we expect for the future of European integration? What does the stillunfolding eurozone crisis mean for the larger geopolitical position of the EU? Absent a crystal ball, any response is necessarily hazy and conjectural. Nevertheless, it is possible to sketch out some significant milestones and signposts...
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...markets. But at this level U.S. dollar is still maintaining its leading role on the international financial markets, maybe because of its greater financial market size or the inertia in the use of financial resources. The objective of this paper is to analyze different aspects of challenges U.S. dollar faces today. What are the chances for euro to surpass U.S. dollar and to become the leading currency. The first section of the paper gives a brief history about an international currency development, the second and the basic part gives some theoretical aspects and reviews the ideas of different economists about the challenges dollar face. All these discussion leads to the final part - conclusion. HISTORY Before the few decades of World War I, international gold standard emerged. It was gold bullion and not a gold coin standard, which was the 19th century innovation. It meant coin and paper money convertible into gold bullions. Britain was the world's preeminent trade nation making up 30% of the world's export in 1860; 20% in 1890 and the 60% of the world's trade invoiced and settled in sterling between the years 1860 and 1914, as it was appropriate for a lot of foreign suppliers for entering the British market. The...
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...almost the status quo. Greece is known as the catalyst and a scapegoat within the views of the Euro debt crisis. Greece is on the brink of insolvency and others are following. Options are available in this time of uncertainty, whether they are conventional or not, that could result in Greece remaining within the Euro and accepting austerity or altering their status and participation within the monetary union. The decision that will be acted on regarding Greece and the results of that decision regarding their solvency as a nation, will leave a change in outlook for the market and other countries on the brink of insolvency within the Euro Zone and impact the currencies success or failure, which would impact countries within and outside the EMU. The European Union was created to promote a sense of Pan-Europeanism, to...
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...and Sweden. Later, in 2000, Greece changed its decision to accomplish the agreement. In 2001, it started adopting the Euro. At the present time, there are 17 out of 27 EU countries using the Euro as an official currency, which makes it become one of the most important currencies in the world. In the future, apart from Denmark and Britain, all other members of the EU will adopt the Euro. It should be known that only Latvia and Romania have a target date for joining the Euro in 2014 and 2015 respectively (European commission, 2011b). This essay will critically examine the pros and cons of adopting the Euro, using the UK as a particular case study. II. Body 1. Background of the Euro. According to Szasz (1999), after the Second World War, some European politicians...
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...Abstract This paper shall discuss the Gold Standard, the Bretton Woods System and the European Exchange Rate Mechanism with a view to analysing their respective advantages and disadvantages; along with the circumstances surrounding their emergence and failure. Through this lens the author intends to draw comparisons between the current EMU and the Gold Standard and any implications these similarities have Introduction A prerequisite to any discussion on this topic is an understanding of certain classical and neo-classical analytical frameworks. Therefore section one will briefly present and explain the logic of Hume’s Mechanism and the ‘Impossible Trinity.’ Section Two outlines a chronological history of various exchange rate mechanisms along with their corresponding successes and failures. Section three draws parallels between the Gold Standard and the European Monetary Union and discusses the consequences of these similarities. Section One: Analytical Frameworks Hume’s Mechanism: This theory combines aspects of the purchasing power parity and interest rate parity conditions. It states that as the monetary base (M) increases domestic prices trend upwards. This induces a nation to import more goods than it exports, creating a current account deficit. This deficit gradually causes gold to leave the system, causing prices to revert back to their original levels- producing a balanced current account. This process in the goods markets is far slower than the complimentary...
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...E SSAY COLLECT ION Crisis in the Eurozone Transatlantic Perspectives ESSAY COLLECTION Crisis in the Eurozone Transatlantic Perspectives This publication is a part of CFR’s International Institutions and Global Governance (IIGG) program and has been made possible by the generous support of the Robina Foundation. The Council on Foreign Relations (CFR) is an independent, nonpartisan membership organization, think tank, and publisher dedicated to being a resource for its members, government officials, business executives, journalists, educators and students, civic and religious leaders, and other interested citizens in order to help them better understand the world and the foreign policy choices facing the United States and other countries. Founded in 1921, CFR carries out its mission by maintaining a diverse membership, with special programs to promote interest and develop expertise in the next generation of foreign policy leaders; convening meetings at its headquarters in New York and in Washington, DC, and other cities where senior government officials, members of Congress, global leaders, and prominent thinkers come together with CFR members to discuss and debate major international issues; supporting a Studies Program that fosters independent research, enabling CFR scholars to produce articles, reports, and books and hold roundtables that analyze foreign policy issues and make concrete policy recommendations; publishing Foreign Affairs, the preeminent journal...
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...ER E N U OP A E CON OMY E o o cP p r 3 1 Mac 2 0 c n mi a es 1 | rh 0 8 E o o c o en n ena e l gde r ae cn mig vra c i n na e uo ra r Ii B g a eg n E R P A C MMISO U OEN O S IN EMU@10 Research In May 2008, it will be ten years since the final decision to move to the third and final stage of Economic and Monetary Union (EMU), and the decision on which countries would be the first to introduce the euro. To mark this anniversary, the Commission is undertaking a strategic review of EMU. This paper constitutes part of the research that was either conducted or financed by the Commission as source material for the review. Economic Papers are written by the Staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The Papers are intended to increase awareness of the technical work being done by staff and to seek comments and suggestions for further analysis. The views expressed are the author’s alone and do not necessarily correspond to those of the European Commission. Comments and enquiries should be addressed to: European Commission Directorate-General for Economic and Financial Affairs Publications B-1049 Brussels Belgium E-mail: Ecfin-Info@ec.europa.eu This paper exists in English only and can be downloaded from the website http://ec.europa.eu/economy_finance/publications A great deal of additional information is available on the Internet. It can be accessed through the Europa server (http://europa.eu) ...
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...Local Economy http://lec.sagepub.com/ The euro crisis Andrew Jones Local Economy 2011 26: 594 DOI: 10.1177/0269094211421748 The online version of this article can be found at: http://lec.sagepub.com/content/26/6-7/594 Published by: http://www.sagepublications.com On behalf of: London South Bank University Local Economy Policy Unit Partner Organisation: Centre for Local Economic Strategies Additional services and information for Local Economy can be found at: Email Alerts: http://lec.sagepub.com/cgi/alerts Subscriptions: http://lec.sagepub.com/subscriptions Reprints: http://www.sagepub.com/journalsReprints.nav Permissions: http://www.sagepub.com/journalsPermissions.nav Citations: http://lec.sagepub.com/content/26/6-7/594.refs.html >> Version of Record - Nov 17, 2011 What is This? Downloaded from lec.sagepub.com at UNIV OF GUELPH on November 17, 2013 Review article The euro crisis Andrew Jones Local Economy Policy Unit, London South Bank University, UK Local Economy 26(6–7) 594–618 ! The Author(s) 2011 Reprints and permissions: sagepub.co.uk/journalsPermissions.nav DOI: 10.1177/0269094211421748 lec.sagepub.com ´ ˜ Marco Buti, Servaas Deroose, Vıtor Gaspar and Joao Nogueira Martins (eds), The Euro: The First Decade, Cambridge University Press: Cambridge, 2010; 1048pp: ISBN 978-9279098420, £95 (hbk); Roy H. Ginsberg, Demystifying The European Union: The Enduring Logic of Regional Integration (2nd edn), Rowman & Littlefield: Lanham, MD, 2010;...
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...A HISTORY OF WOOMERA Maks Z Woomera was created due to the needs of the Britain's defence after World War II. Britain required a large remote area to test new weapons systems. Many sites were considered including Canada. Though in the end Australia's vast and unpopulated inland won the day, and the Long Range Weapons Establishment (Woomera rocket range) was created on the 1 April 1947 as a Joint venture between Britain and Australia. Woomera's colourful history includes testing weapons, satellite launches, tracking lunar and planetary spacecraft, as well as the Mercury manned spacecraft. Germany's use of V-1 flying bombs and V-2 rockets during World War II prompted the British to launch a rocket program. Though because Britain’s population...
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...Global Economic Perspectives Exam II Objective List BASIC CONCEPTS * Exchange Rate Risk * Selling dollar-denominated bonds but not having dollar-denominated sales * China’s real estate bubble * How to avoid: * Currency swaps * Future markets * Currency pegs * Setting the currency equal to a specified value * What factors determine exchange rates (pegging and managed floats) * High interest rates Appreciation & recession – increased demand & price * Stronger currency favors importers (trade surplus) * Low interest ratesDepreciation & Expansion * Weaker currency favors exporters (trade deficit) * The role of the IMF * Make emergency loans to countries with balance of payment problems * Ensures stability of national monetary system * Fiscal Policy * Government changing taxes and/or government spending in effort to increase or decrease business activity * Expansionary FP leads to increased spending but downside is budget deficits * Contractionary FPleads to budget surpluses or smaller deficits * AKA Austerity (attempt to shrink growing deficits) * Monetary Policy * Central Banks changing the MS to increase or decrease the availability of credit in an effort to increase or decrease business activity * Primary tool is Open Market Operations * Buying and Selling short...
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...EMS The European Monetary System (EMS) was the forerunner of Economic and Monetary Union (EMU), which led to the establishment of the Euro. It was a way of creating an area of currency stability throughout the European Community by encouraging countries to co-ordinate their monetary policies. It used an Exchange Rate Mechanism (ERM) to create stable exchange rates in order to improve trade between EU member states and thus help the development of the single market. Stable money had been a key part of international economic calculations since World War II. However, by the 1980s, opinion about it was much more divided. As a result, not all countries took part in the EMS straight away, and there were deeper splits in the years to come over the role of the EU in setting monetary policy as the EMS was replaced with the Euro. History The EMS was launched in 1979 to help lead to the ultimate goal of EMU that had been set out in the Werner Report (1970). The EMS came about because of the high global inflation and economic stagnation that characterized much of the 1970s. Contributing greatly to these problems was the sorry financial predicament of the United States during this decade. The dollar, which served as a peg for European currencies, was plagued by a ballooning American deficit, the oil crisis, a rapid rise in the demand for gold in world commodity markets, and unemployment and "stagflation" at home. The currency exchange rates of European Community (EC) members fluctuated...
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...Mukitul Alam Prof. Anzenberger. MGT-330, Sprn-12 Final Paper 10-July-2012 The Eurozone Debt Crisis Most of the people know how it feels to owe money, even if it is only to a mortgage company, or to a four-year college loan provider. But it is a different matter for an entire nation to be deeply buried in debt and unable to repay it. When a country drowns in debt, the government of that country usually seeks austerity as the major remedy of overcoming its debt crisis. Austerity promotes slow growth, and this actually makes the situation even worse due to the fact that world economy has become more open and integrated. In today’s world, there is no nation that exists in economic isolation. Every countries almost all the economic aspects- its education, health service, industries, service sectors, levels of income, and employment is integrated to the economies of its adjacent countries. This linkage plays a very important role in the global movement of goods and services, labor, investment funds, and technology. That is, when a country defaults on paying its debt, it not only affects the country in default, but also initiates a global economic crisis. In my research paper, I will tell the tale of eurozone debt crisis, which has created a global hysteria in the current world economy. In the research that follows, I will start...
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...The European Union (EU) is the umbrella organization encompassing the European countries that have eliminated economic, trade, and immigration barriers between the member countries of the union. The European Union is a unique economic and political partnership between 27 European countries. It has delivered half a century of peace, stability, and prosperity, helped raise living standards, launched a single European currency, and is progressively building a single Europe-wide market in which people, goods, services, and capital move among Member States as freely as within one country. The EU was created in the aftermath of the Second World War. The first steps were to foster economic cooperation: countries that trade with one another are economically interdependent and will thus avoid conflict. In 1950 French Foreign Minister Robert Schuman proposes integrating the coal and steel industries of Western Europe, 1951 The European Coal and Steel Community (ECSC) is established, with six members: Belgium, West Germany, Luxembourg, France, Italy and the Netherlands. A supranational body, called the High Authority, is created to manage the coal and steel industries, 1957 the six members of the ECSC sign the Treaties of Rome, creating the European Economic Community (EEC) and the European Atomic Energy Community. The EEC member states aim to remove trade barriers between them and form a common market, In1967 The institutions of the three European communities are merged, creating a single...
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...Discussion on Tragedy of the Commons | This paper intends to discuss the basic theories within the scope of the tragedy of commons, especially from the ethics perspective. In addition, the paper also explicitly explores two possible ways to solve the tragedy of the commons, the free market solution and the socialism solution, and applies these ways to a real case of Euro’s Tragedy. In the end, referring to Elinor Ostrom’s theory in 2009, the paper recommends the collective agreement from the moral perspective to be the possible ideal solution to the tragedy of the commons. | | Contents 1. Introduction 1 2. Formation 2 2.1 Theoretical explain of the formation 2 2.2 Hardin’s grazing model 4 3. Ethics Involved 5 3.1 Ethical Egoism Theory 5 3.2 Utilitarian Theory 5 3.3 Moral Foundation Theory, Virtue Theory and Confucius 6 3.4 Right Theory 6 4. Solutions to the Tragedy 7 4.1 Free market solution 7 4.2 Socialism solution 9 4.3 Comparison of the Two Solutions 10 4.3.1 Attitude towards self-interest 11 4.3.2 Attitude towards common resources 11 4.3.3 Government Function 11 4.3.4 Incentive structures 11 4.3.5 Outcomes 12 5. Case of Euro’s Tragedy 12 5.1 How Euro’s Tragedy Happened 13 5.2 How it related to Tragedy of the Commons 14 5.3 Free Market Capitalism Solution and the Tragedy of Euro 14 5.4 Socialism Solution and the Tragedy of Euro 15 6. A Third Solution 17 6.1 Ethical Obligation 17 6.2 Cultivating Ethics 17 6.3 Elinor Ostrom’s Theory 18 ...
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...Throughout the past 60 years the European Union has established itself as a leader in dismantling national level economic and cultural barriers in return for a meso-scale regional framework which has gone on to become a key feature of globalization. In wake of the atrocities committed during World War II, Europe sought to establish a community of peace, stability, and prosperity with the common interest of humanity (De Vasconcelos, 2005). This unification has been achieved through the liberalization of four essential freedoms of movement: goods, service, capital, and labour (Molchanov, 2007). Even reconciliation between former enemies, such as France and Germany, came from the understanding that new world order has dampened the ability of nations to solve their problems on their own. Integration at a regional level can be thought of as integral part of globalization as it has become Europe’s primary defense amidst rising global competition (Murray, 2011). In fact, Peter Schmitt-Egner identified the process undertaken by the EU as transnational regionalism, as it seeks to 1: Utilize European integration as arena for transnational learning to foster internal regional development and; 2: Enhance regional competence to create a ‘Europe of Regions of Citizens’ (Schmitt-Egner, 2002). For Europe, regional integration has presented itself as a window of opportunity that allows for: “outward looking trade policy, internal competitiveness and involvement in cross-border agreements” (Downs...
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