Sunday, October 2, 2011

The Euro And Its Problems

With the recent economic problems in Europe, especially Greece, I wondered what countries normally do in that situation. I found that one way countries try to fix a debt issue is to devalue their currency to make their goods seem better priced. However, in Europe, most countries use the Euro which is a shared currency. Thus there were talks of a "Euro Breakup". However with Greece near defaulting, it would cause huge problems for the currency. This is why countries like Germany and France, the more wealthy countries using the Euro, are rushing to help bail out Greece. Other countries however are also having problems, such as Italy and Spain. This would require germany and France to constantly provide these countries with "cash flow" to sustain the currency. However, I think that all countries in the end are in it for themselves and I do not see France or Germany helping those countries out much more. However, this would mean that Greece, Spain, and Italy would have to leave the European union in order to stop using the Euro and that is unlikely to happen. also, France and Germany cannot kick them out alone. That is why, in the end, I see the countries looking out for number one and devaluing the Euro in order to try and save their own economies. On a side note, I think this would be good for the US because it would drive the value of the dollar, hopefully, back up to a more level value with the Euro respectively. Or it could just cause the Asian currencies to sky rocket and we all loose a lot of money.

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