Ok. Lets hear it. What are your opinions after 6 months introduction of the Euro. My personal feelings are mixed. It’s very handy not to have all those different currencies for miner trips to all the different countries. On the other hand it feels quite artificial and prices have risen quite a lot.
Opinions ?
US doper back from Germany trip - It sure is great traveling through other European countries. It’s nice not having a bunch of exchange rates. (US view - It’s nice that a eruo is worth about a dollar, no exchange rate to worry with.) The people in Germany were complaining about the jump in some prices, mainly clothes, that ocurred with the switch.
I’m still not accustomed to the prices. Everything still look cheap (1€=6,55 francs, roughly), and I tend not to realize how much I’m actually spending.
Apart from that, the notes are fine, though a little unimaginative. I like the bridges/doors concept, though. I don’t like that much the coins, but on the other hand it’s fun to check if there’s some coin from another country in the change (still waiting for coins from Austria, Greece and Finland).
Anyway, I was a very strong supporter of the new currency. Actually not much for economical reasons (though I also think these reasons are sound), but because I’m a federalist, hence every step toward unification is fine with me…
I have way more coins in my pocket but not as much money as a hell of a lot of things have risen in price.
Like the notes but the coins are a bit similar for my liking.
Furthermore the appalling decline of the Euro’s value (following currency convergence, and not linked to the issuing of the notes) has made Eurozoners a lot poorer compared to, e.g., the UK and US.
I’m also finding it a bit more difficult to get through the month due to unscrupulous price rises.
But I have been forcing myself to think in € rather than IR£, so when I eventually visit another Eurozone country (in the Caribbean in June!), it should be quite enlightening.
Heh… clairobscur, I’m still waiting for any foreign euro coins to appear in my wallet. Six months and not one single non-Finnish euro coin. It’s not faaair. 
LOL…I had to wait for a grand total of 3-4 days before seeing the first foreign coins (belgian, german and spanish ones)
I guess it will be a long time before any significant amount of foreign euros appear in Finland. I guess people who get their hands on them are hoarding them…
Since I’m constantly broke anyway, I don’t worry about which currency I don’t have in my pocket.
No, seriously. The single currency is a convenient thing IMHO, and I’ve supported the idea before, for similar reasons as clairobscur.
Sure, prices have gone up a bit (and here in Germany, they’ve created the worst wordplay ever to describe this - “Teuro”), but I think it’s exaggerated, especially by tabloid papers. The most notable price hikes were in restaurants, I believe, but I don’t know how much the euro really is to blame for this. Probably they’ve just grabbed the currency switch as a good opportunity for price hikes long overdue.
And sometimes, it’s just not possible to make people stop complaining. When the dollar was very low a few years ago, it was bad for the export industries; now the dollar is pretty high, and it’s bad as well.
The best thing is that I am paid in Pounds Sterling, but work in Europe - so I have in effect had a 25% pay rise since the Euro’s introduction! 
Ahem. Can’t argue with the UK example, but here’s the Euro/Dollar graph for the past 120 days. A historical low for the US Dollar. I just got back from a week’s trip to the US, and upon examining my bank statements, it was a lot cheaper than last time around. YMMV.
Schnitte: teuro?? That’s positively horrible. 
Coldfire - if you extend the Euro / Dollar graph back another two years, you will see that the decline in value of the Euro is pretty appalling over the whole period of its existence.
The recent improvement in this exchange rate is due to the (currently) low dollar, not a stronger Euro - and still doesn’t cancel the overall losses.
Yeah, the knife always cuts both ways. The initial decline in value of the Euro can be attributed to a strong US economy at the time just as much as it can be to contemporary distrust in the single currency. It is my personal theory that the recent appreciation of the Euro vs. the Dollar is at least partially atributable to the proof that all is still well now that the tangible currency finally has become reality: no major changeover problems, et cetera. Of course, there are very valid reasons for the decline of the Dollar as well - and we all know them.
A quick analysis of the Dollar/Euro rate from January 1, 2000 (when the Euro first came to life) until May 31, 2002 reveals that over that period, the Euro depreciated about 8% against the Dollar. Here are all historical rates. Exchange rates aren’t a black and white game of “my currency is stronger than yours”. There are a lot of factors at play, a lot of them not even directly concerning either the US or European markets. But overall, an 8% depreciation over 2.5 years is a far cry from “appalling”.
Also, “making Eurozoners a lot poorer” is very relative. With a cheaper Euro, exports from the Eurozone to the US have been increasing, driving up the respective GDP’s in Euroland.
There’s always two sides to a changing exchange rate.
I maintain an 8% drop in value over one year is pretty appalling.
Currency convergence began on Jan 1, 1999, not 2000. I generated the following Euro/USD graph from 1999 to present using this site (can’t reproduce via the link, so have copied it to my own site), and then Euro/GBP graph using the same dates, to illustrate what the slump in value looks like. And further to illustrate that this is most likely a drop in value, rather than a climb of the other countries, here’s the same time-period vs. the Yen.
I agree we’re not poorer WRT exports. I should clarify that Eurozoners are poorer specifically WRT visiting non-Eurozone countries, and importing from non-Eurozone countries; it’s probably different in the Netherlands, but unfortunately Ireland still imports a lot of stuff from the UK and US, which has contributed to large price rises of many consumer goods (not to mention galloping inflation caused partly by the drop in value of the Euro - and the government’s inability to alter interest rates to counter it due to European Central Bank control - but that’s another thread…).
The 8% I referred to was since January 2000, not just over one year.
I stand corrected on the Euro’s conception date - carelessness inspired by the start date of the rates on that Evil American Federal Reserve Page.
Thanks for your graphs - they’re insightful. But mostly, they lead me to the conclusion that the Euro has only depreciated significantly against the dollar over the past 2.5 years, whereas it’s rather stable (if short term volatile) versus Sterling and Yen.
I guess my question is: just how far do you want to look back to find “relevance”?
Great resource Cf.
the Euro-Sterling table for the same period doesn’t seem to indicate ANY significant devaluation against the British Pound either, and recently has gotten stronger.
We Brits are somewhat polarised about the Euro, the only non-jingoistic argument against us joining seems to be that we would lose interest rate control, but no-one seems to be able to say why that is something you would actually want to control.
(IANAE)
I was bitching about what happened in 1999, by the way.
Well, the interest rate most certainly is something you’d like to control. The question is: who controls it, and are they doing a good job?
For a country that only granted its central bank full independence in 1997 (WARNING: PDF file, and a long one to boot), the Brits sure seem to have a big mouth about the concept of central banking, which ideally, whether federal or national, is of course completely independant from politics to begin with.
And FWIW, IAAE.
Well, IANAE either, but since this is a pet issue of mine, I’ll have a go.
Look at it this way. In the UK we’ve got a relatively booming economy in the South and a relatively stagnant one in the North. Although this is a generalisation and a simplification, from the point of IR control, let’s say it’s so.
If we could (and we can’t, because we have our own, single currency - we call it the pound) we might like to raise interest rates in the south, while perhaps lowering them in the north. This is of course impossible; one currency has one rate. But if we could, we would.
In the general sense, raising interest rates has the effect of putting the brakes on an economy. This is for a number of reasons, but some are that consumers don’t spend as much (their mortgage and credit cards are now more expensive to service) - a similar argument applies to business - it costs them more to borrow so they tend to put off large investment and expansion. Lowering rates has the opposite effect.
You might conclude Given that a booming economy is a Good Thing, why would anyone ever want to put the brakes on?.
The answer is inflation. You can have too much of a good thing, and the sensible course is to set a realistic inflation rate and twiddle the interest rate knob in such a way to hit that rate.
Blimey, I’m rambling.
Anyway, back to the euro issue. If every economy in every part of Europe could be absolutely guaranteed to be in step, and keep in step in perpetuity, I cannot see any problem with having the ECB set the euro IR to whatever. The flaw is that I can’t see that happening. Ireland certainly went through a period of overheating (still might be, I’ll look for some stats), and as we face enlarging the EU with countries with economies which are historically different from ours, the problems increase.
And even if you sort those out, you’ve got other factors, such as the fact historically we have a tradition of more house ownership (as opposed to renting) in the UK. This makes us uniquely sensitive to IR changes (as I can attest to personally).
(BTW, as I’ve said in other threads, my own position is based entirely on economics, not jingoism; I’ve no problem whatsoever with losing the pound. Pay me in buttons if you want to, but make sure my mortgage company doesn’t want twice as many buttons next year as this year).
(Just saw Coldfire’s post in preview)…
I agree - but only because it’s so important. I thought the decision by the gov’t to cut the MPC loose (and it was a surprise - a lot of people were a bit slackjawed since they weren’t under much pressure to do so that I could see) was a very surprising one.
I think we both agree that an apolitical central bank is the only way a nation or federal government can possibly hope to control a single currency (pound or Euro) IR. The difference is that I think the ECB has a much harder job. It may well be that most countries will end up being ok most of the time, but I can forsee times when this won’t be true for everyone. I can just see that some of the factors which set us apart might mean that the UK will be one of those unhappy countries a bit more often.
That said, I wish the euro well. It is in everyone’s interests for it to be a success.
No offense, but you are indeed.
I’ll gladly explain the relations between an exchange rate, an interest rate, and inflation. But not in this thread (see the OP), and not now, 'cause I’m late for an appointment already.
Don’t forget that this graph only shows the last 120 days! The Euro has gone up in value only over the last couple of months - follow it back to Jan 1999 and you can see how it has fallen overall.
Britain is not yapping about the concept of an idependent bank- we are yapping about the concept of a national bank linked to national needs, i.e. not a “one-size-fits-all” policy that cannot take account of variances between national economies (or indeed be influenced by the voters of countries which do badly out of it).