Will the European Union Survive?

Surprising, most forget that their was (and still is - as e.g. in relation with the UK) the European Currency Unit (ECU) .... since 13 March 1979.

On Friday, the euro EUR= EUR=EBS climbed as high as $1.2673 on electronic trading platform EBS in early trade. It last traded at $1.2565, up 0.8 percent on Reuters data.

It tumbled as low as $1.2143 earlier this week after Germany banned naked short selling in some securities, fuelling speculation about other possible market regulations.

The euro is poised to end the week roughly 1.7 percent higher against the dollar, following five weeks of losses.

Exactly, and what do you expect normal germans to think, the ones who are seeing huge cuts in their pensions and overall government support due to lack of funds?

Can you name a single person who got a cut in his/her pension?

I mean, I live here, know quite a bit about this and that, but I've never heard of such.

Germans now face several years of belt-tightening, with Roland Koch, the deputy leader of chancellor Angela Merkel's Christian Democratic Union (CDU) party and the minister-president of the state of Hesse, saying that no areas "can be considered taboo".

Tax cuts that were promised by Merkel's government when it came into office in October have now been scrapped, the chancellor announced this week. Instead, policymakers are now talking of raising taxes to fill a €10bn fiscal gap.

Economists are advising the government to raise reduced VAT levels on items such as books. Friedrich Heinmann from the ZEW institute said: "If the government increased VAT on items that currently enjoy a reduced rate, such as hotels, theatres, books and newspapers, it would glean €8bn; otherwise it will be forced to raise the current VAT rate [of 19%]."

Experts are warning that inflation is likely to rise owing to the euro's recent fall in value against other major currencies, which will eat into wage rises and pensions.

"We can expect inflation to rise sharply over the next few years," said economist Hans Wolfgang Brachinger. "The euro is losing its value, and consumers will have to dig deeper in their pockets as a result".

Municipalities, many of which are already bankrupt or nearing bankruptcy, are also likely to see their budgets slashed. This will lead to the closure of facilities such as swimming pools and a lack of money for road repairs and other infrastructure. Michael Fuchs, the CDU's deputy parliamentary group leader, said: "Every single type of subsidy now has to be examined closely".

the euro is trading at about u.s. dollar 1.20 - down somewhat but long-term the euro is up from about 8o cents u.s

the euro's recent fall in value against other major currencies

Massive cuts to your standard of living are on the way......time to wake up buddy boy....

my point is that the long-term trend for the euro seems to be UP !

am i wrong

But again: you said that there have been massive cuts in pensions.

When and where was that again?

At the start of this year, the Federal Labor Agency had a surplus of €17 billion. It is now estimated that the agency will require additional funds of €15 to €20 billion by the end of 2010. For 2009 alone, the agency can reckon with an operational deficit of approximately €14 billion, according to one official source. The country’s health insurance funds also predict ballooning deficits estimated at up to €13 billion by the end of 2010.

According to press reports, Treasury experts estimate that shortfalls in revenue for all regional administrative bodies (federal, state and local) will total over €300 billion in the coming three years.

The federal government alone is expected to rack up debts of €50 billion"more than any preceding government. A large portion of the government’s investment in its economic stimulus package and its bank rescue plans are not included in this total. Both have been hidden in subsidiary budgets. For next year, the government is already reckoning with new debt levels totaling up to €80 billion.

Reflecting on this state of affairs, the Süddeutsche Zeitung commented in an article entitled “The Third Phase of the Crisis” that there was a strange contradiction between the economic crisis and its perception by the public. Currently, the population has accepted the situation with remarkable calm. Everything has remained peaceful in Germany, but this peace will soon be over, the newspaper predicted

Public pensions where cut in the reform of 2001, and even those reduced costs are not sustainable.

You are quibbling with details...could it be because you know deep down that my general point is valid?

Underlying these comments and others that followed in a succession of headlines lies Germany’s demographic time-bomb. With one of the world’s oldest populations and a birth rate among Europe’s lowest, the theory goes, benefits will have to be cut as the number of contributors to the pension system falls and the number of recipients rises.

There is a possible alternative " but it would involve substantial tax hikes at a time when the opposite is in vogue. With companies are all too eager to move to countries with low taxes, cheaper labour, and fewer questions asked about social responsibility, a tax hike of this order looks like a no-starter for politicians trying to keep the economy competitive.

Thus arises the question of fairness between generations, or Generationengerechtigkeit. Why should this generation of workers pay for relatively lavish packages next to which their own retirement will probably pale in comparison? How fair can such a system be? Steinbrueck himself has said: “The ones being pinched are the 25- to 35-year-olds who want to have children.”

Quote:

Thus arises the question of fairness between generations, or Generationengerechtigkeit. Why should this generation of workers pay for relatively lavish packages next to which their own retirement will probably pale in comparison? How fair can such a system be? Steinbrueck himself has said: “The ones being pinched are the 25- to 35-year-olds who want to have children.”

I think that really is THE question .... about the last 130 years. It's how our system worked all that time.

Given Germany's now declining population and continuing very low birth rate, together with the new requirement to supplement the finances of Greece and possibly Spain and others, how long do you believe these generous benefits will last?

Actually they aren't "benefits" at all. The government merely gives you back some of the money it takes away in much higher taxes on everything you earn and on everything you buy. The loss of your freedom to choose for yourself, is, of course not compensated.

Actually they aren't "benefits" at all. The government merely gives you back some of the money it takes away in much higher taxes on everything you earn and on everything you buy. The loss of your freedom to choose for yourself, is, of course not compensated.

I think that the declining population is a general problem.

What such has to do with a "loss of freedom" is something I'll never will understand.