Jared Johnson, The Impact of the Euro on the EU.

Final Proposal

2011-04-23T23:55:00.000-07:00

Final Proposal

TO: Professors: Scott Abbott, Mark Jeffreys, William Cobb and Vaughn Armstrong

FROM: Jared Johnson

DATE: April 23, 2011

SUBJECT: Proposal to complete a research project on the effects of the Euro on the European Union and to demonstrate weaknesses within the Union itself that raise warning signs for the health of the EU moving forward.

Statement of Thesis and Project Summary:

The aim of this research project is to diagram and expose major economic and political flaws within the structure of the European Union and the creation of the Euro. The propose is to argue the negative impact and eventual demise of the Euro. I intend to do this by exploring and discussing how the Euro is a symbol of political and economic unity and whether it is enough to maintain that same unity within the European Union. My point of view on the Euro is opposed by many economist, financial analysts and politicians, especially while the Euro is currently nearly 50% stronger than the US Dollar with international money and attention ever growing in that region. So a key part of my argument will come from the Growth and Stability Pact at the creation of the Euro outlining “worst case scenario” debt situations that could lead to financial meltdown within the European Union, those scenarios arrived approximately two years ago. I will discuss both sides of the argument acknowledging the a positive Euro future (the majority) and the demise of the Euro (small minority) and I will attempt to argue the latter and demonstrate my point through hard economic facts, case studies, current events and similar international situations. With my background in international markets and currencies I have firsthand experience in this field and the Euro is a standing example of these kinds of major economical and political mishaps.

Key points of my argument will consist of the following:

The hundreds of billions of dollars that have been spent on recent bailouts while the financial crisis is only growing more serious
The political and social discontent between the “producing” countries and those in need of assistance.
The continuing violations, by several member states of the EU, of severe debt warnings put in place at the creation of the Euro with the Stability and Growth Pact.
Discuss the topic of the Euro replacing the US Dollar as the world reserve currency, pros and cons of that argument.
The history of European countries fighting each other and taking advantage of those countries less able to defend themselves.
The history of treaties and pacts put in place by the larger member states with any implications this has had regarding the smaller EU members.
Lastly I will include the compare and contrast of the EU with other countries that have attempted currency unions and those countries that are in preliminary stages of considering such an organization (several oil producing countries are in talk currently).

Literature in Review:

Several of the sources used come directly from the International Monetary Fund (IMF) site as well as the European Commission for Economic and Financial Affairs (ECFIN), these are great primary sources for information regarding the affairs of the EU. According to the ECFIN, "implementation of the single currency was not only an economic decision; it was also a political commitment by the EU Member States to work together." (European Commission) There is big debate on whether the problems with the EU are more political or economical, my research so far has found both to be of equal importance and equally problematic. The political problems and tension between the small and large countries in the EU seem to be causing Issues on both sides, hence it appears the political problems are causing the economical problems and vice versa.

Indeed a major topic to be addressed in my project will be the financial danger looming around the PIIGS (Portugal, Ireland, Italy, Greece and Spain) and a great article found in my research reinforces this point, “Greece’s fiscal problems are, as I have argued many times, but the tip of a global iceberg... Indeed, history suggests that severe recession and socialization of private losses often lead to an unsustainable build-up of public debt.” (Roubini) This adds to the problem of several countries being in major violation of the Stability and Growth Pact of which, “Implementation started on January 1, 1999,in order to make sure that the EU member states maintained fiscal discipline after the introduction of the euro, the single currency.” (Kesner-Škreb) Both articles have been key in forming my argument and leading me to new and informational sources.

Another article that was crucial comes from a professor of economics at UC Berkley, he discusses the financial and political challenges the EU faces with fighting to keep the EU from completely falling apart, he makes the comparison of an American state vs a country within the European Union. Along with the financial problems plaguing the EU there are serious social and political hurdles, “Europeans don’t do these things (think of themselves as completely united) because they see themselves as Greeks and Germans first. They don’t interfere in the “sovereign prerogatives” of other member states.” (Eichengreen) As demonstrated in the previous article, issues within the European Union span across a large array and the obstacles to overcome are great.

Preliminary Outline

1. Introduction

2. Discussion of the financial state of several of the major EU members and the effects they have on each other with the positive and negative aspects of the Euro (pro and con argument)

a. Discuss the current state of the Euro and financial issues most prevalent within the EU giving recent developments.

b. Discuss prominent social/political issues and in the EU

3. Possible causes of the current state of financial crisis.

4. Analysis of the Stability and Growth Pact (SGP)

a. Discuss when and why it came about

b. Review the major violators of the SGP and what impact that has on the rest of the EU

5. Review historical implications in Europe and the past and present effects they have on the current situation.

6. Discuss current affairs pertaining to this issue (topics of interest)

7. Conclusion.

Schedule for Completion:

May 30th, completion of research

June 30th, refined thesis, completion of two pending interviews

July 30th, completion of economic/finance section of draft

August 30th, completion of historical section of draft

September 30th, submit first draft/start revision

October 30th, submit final draft, revise (hopefully defend)

Bibliography

Brash, Donald. "The Pros and Cons of Currency Union: a Reserve Bank Perspective." 2008. Reserve Bank of New Zealand. 2011 .

-Great article from the bank of New Zealand discussing the pro and cons of a currency union, reasons they would want to enter into a larger one, which countries would best benefit them in the union but also some of the major draw backs. He specifically discusses the aspect of losing monetary control of an individual country when a currency union is started.

Brown, Brenden. Euro Crash: The Implications of Monetary Failure in Europe. Palgrave Mcmillan, 2010.

-Brown's book further explores the path the EU is on with the Euro and increasingly weakening countries. The author also goes into further detail about what would likely happen to the EU should more defaults come as a result of the extensive bailouts possible needed.

Eichengreen, Barry. "European monetary unification: a tour d'horizon." 2009. http://people.exeter.ac.uk. Feb 2011 .

—. "Europe's Trojan Horse." February 2010. Project Syndicate. 2011 .

—. Globalizing Capital: a History of the International Monetary . Princeton University Press, 2008.

European Commission. European Commission of Economic and Finanial Affairs. 2010. April 2011 .

International Monetary Fund. "Currency Unions." 2010. IMF. 2011 .

Kesner-Škreb, Marina. "Stability and Growth Pact." 2008. Financial Theory and Practice.

-Great article on the Stability and Growth Pact and what exactly it entails and more specifically those countries that instigated it and those that are in violation of the pact.

Lien, Kathy. How Does a Weaker Dollar Impact Your Investments? http://www.kathylien.com/site/us-dollar/how-does-a-weak-dollar-impact 2007

Lynn, Matthew. Bust: Greece, the Euro and Sovereign Debt Crisis. John Wiley & Sons Inc., 2011.

There's much reading yet to do with Lynn's book but so far he brings up some good topics about current fiscal problems the EU is facing and some implications for the future of the EU/Euro, specifically regarding the bailouts and how they are just a band aide on the problem

Masson, Paul and Mark Taylor. Policy Issues in the Operation of Currency Unions. Campbridge: University Press, 1993.

-Masson and Taylor discuss the functions of a currency union and get into great details about the inner workings and where they fall short but how political power pushes them on, NOT economic power.

McNamara, Kathleen. The Currency of Ideas: Monetary Politics in the European Union. Cornell University, 1998.

-McNamara discusses in details some of the reasons that countries enter into currency unions and some of the major pitfalls of these relationships. She does a great job in discussing the strains associated with these unions and some of what the EU is and has been facing.

Pissarides, Christopher. "London School of Economics, The Labor Market and the Euro." http://www.new.ucy.ac.cy. Feb 2011 .

-Pissarides discusses the aspects of a currency union, the expectations but the sometimes overlooked detail of the work force through the various countries involved in the unions, great implications for the EU.

Roubini, Nouriel. "Teaching PIIGS To Fly." 2010. Project Syndicate. April 2011 .

-Roubin's article on the PIIGS counties is very interesting, he basically covers the troubles that lay ahead with the EU with the current debt crisis and what the EU might face if major changes are not applied.

Sarkar, Salil. "Will Austerity Save Europe From Crisis." http://rfi.my/. Feb 2011 .

—. "Will The Euro Survive?" http://www.english.rfi.fr. Feb 2011 .

-Sarkar discusses the specific aspect of the lack of a central federal body to more tightly unify the countries as well as the heavy burden of debt each country holds reinforces the problems the EU is facing and if their attempts of a solution are really making enough of a difference.

ADDENDUM TO FINAL POST:

As per Professor Abbott's request, I just wanted to elaborate a bit more on the work I've done and some of the topics I plan to tackle as I work towards completion of this project.

As mentioned in the above proposal I have several topics to work with in making my final argument. Some background information that is important to understand is specifically related to the formation of the Euro and certain guidelines that were put into place at that time. It's important to note that my argument is for the demise of the Euro, I am not arguing the collapse of the European Union, just the splintering of the countries that use the Euro and the downturn and ultimate abandoning of the single currency.

My argument is not backed by many economists, in fact the popular opinion as of current is the possibility of the Euro replacing the USD as the world reserve currency. That argument is a strong one especially while the Euro is almost 50% more valuable than the USD on the open market.

Much of the base of my argument comes from the Stability and Growth Pact that was created at the introduction of the Euro. This pact laid out strict guidelines for where member states of the EU/users of the Euro needed to be in regards to the GDP/debt ratio, it discusses warnings and possible outcomes if these guidelines are not followed. The SGP REQUIRES all countries within the EU to have a national budget deficit no higher than 3% of the GDP, most have only violated this one slightly but still have been unable to stay within this limit. The big and arguable most important is the requirement that the government debt NOT exceed 60% of the annual GDP of that country. Not only do several countries, including Portugal, Italy, Belgium, Spain, Greece and Ireland currently stand in violation of those guidelines (most running 90% or more of government debt to GDP) but they have been in violation of this guideline for some years now. (Kesner-Škreb)

The SGP states that if these guidelines are not followed the outcome can and will likely lead to financial meltdown within the region. This pact warned of this in the late 1990's about 10 years before the first bailout of an EU country, that being Greece. Since Greece's bailout of over 100 billion Euros, Ireland and Portugal have both also received bailouts from the International Monetary Fund and the European Central Bank. The funds from these bailouts have come from loans the ECB has made from the stronger/producing countries like Germany and France. Economists have said that although the bailout has been rough, at least the debt of the troubled countries is under control and risk of default on the government bonds is no longer at risk. Only one year after the Bailout of Greece and a mere 5 month after the bailout of Ireland both countries are at risk of defaulting on their repayments of the bailout funds. (European Commission) Portugal has only just received bailout money within the last 60 days, repayment issues are yet to come there but they are in identical circumstances as the other two that are unable to meet repayment of bailout money.

So while China and Japan are buying government bonds from Spain and Portugal and the value of the Euro continues to climb, I've got my sites (and argument) are focused on the other countries that are growing closer by the day to requesting bailout funds and the lack of tolerance from the larger countries from whom the bailout money is burrowed.

An important principle in the value of a currency is an interest rate. Interest rates determine "how much" a currency is worth, the higher the interest rate the more valuable the currency is. This comes from outsides countries buying bonds of that country because the higher the interest rate, the more investors make on their investment in that government bond. The trick with this is central banks (the Fed, bank of England, ECB etc) keep interest rates low in bad economic times to keep the value of the currency low as well. The benefit of a weak currency in bad economic times is cheap money makes the products of that country much more attractive in the international market place, thus demand for exports usually increase substantially for that country due to its weak currency. Economics shows us that a country that exports is a country that has long term viability. Also, when a country has a weak currency it is much less affordable to purchase foreign products, so not only has that country's product becomes more attractive to foreigners but it's the only product the domestic economy can afford, thus boosting that local economy due to a spike in domestic demand. (lien) Thus local central banks like, like the Fed, encourage a weak currency to help spark demand on their goods and services which lead to long term recovery and growth.

The problem happening with the individual countries within the EU is, as mentioned, many of the individual countries are suffering from weak economies and where they would normally lower their interest rates and allow for a weaker currency to spark growth/recovery, they can no longer do this as a result of being part of the EU. The European Central Bank sets the interest rate for the entire region thus taking away the ability for the individual countries to set their own interest rate and make necessary adjustments in time of economic downturns. This is where the violation of the SGP starts and where the economic problem worsens, the individual member states are seeing some of the worst economical times since WWII and the evidence from recent bailouts of three countries is irrefutable proof. With the Euro near historic highs and continuing to climb everyday, the problem in the EU will only get worse, the countries with unstable economies are nearing collapse and the bailouts will continue to shift the debt within the EU and bury the smaller economies.

This is the base of my argument at this point, as mentioned in the proposal I will also demonstrate the counterargument with the majority leaning to the positive side of the Euro. I will use the above points to strengthen my argument and prove my thesis. There is much more material along with all of this but I wanted to clarify these points with more substance than I was able to put in the original proposal.

The latest

2011-04-01T21:43:00.000-07:00

I am meeting with my possible future history committee member to look over my current history content, I'll have the notes and details posted from our meeting on Monday morning immediately after our meeting. I'm excited to get an additional point of view on European contemporary history, I look forward to the further insight into my project.

I will post notes this coming Monday morning.

Updated research

2011-03-23T22:54:00.000-07:00

Spring break caught me a bit off guard and put me a few days behind in my research, nevertheless the show must go on.

As mentioned in my previous post I have been working with some experts in the field of global currencies and international trade, I am still compiling the research and data from that. I will have an updated thesis statement reflecting the new research shortly.

Two important pieces of information I have come across:

1. At the creation of the European Union/Euro, there was financial regulation put in place to maintain economic conformity across the various member states called the "Stability and Growth Pact." This was put in place to make sure public and government debt didn't exceed a certain percentage of the GDP of that country. Thus far a majority of the member states are in violation of this pact with debt to GDP ratios EXCEEDING what they have outlined as "dangerous" levels, this has been the case for the past 2-3 years in several countries. What was warned to be dangerous is regards to debt levels is now common place and the result is continuing bailouts of various countries and the risk of further problems is spreading. (Recent news of Portugal needing EU assistance is only strengthening my case)

Sources used for this:

Kesner-Škreb, Marina:

Institute of Public Finance, Zagreb: "STABILITY AND GROWTH PACT"

"http://en.wikipedia.org/wiki/Stability_and_Growth_Pact" this is a list of countries that are currently in violation of the SGP and a further explanation of the regulation with several cited sources.

2. According to the European Commission of Financial Affairs, "implementation of the

single currency was not only an economic decision; it was also a political commitment

by the EU Member States to work together.." There is big debate on whether the problems with the EU are more political or economical, my research so far has found both to be of equal importance and equally problematic. The political problems and tension between the small and large countries in the EU seem to be causing Issues on both sides, hence it appears the political problems are causing the economical problems and exactly vice versa.

http://ec.europa.eu/economy_finance/euro/why/identity/index_en.htm

With some of the new information and research I've discovered my topic is getting more refined but there is a bit more to go. I am trying to focus on the goal of the Euro and what the outcome has been so far. From that I want to project said results onto a future path of the European Union and prove that one of two extreme changes will become necessary:

1. The European Union becomes a single country and combine all debt/assets/governments etc

2.Or The European Union must breaks apart.

I feel like I am on the right path so far but more research and more work to do yet.

The Latest...

2011-03-12T08:59:00.000-08:00

I have chosen to spend this week discussing my research and topic with some experts in the field, I have some great research and I wanted to make sure that I was getting the most out of it. I am trying to clarify and nail down my thesis just a bit more which is why I decided to spend this time discussing aspects of my research with a few different people. I will have a more clarified thesis statement, that goes very well with my research, in another day or so. I just want to make sure I am using my resources to the fullest.

My current thesis is almost like two theses in one so I am working to narrow it down just slightly. I did some research this week, I will post a slightly revised thesis and additional research in the shortly.

Updated Thesis and Bibliography

2011-03-04T13:19:00.000-08:00

The European Union is wrought with challenges including social, political, historical, economic and cultural issues. The question I would like to answer is can the Euro be enough of a uniting force to hold the European Union together?

The goal is to research the various countries and currency unions that have attempted this in the past and that are currently in a union and find out what has worked and what has not, including examples of the early American colonies. I will explore the social, political and economic differences of the various EU countries and pose the question of if the focal point (the Euro, IE MONEY) will be enough to keep these countries together. Can the EU buy their way out of this problem, will money/Euro be enough to unite these countries and cultures?

Annotated Bibliography:

Lynn, Matthew. "Bust: Greece, the Euro and Sovereign Debt Crisis." John Wiley & Sons Inc. 2011.

-There's much reading yet to do with Lynn's book but so far he brings up some good topics about current fiscal problems the EU is facing and some implications for the future of the EU/Euro.

Eichengreen, Barry. "Europe's Trojan Horse." http://relooney.fatcow.com/0_New_6768.pdf(accessed Feb 2011)

-this is a very interesting article that directly relates to and addresses some of my questions of the necessity for the European Union countries to unite completely or suffer further losses from the more troublesome countries. It also talks about how the stronger/higher producing EU countries might not like this/agree to it because of the financial burden of having to further carry the risky countries.

Roubin, Nouriel. "Teaching PIIGS to Fly." http://relooney.fatcow.com/0_New_6765.pdf(accessed Feb 2011)

Brown, Brenden. "Euro Crash: The Implications of Monetary Failure in Europe." Palgrave Mcmillan, 2010

McNamara, Kathleen. "The Currency of Ideas: Monetary Politics in the European Union (Cornell Studies in Political Economy)." Cornell University, 1998

-McNamara discusses in details some of the reasons that countries enter into currency unions and some of the major pitfalls of these relationships.

Masson, Paul: Taylor, Mark. "Policy Issues in the Operation of Currency Unions" University Press, Campbridge 1993

-Masson and Taylor discuss the functions of a currency union and get into great details about the inner workings and where they fall short but how political power pushes them on, NOT economic power.

Brash, Donald: Reserve Bank of New Zealand "The Pros and Cons of Currency Union: a Reserve Bank Perspective." http://www.rbnz.govt.nz/speeches/0091114.html (Accessed Feb 2011)

List of Countries with Currency Unions, International Monetary Fund: http://www.imf.org/external/np/exr/facts/emu.htm (Accessed Feb 2011)

-According to the International Monetary Fund this is a list of countries that have and are currently in currency unions.

Additional List of Currency Unions: http://en.wikipedia.org/wiki/Single_currency (Accessed Feb 2011)

-Wikipedia's list of currency unions with their GDP numbers and rough populations.

List of external debt: "World Economic Outlook Database, April 2010, International Monetary Fund." (Accessed on Feb 2011)

-According to the IMF this is a list of the external debt on several countries including the EU countries, this debt refers to the money a country owes through the sale of bonds and treasuries to other countries.

Secondary List of External Debt for EU Counties:"http://en.wikipedia.org/wiki/List_of_countries_by_external_debt" (Accessed Feb 2011)

-Just a secondary list of external debt owed by one country to another.

Eichengreen, Barry: "Globalizing Capital: a History of the International Monetary System" Princeton University Press, 2008

-Eichengreen goes through the history of the monetary system and how it's changing and evolving and some of the fundamental aspects that are required for a successful monetary system to function properly.

Eichengreen, Barry. "European monetary unification: a tour d'horizon." http://people.exeter.ac.uk/tkirsano/eichengreen.pdf (Accessed Feb 2011)

-Eichengreen in this report praises the effort of the EU to make the currency union work and function but warns of the pit falls.

Pissarides, Christopher. "London School of Economics, The Labor Market and the Euro" http://www.new.ucy.ac.cy/data/ecorece/Full%20text_Pissarides.pdf (Accessed Feb 2011)

-Pissarides discusses the aspects of a currency union, the expectations but the sometimes overlooked detail of the work force through the various countries involved in the unions.

Sarkar, Salil "Will the Euro Survive?" http://www.english.rfi.fr/economy/20100628-will-euro-survive (Accessed Feb 23, 2011)

-Sarkar discusses the specific aspect of the lack of a central federal body to more tightly unify the countries as well as the heavy burden of debt each country holds.

Sarkar, Salil "Will Austerity Save Europe From Crisis" http://rfi.my/i9mCa2 (Accessed Feb 25 2011)

-Here Sarkar again reinforces the problems the EU is facing and if their attempts of a solution are really making enough of a difference.

A few Notes along the way

2011-03-02T21:19:00.000-08:00

The research has been very lucrative this week, so much to read!!

One goal I had this week was to find sources and example of "currency unions" similar to the Euro and the EU. I found several actually, some of those examples are as follows:

1. Switzerland and the Swiss Franc, also included in this union is Liechtenstein

2. Russia and the Russian Ruble, included is South Ossetia and Abkhazia

3. New Zealand Dollar also includes Cook Islands, Niue, Pitcairn Islands

There are several other examples of currency unions that are currently in operation. One thing I noticed in common with all the examples is there's usually a large country with a large economy that is basically the "boss" of the union and smaller countries participate for reasons of keeping exchange rates stable so those smaller countries can easily do trade with the larger "mother ship." However one common theme amount these unions is that the smaller countries, in almost all the examples, are VERY small countries with populations of usually less than two million citizens and very nominal national production/GDP.

This was a strong theme in finding the big challenge with the Euro, the other unions are in essence helping the the smaller countries, while the Euro is trying to hold developed, highly populated countries under one umbrella. The European Union is full of countries with populations exceeding tens of millions, with GDP numbers exceeding a trillion dollars and debt in excess of 100% of the individual countries GDP.

The Euro/EU is truly one of a kind in examples, I will cite the sources in the next post. Great information.

The question goes deeper....

2011-02-25T19:16:00.001-08:00

In researching my topic about the Euro and the health of the European Union/Eurozone some interesting questions have come up. One of which is a case study (this goes along with my thesis) of whether single currencies can survive in a multi-country setting. There was quite a bit of talk years ago about a one world government (conspiracy of course but interesting nonetheless) as well as a single currency. There was even mention of the "Amero" a while back, a single currency for all of the Americas. Now I don't have any plans on delving into conspiracy theory or even speculating on hypotheticals but the topic of my thesis was/is unintentionally close to this subject.

Does a single currency work over multiple countries? The most obvious study of this would be the Euro/EU, but have there been other examples of this? If so what/when/where? Results...? This is the course of my research right now, I'm struggling a bit with sources but as I go deeper more resources are becoming available.

This is where the early American colonies have been crossing my mind, that was one example of multiple currencies being used in a single country (that was essentially operating as 13 different countries).

So the question is leading a bit of one direction:

1. can any other scenario, besides one country with one currency, work?

I won't let this get me too far off track but I believe there are interesting and relevant parallels to be drawn here, is the current/most used system of one currency per country the only way? What will we be able to learn from the example of the EURO/EUROZONE?

There is lots of pro-Euro research that supports the viability of the Euro as well as research supporting the demise of the Euro. For example the president of the European Central Bank, Jean-Claud Trichet was quoted as saying about the Euro, "A currency which keeps its value fully in line with its definition of price stability - with annual inflation rate of less than two per cent, close to two per cent - over almost 12 years is a currency which inspires confidence."

A great source of this material is author and Professor of finance Salil Sarkar, he speaks of the positives of the Euro and the challenges it faces in the future... the very near future. One big challenge the European Union faces, he mentions, is the lack of a real centralized authority.

Back to my thesis, can the Euro survive without becoming one single absolutely united country? Sarkar does not believe it can, nor do I. I am still leaning towards the unite or disintegrate as regards to the Euro and EU.

Sarkar, Salil "Will the Euro Survive?" http://www.english.rfi.fr/economy/20100628-will-euro-survive (Accessed Feb 23, 2011)

Lanman, Scott: Dorning, Mike: "Geithner Says He's Confident Europe will "fix" Debt Crisis"http://bloom.bg/fFEBYt (Accessed Feb 21 2011)

Sarkar, Salil "Will Austerity Save Europe From Crisis" http://rfi.my/i9mCa2 (Accessed Feb 25 2011)

Bibliography-- part 1

2011-02-17T21:26:00.000-08:00

My current path of research continues, as mentioned in the last post I am adding some initial citations of sources I intend to use.

My research is still geared towards some of the problems and issues arising from a single currency for multiple countries with independent (of each other) political, fiscal, social etc beliefs. I am focusing on some of the pitfalls of these individual countries and what they may face in the future if (as per my previous claim) there is not a resolution of "All or nothing." In other words will the Euro be able to survive the current situation or will these countries need to band together and essentially form an official single country? Of course the other option is the stronger producing countries, especially Germany, opting out of the Euro/single currency to avoid being responsible for the current bailouts and the inevitable future bailout of trouble economies within the EU.

Some of the material I intend to use is listed below, some from books and others from Google Scholar. Much more to come...

1. this is a very interesting article that directly relates to and addresses some of my questions of the necessity for the European Union countries to unite completely or suffer further losses from the more troublesome countries. It also talks about how the stronger/higher producing EU countries might not like this/agree to it because of the financial burden of having to further carry the risky countries.

--Eichengree, Barry. "Europe's Trojan Horse." http://relooney.fatcow.com/0_New_6768.pdf (accessed Feb, 15 2011)

2. Brown's book further explores the path the EU is on with the Euro and increasingly weakening countries. The author also goes into further detail about what would likely happen to the EU should more defaults come as a result of the extensive bailouts possible needed.

--Brown, Brenden. "Euro Crash: The Implications of Monetary Failure in Europe." Palgrave Mcmillan, 2010

3. Roubin's article on the PIIGS counties is very interesting, he basically covers the troubles that lay ahead with the EU.

--Roubin, Nouriel. "Teaching PIIGS to Fly." http://relooney.fatcow.com/0_New_6765.pdf (accessed Feb 17 2011)

4. There's much reading yet to do with Lynn's book but so far he brings up some good topics about current fiscal problems the EU is facing and some implications for the future of the EU/Euro.

--Lynn, Matthew. "Bust: Greece, the Euro and Sovereign Debt Crisis." John Wiley & Sons Inc. 2011.

Research progress

2011-02-10T19:57:00.001-08:00

Thanks everyone for the comments, they have been very helpful.

My focus is still in the area of the effect that a single currency has on the several member states of the European Union. As my daily profession I'm a currency analyst and major concerns are coming out of the EU in regards to the "PIIGS" (Portugal, Ireland, Italy, Greece and Spain) Although these are only 5 countries in a fairly big union, they represent a significant part of the EU gross national product.

As many already know, Greece and Ireland sought bailout money last year from the European Central Bank and International Monetary Fund. Two of the five countries of most concern in the EU have not been unable to sustain their debt obligations without outside assistance, when (not if) will the other three countries fall?

I have continued my research along the path of the effects of a single currency union like the EU, I have been researching other countries with similar situation. The EU is definitely not the first of its type nor will it be the last to incorporate a common currency. On a side note there are members of the EU not using the Euro, for example England, Sweden, Denmark, Hungary along with a few others.

Two parts of the research I'm focusing on right now include:

1. The similarities with the EU/Euro and the early American colonies that incorporated the use of 13 different currencies in the 13 different colonies.

2. Also I'm researching effects the Euro is having on the Euro-using members of the EU. As mentioned earlier the "PIIGS" are a focus of my research, with Ireland and Greece receiving an combined 250 billion Euros of bailout money. How can the larger/producing countries hold this up (IE Germany, France etc)?

An interesting topic is how countries can manipulate their own currency when the economic conditions dictate. For example the USD has been at its weakest points over the last 3 years as we've been dealing with the financial crisis. This is no coincidence, it's advantageous for any country during times of financial difficulty to devalue their currency to make exports more competitive in the int'l arena.

In summary, is the Euro dragging down the European Union as a whole? I believe it is and so far my research hasn't uncovered much evidence to the contrary.

The EU is nearly operating as a single country but there are still big gaps in how each country deals with their own debt, so far my claim of "all or nothing" (referring to the EU's need to unite completely or dismantle) is building a strong case.

Bibliography coming shortly....

Updated Thesis

2011-02-07T12:07:00.001-08:00

In continuing my research with my thesis and from suggestions from both Professors I am moving the research in a slightly new direction while maintaining a similar thesis.

The goal of this project is to research and possibly discover if the Euro is a key binding force holding the European Union together. If it is there are several important implications therefore my research will lean more towards the following:

1. What effect does the Euro have on the European Union

2. Will the EU have enough common bonds without the existence of the Euro?

3. How have other countries dealt with a common currency like the EU/Euro.

My thesis is slight redirecting more to the effects of the Euro on the European Union and what the European Union might do with out a common currency. My research will also include can the European Union survive with a single currency and/or can a single currency survive within a multiple country union?

My research continues....

Assignment 2

2011-02-04T11:17:00.001-08:00

Assignment 2, “The Euro Almighty”

My proposed thesis is still refining, I plan on still discovering and researching if the Euro currency can hold the multi country European Union together. I have narrowed the focus slightly; I will be asking and researching the simple questions of the following:

· Is a single currency enough to hold the European Union together?

In researching this question I have come across many interesting details pertaining to the geopolitical, military, monetary, and foreign policy. I will discuss all those aspects in the attempt to answer the above question.

assignment 1

2011-02-04T11:14:00.000-08:00

Assignment 1, “The Euro Almighty”

My proposed thesis for this project will focus on the European Union (EU) and the monetary and political problems that it faces due to the introduction of the single currency, the Euro. The Euro is the binding force holding the EU together and the question I will be asking is if that is enough. Can the Euro hold the Union together? I will use the following as points to explore this question.

I plan to use my emphasis in History to:

1. Draw parallels between the current European Union and the early American Colonies and make conclusions about the differences and similarities of the two.

2. Explore the differences that many countries have had in their early formation and discover if the European Union can survive without becoming a single country.

3. Study the major political, social and historical differences between the EU members that may hinder the more solid formation of a sustainable union.

I will focus Business emphasis on the following:

1. Will money (governments bail outs, bond auctions and foreign money) be enough to hold the EU together?

2. There have been and are expected to be more problem countries within the EU that have received bail out funds, will these funds be able to save the individual economies?

I will attempt to discover and possibly prove that a currency doesn’t make a country just like a product does not make a company. The EU will likely cease to exist if the above questions are not addressed.