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Essay / Research Paper Abstract
This 5 page report is based on a recent Fortune article by Paul Krugman entitled, “The Euro: Beware of What You Wish For.” The gist of the article is discussed and interpreted in the context of a scenario involving the collapse of the EMU, how different populations and governments within the Union interact with one another, and the changing political realities of Europe are also briefly discussed. Bibliography lists 3 sources.
Page Count:
5 pages (~225 words per page)
File: D0_BWeuro.rtf
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Unformatted sample text from the term paper:
that 1999 is here, and the switch has been made, electronically at least, the financial world wonders "what happens next?" As is noted in "The Euro: Beware of What
You Ask For" by Paul Krugman, there are numerous critics around the world who are convinced that the entire process has only one logical outcome - disaster. According to Hofmann
(1996), the majority of those critics claim the process will irreparably disrupt the stability of international currency market. They also believe that the problems will appear as a result of
the lack of provision for the formation of an optimum currency area by the European Union. The absence of optimum currency area will prohibit real convergence of currencies, which can
result in a collapse of the system. The loss of monetary sovereignty may outweigh the calculated benefits of the single European currency. Standard Scenario of a Collapse The scenario Krugman
outlines, one that many others have also wondered about, is that two or three years after the euro is formerly (and physically introduced), therefore sometime in 2001-2002, part of Europe
will face an economic downturn and recession. There will be those national governments who will be willing to deal with the recession by riding it out and allowing a
certain level of inflation to creep into the countrys economy. Meanwhile, other countries in the Union will insist on maintaining a more disciplined economic policy. The result would
be a significant and economically damaging political argument between the members and erstwhile partners of the Union. Such a disruption is then likely to cause an international problem due
to the worlds financial markets devaluing the bonds of the "weaker" European governments. Fundamentally, Krugmans "conflict of interest" is truly a conflict of cultures and attitudes. He compares the
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