I think he was referring to the uncertainty posed by the threat of currency speculators on less developed economies. (He argues, if I remember, for modest taxes on large capital movements in order to scare volatility inducing speculators away.) And yes, even in the case of Indonesia, it is quite possible that workers were hurt on net as well as owners, but we have to look at the actual outcome to be sure -- it's not evident that this should always, or even usually, be the case, which is why I keep saying that currency unions and pegs are case-by-case situations. Just because they work for some countries doesn't mean they'll work for all countries.

And it's not that there is a transfer of wealth from "firms" to workers, but that there is a transfer of wealth from bankers, traders, and firm owners to workers.  Clearly if firms go out of business, workers are hurt as well or more than owners. But what I argue is that there is no reason to believe that a flight to the DM in today's Europe would result in the closure of any Spanish manufacturing firms. (It might result in a few banks and merchant houses closing shop, but that's part of the transfer of welfare.)

Spain is not Indonesia, so it's pretty questionable whether currency speculation could result in anything but a very temporary change in the exchange rate. The daily flow of huge amounts of goods and services over borders would have to eventually push rates back to levels consistent with country's current account balances. However, under a fixed rate regime like the euro provides, an imbalance such as high unemployment might only be solved through transfers of wealth from richer countries or migration, both of which are also highly restricted.

I think a large part of the dissonance on this topic comes from two different ways of defining what the EU really is.  For many, particularly here, the EU is an institutional framework for international governance, which puts it against the neo-liberal narrative.  However, for many others, the EU is primarily a free trade agreement, epitomizing the victory of merchants over the medieval militarists who established castles every few kilometers on the Rhine River to soak the traders on their barges. This view places the EU project squarely in support of the neo-liberal narrative. Generally, common currencies and currency pegging are pro-neo-liberal policies meant to support the welfare of traders and bankers at the expense of workers and local governance, so the establishment of the euro ahead of a stronger, continental welfare policy framework can look alot like the neo-liberals are winning.

The gist I got from Stiglitz's Globalization and its discontents is that these devaluations are a disaster.

I got the same gist from living through a few of them. After first continuing to drop, employment will pick up in their wake, but the spread of poverty will be a more lasting effect. And the next crisis will come certainly, especially after tax cuts.

_{*Lunatic*, n.
One whose delusions are out of fashion.}