The end of the Euro | 276 comments (276 topical, editorial, 0 hidden)

Re: The end of the Euro (4.00 / 4)

Short answer: No. That was actually a contentious political decision at the time, although this fact has been airbrushed from the official version of history.

Slightly longer answer: Denmark joined Bretton Woods, just like the rest of The West^TM. When Bretton Woods crashed, we tried to maintain a D-Mark peg, but had a decade of regular devaluations against it.

Of course devaluing and then attempting to defend the new exchange rate is just asking to be attacked. What we should have done was to float our currency. What we did instead was elect a right-wing economic hit man who enforced the D-Mark peg to the exclusion of all sensible macroeconomic concerns. Right on cue, this caused our productive economy to crater and the FIRE sector to blow a huge bubble all over the first half of the 1980s.

Somehow the 1980 decision to go for broke on the peg rather than abandon it has been anointed as the greatest act of wisdom in recent Danish economic history - rather than the gross act of irresponsible industrial sabotage it actually was.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Aug 10th, 2011 at 07:46:33 PM EST
[ Parent ]

Re: The end of the Euro (none / 0)

thanks for the correction.

Ever since I learnt about confirmation bias I've started seeing it everywhere

by ATinNM on Wed Aug 10th, 2011 at 09:46:38 PM EST
[ Parent ]

Re: The end of the Euro (none / 0)

Sounds like your history is being written by Austro-Chicagoans. You have my sympathies.

by rifek on Thu Aug 11th, 2011 at 02:42:46 PM EST
[ Parent ]

Re: The end of the Euro (4.00 / 2)

Sounds like the defence Sweden put up for the ERM/Ecu-peg (or whatever it was called) in the early 90's. The Riksbank jacked interest rates up to 500 % (yes, really) before it conceded defeat and let the krona float. Madness, but at least and unlike in Denmark, everyone in Sweden nowadays agrees that the peg was insane.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Thu Aug 11th, 2011 at 05:16:35 PM EST
[ Parent ]

Re: The end of the Euro (4.00 / 2)

The Riksbank jacked interest rates up to 500 % (yes, really) before it conceded defeat and let the krona float.

In the immortal words of the Bundesbank:

The Bundesbank with its commitment to price stability had refused to lower interest rates massively. The partner countries are forcibly reminded of their responsibility for their currencies; the process of convergence needed for monetary union is strengthened.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Aug 11th, 2011 at 05:27:21 PM EST
[ Parent ]

Re: The end of the Euro (4.00 / 2)

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Thu Aug 11th, 2011 at 06:08:29 PM EST
[ Parent ]

It's the end of the Euro (none / 1)

as we know it ...

and I feel fine

Ever since I learnt about confirmation bias I've started seeing it everywhere

by ATinNM on Thu Aug 11th, 2011 at 06:25:20 PM EST
[ Parent ]

Re: The end of the Euro (none / 0)

The problem for Denmark was that the decision to defend the peg was made at the time Europe was coming out of the oil crisis, and the defence was supported by the full force of hitman fiscal policy. Which meant that it did not require ridiculous interest rate spreads, "only" a fiscal policy of systematic industrial sabotage. Indeed, the Danish version of the D-Mark peg has been a fiscal peg targeting interest rate spreads.

It will be interesting to see what happens the day it comes under serious attack. So far our oil revenues have made such attacks non-viable, but that state of affairs will not last beyond the present decade.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Aug 12th, 2011 at 05:16:57 AM EST
[ Parent ]

The end of the Euro | 276 comments (276 topical, 0 editorial, 0 hidden)

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