Archived posting to the Leica Users Group, 1998/08/21
[Author Prev] [Author Next] [Thread Prev] [Thread Next] [Author Index] [Topic Index] [Home] [Search]>From: Pascal <cyberdog@ibm.net> >Date: Thu, 20 Aug 1998 10:06:22 +0200 >Subject: Re: [Leica] Off-topic: Euro and currency > >On 19-08-1998 12:38 Dominique PELLISSIER wrote: > Comment : for an individual, the Euro will allow : 1) to compare directly the price of goods, Leica for instance, anywhere in Europe.Competition between Leica dealers will be stronger. 2) not to pay the "spread" on the exchange rates between european monies as it is the case today. For instance, I read : 322-346 FRF for 100 DEM.The spread is the difference. If I buy 100 DEM, my bank asks me 346 FRF. If I don't want my Dmarks any more, my bank will buy them again 322 FRF. I agree with you on the "eurocracy" which is like a federal government. Pascal wrote : You are right on the exchange of currency, but that is precisely the main point forwarded by Euro-advocates. How many people exchange their own currency for some foreign, change that again into another foreign, and so on... with the result that you will have paid a very substantial sum as exchange costs? Not too many, most only change one time and then back into their own currency. My comment : let me tell you my own experience. In April I was in Brussels. I changed my FRF for BEF.But, ignoring how many BEF I needed, i changed too much and now i have in my pocket BEF. I don't want to change them for FRF because of the spread.I prefer to keep them for my next travel, next year...That's not efficient. Pascal wrote : However, and this is my point, euro-advocates tell you that the whole Euro-region is going to have benefical effects for their economies.While this might be true on a macro-economic level (for Europe seen as a whole), this is not going to be the reality for all countries within the zone. Indeed, you will (and this is what I predict for the following 5 years) notice a shift within the borders of the Euro-zone because industries will re-locate their assets to where they have biggest advantage (this is of course only logic seen from their standpoint).I do not want to sound too pessimistic, but I fear a lot of European countries, especially in the northern part of the zone, will feel these effects, to the benefit of mainly southern countries within the same zone. That this will put additional pressure on governments to do something about it, is obvious. Taxes and all kinds of disguised contributions are already at a never-seen top level, so it would be difficult to go this way. It seems to be this evolution will have mainly a negative impact on social security, once you get into such a system, where competition can no longer be fueled by monetary measures (the same is true for fiscal measures since most, if not all, governments are in dire straights and will have to keep on cutting to remain within the allowed budget deficit margins), and money will have to be found somewhere, and the total cost of employees for industries and trade will have to be lowered to be able to compete with countries that do not have the same social standards. In short, it was a good idea to come to a monetary union, but it will only work to everybody's satisfaction if there had at the same time been a social union (not to speak about a political union...). OK this was longer than I thought it would be, but I only wanted to set the reason for my negative thinking straight. Just hoping this will not start a lenghty off-topic debate... > >Pascal My comment : your analysis is quite accurate and is not off-topic as far as Leica is concerned. Why Leica has built a factory in Portugal in 1975 ? The answer is obvious. You note that the Leitz's decision was prior to the Euro.The Euro could accelerate the shift of industries towards low wage/low social costs countries in Europe but I think that, without the Euro, we would have observed shifts towards non european countries. Leica with the former Chairman had a project to build a factory in China, 20 years after the disaster of Rollei in Singapore! As the shift is a part of the world competition mechanism, the Euro looks like a dam. Dominique