which makes me wonder why isn't any country leaving it? Or is there an exit barrier?
Technically speaking, it would be a breach of the treaties with other member states, and therefore illegal in international law.
Since departure from the euro would mean creating (or re-creating) a national currency at a value that automatically devalues the debts owed elsewhere in the eurozone, it would also be forcing the debtors to accept less than they thought they would be due.
So in practice, it would be up to the other member states to weigh up whether that required them to impose any sort of financial or other consequences. But from their point of view, there would also be the issue of the loss of political credibility for the euro as a whole, or the entire wider European Union project.
Economically and financially, it wouldn't make much difference to the larger member states (Germany, France) if a relatively small economy dropped out of the eurozone: but the financial markets' reaction would be to try to hedge their bets against larger struggling economies also dropping out (Spain, Portugal, and at one time in the crisis, even possibly France), and raising their interest rates for lending to those governments, and so on, thus worsening the problem, and the survivability of the euro itself could then come into issue.
Besides, as with the postwar fixed exchange rates (Bretton Woods) system, though devaluation was legally possible, it usually required countries to impose as great or greater financial disciplines on themselves (to restore market credibility of their new exchange rate) as it did to stay within the system. So in the short term, even for a small economy, dropping out of the eurozone wouldn't be a magic bullet. The problems they experienced in the euro could just as likely be replicated with a national currency, unless they sorted out government finances and supply-side impediments to growth (bureaucracy, restrictive practices, corruption).
One thing that always intrigues me is how many people outside of the euro currency zone have a catastrophic view of it, as though the currency was destroying the economy. The fact that the German economy keeps sailing along would indicate that it is not the currency that is damaging any particular economy but simply the economic policies of various countries. The euro would not have such a high exchange rate if it were really as fragile as a lot of (outside) people seem to hope.
Kerouac- my opinion was only based on hearsay. Have read it elsewhere- not to do with a depreciating currency but with very high tax rates. Which can compromise on growth.
Now, with a GDP per capita of USD 20000 PPP, and a growth rate of less than 2%, lesser growth is going to be a bigger issue fro Croatia, than for a country like Germany with much higher avg incomes.
A quote from the book Breakout Nations I've been reading breakoutnations.com "Once a country adopts the Euro, it enters a danger zone where the cost of capital becomes too cheap, and supposedly smart investors start making all kinds of mistakes. In the case of Portugal and Spain, it now looks as if the euro (and the low interest rates that come with it) set them up for real estate bubbles that burst in the 2008 crisis. Among Slovaks that embraced the euro in 2009 just before the Greek crisis a public backlash has broken against the fact that Slovakia must now stand alongside far richer Eurozone members like Germany and bail out somewhat richer Eurozone members like Greece."
Now, joining the EU is considered advantageous as the newly joined country has met certain political objectives: judicial independence, low debt rates, proper parliament and similar. ALso it receives grants from the EU for incomes to rise to richer EU members.
A quote from the book Breakout Nations I've been reading "Once a country adopts the Euro, it enters a danger zone where the cost of capital becomes too cheap, and supposedly smart investors start making all kinds of mistakes. In the case of Portugal and Spain, it now looks as if the euro (and the low interest rates that come with it) set them up for real estate bubbles that burst in the 2008 crisis."
Ireland too; but not Estonia, I believe (and, of course, other countries also got themselves into unsustainable property bubbles - the US, where the crash started, and the UK, where - to my mind - some idiotic ideas about property values continue to be far too strong and with few correctives in the system).
You could say the problem with the euro was that the original treaty conditions for joining the euro were, at one and the same time, too harsh and too weak. Harsh in the sense that they were a single set of relatively few, rigidly fixed markers; weak in the sense that there was no independent monitoring of whether countries really were sticking to them and no real system for communal agreement about marginal adjustment to forestall any problems (let alone any other indicators of financial/economic strain). So everything went steaming ahead with only occasional noises off, until the steering wheel had to be wrenched over to one side at the last minute, with the inevitable result that the vessel heeled right over, nearly losing a few crew members and risking foundering completely.
I have to say that the Europe I was conned into voting for was a first class idea. However the implementation has been abysmal, and overtaken by corruption, so that now I would vote to get out if our devious politicians ever actually give us a referendum.
A great opportunity has been lost.
As for the housing and other bubbles, as you say Patrick these have happened in and outside the Eurozone. This is because of the culture of greed and easy credit which has dazzled people into believing they can live beyond their means. The chickens are slowly coming home to roost and a lot more misery has to come before things are straight.
I had always considered that ones house should cost no more than 3½ times annual income. Assuming that UK average income is £25,000 that means an £87,500 house. That of course is a complete joke in most parts of the country, but I think it is a good indicator of where prices should be. Pie in the sky isn't it Can't see it happening just yet
Man is not lost, only temporarily uncertain of his position