Fast facts about the eurozone

[Brian Ellis]

1. The euro is the currency for 320 million Europeans. With the entry of Cyprus and Malta in the Eurozone today, it becomes the official currency of 15 states. They are:
Austria, Ireland, Spain, France, Germany, Italy, Belgium, Netherlands, Greece, Finland, Luxembourg, Portugal, Slovenia, Malta and Cyprus

2. If we include the countries with currencies pegged to the euro, the euro affects 480 million people worldwide

3. The Vatican City, Monaco, San Marino, Andorra, Montenegro and Kosovo, although not EU members, have adopted the euro unilaterally


4. The euro is also the legal currency in Guadeloupe, Martinique, French Guiana, Saint-Barthelemy, the Azores, Madeira and the Canary Islands

5. Member-states Lithuania and Estonia had been due to enter the eurozone today but their entry was postponed because their inflation rate was too high


6. The next country scheduled to adopt the euro is Slovakia, in 2009; Lithuania and Bulgaria are set to follow in 2010 and Estonia in 2011.

7. Although the Maastricht Treaty of 1993 obliged all member-countries to join the euro, the UK and Denmark negotiated exemptions for themselves


8. Sweden voted against the euro in a referendum in 2003 and has got round entering the eurozone by failing to meet the membership criteria.

9. The euro was introduced to the financial markets as an accounting currency (European Currency Unit – ECU) in 1999 and was launched as coins and bank-notes in 2002


10. The Frankfurt-based European Central Bank (ECB) administers and manages the euro. It is an independent Central Bank which has exclusive authority to set monetary policy

11. The ECB is totally independent of national governments and has a mandate to keep inflationary pressures low


12. The European System of Central Banks is involved in the printing, minting and distribution of notes and coins in all member-states

13. The euro is divided into 100 cents, often referred to as eurocents


14. The denominations of the euro coins are €2, €1, 50c, 20c, 10c, 5c, 2c and 1c. All have a common side showing the denomination with a map of Europe and a national side showing an image chosen by the country which issued the coin. Coins, regardless of the country of origin, are accepted in all eurozone states

15. Euro bank-notes are not country-specific and have a common design on both sides. They are issued in denominations of €500, €200, €100, €50, €20, €10, €5


16. The €500 denomination is not issued in all countries but it is legal tender in the eurozone

17. The euro is widely considered to be a major, global reserve currency. Since its introduction, it has been the second most widely-held reserve currency after the US dollar


18. Former Federal Reserve Chairman Alan Greenspan has said that the euro could replace the US dollar as the world’s primary reserve currency.

19. Reserve status could become a disadvantage if the currency becomes overvalued; European exports would be more expensive


20. The euro has overtaken the US dollar as the currency with the highest value of cash in circulation in the world – more than €610 billion

21. At its introduction, the euro traded at $1.18/€. At the end of November of this year the dollar fell to an all-time low, at $1.48 against the euro


22. Trade within the eurozone becomes cheaper because the cost of exchanging currency is removed

23. Banks in the eurozone must charge the same for cross-border transactions as they do for domestic transactions for electronic payments (credit cards, cash machine withdrawals)


24. Eurozone countries have low inflation and low interest rates which translates into stable economies

25. The daftest one of the lot: The Sovereign Base Areas in Cyprus are legally part of the UK, much as Guantanamo Bay in Cuba is legally part of the USA. The UK negotiated exemption from joining the Eurozone, so that the euro is not legal tender in the UK, but the euro has been adopted in the SBAs, so part of the UK legally uses, from today, the euro as its currency!

[UtwigMU]

The fact about Teuro is that some stuff has gone up up to 50% a year after adopting it. Even though state skews statistics the inflation has still been record high. Government will loose the elections because of this.

For instance before euro average coffe cost 200-220 SIT (0,83-0,92c) now it's 1,10-1,20. One cafe I was frequenting jacked price from 1 to 1.5. In center beer is already close to 4 euros. When I was in Vienna in the summer I paid 8 something for pizza and big beer on Mariahilferstraße. In Ljubljana a month latter I paid 10 something for pizza and bottled water in comparable area. Hostels in Vienna also cost same or less. Now I feel like tourist in blody London where you wonder whether to sip one beer for 2 hours or not.

[Umfriend]

#9: ECU was introduced in 1979, the Euro was introduced as accounting and capital market instrument in 1999.
#19: Bollocks. If the demand for the Euro rises for reserve purposes, that demand does not create demand for services or goods and thus there is no upward price pressure. Hence, the ECB would simply 'print'' Euro's. This would actualy cause the EU to become rich as the US has done for decades by printing dolars for reserve and drug trafficing currency.

[Umfriend]

The fact about Teuro is that some stuff has gone up up to 50% a year after adopting it. Even though state skews statistics the inflation has still been record high.

For instance before euro average coffe cost 200-220 SIT (0,83-0,92c) now it's 1,10-1,20.

Yes, out-of-pocket expenditures became higher but those are, in many economies, relatively small. None of your rents, mortgages, insurance premiums, taxes, energy bills etc. went up at that time so the overall inflation rate was hardly affected. You just got hit where it hurt and that is your wallet but not your bank account.

[UtwigMU]

Rents/prices of apartmens went up ~10%. The apartment prices/rents doubled since 2000 while salaries have maybe grown 10% since then. Energy prices have also gone up.

Food has also risen, supermarket and market prices are higher than France, Austria. People close to borders do grocery shopping abroad.

Cheapest flat in Ljubljana is 70.000 Euros, rent is 350 + expenses for studio apartment. Average salary is 700 Euros a month.

I know it's not entirely Euros fault and mainly structural problems in economy are to be (tax system, not enough incentives for hi-tech and high R&D startups, education favouring producing worthless economists and politoligsts etc...) For instance out of my salary I get 45% 65% goes for various expenses, taxes and pension insurance that I will still have to take care of by myself. I haven't pondered going abroad since I was 12 and there was still Communism, but now I'm seriously considering just moving to some country where you can survive with normal job. Just if you look at Austrians, there salaries are 2.5x our salaries with same rent prices and lower food costs.

[UtwigMU]

45-55 salary breakdown. And then I hear you Americans whine about big government

[Brian Ellis]

It is very difficult for us to know what the inflationary pressures are because of numerous factors:
- energy costs have risen because of oil hikes, but they have been relatively modest as the CY£ has been locked to the euro for some time. As the $ has dropped, the rise in oil prices is not very great
- wheat and maize costs have risen because of poor harvests (wheat) and diversion to biofuels (maize), However bread and animal feed costs have risen well beyond proportionality. This has certainly been inflationary.
- although CY£>€ conversions have been monitored closely, many retailers have been upping the £ price in anticipation for several months. E.g., the local butcher upped a souvlakia from £1.50 to £2 in July. This will convert to €3.42 but you can bet that he will up it again to €3.50 (or more) when the controls are relaxed this spring. Other retailers selling an article at £1.95 have already upped to £2.05, so that he can sell it for €3.50. This has also been inflationary.
- an article imported from the USA to sell at, say, £5 when the $/€ forex was at parity is still sold at £5, even though the importer now gets $1.45 for his € (the €/£ rate has been sensibly constant for several years). Assuming the article price in the USA has risen by 10%, the importer is now making a lucrative increase in profits. American goods should be much cheaper now, but they aren't. This is anti-deflationary.
- water shortages, due to drought, have forced farmers to irrigate less, so that there is less forage for animals: meat and dairy product prices have risen.
- house and land prices, thus rents, have gone through the roof over past two years. I estimate my house is worth ~2.5 times what I paid for it 10 years ago (some say 3x).

So yes, we have seen inflationary tendences, but I cannot say which are real or because of greed or uncontrollable reasons. What I do know is that my pension does not go as far as it used to!

[Wulfman]

Rents/prices of apartmens went up ~10%. (..) Energy prices have also gone up. Food has also risen ...
Cheapest flat in Ljubljana is 70.000 Euros, rent is 350 + expenses for studio apartment. Average salary is 700 Euros a month.

I know it's not entirely Euros fault ...

I would think that a few thing would have gotten even more expensive (energy and energy-dependent goods) without the €. as you are talking about vienna: cost of living increased quiet dramatically over the last few years as well. when I started studying 4.5 years ago, you could get a tiny flat (30-35m²) for some 250-320€, right now you have to dig around to find something much cheaper than 400€.
while there is a general increase in cost for rents, there is also the factor that the number of students in Vienna is larger than the number of small flats...

is the 700€ before or after taxes?

mfg
wulfman

[UtwigMU]

700 is after taxes, for instance average postman gets 702 nett wage.

The problem is that in Ljubljana you also can't find 35-40m2 for under 400 euros. And in Vienna you have subway that runs till midnight instead of busses which are slower than cycling to work. I could see myself living and working in Vienna actually, when I was there I immediately knew where I'd walk, where I'd shop, where I'd drink beer, where I'd go for coffe, what kind of people I'd hang arround with. Spoke to few southern Germans who also loved it there.

[TransformX]

I have to agree with UtwigMU, at least concerning Portugal. With the Euro, prices have gone up everywhere, from the price of a cup of espresso to real estate, even though the sallaries remained the same.

[Umfriend]

Rents/prices of apartmens went up ~10%. The apartment prices/rents doubled since 2000 while salaries have maybe grown 10% since then. Energy prices have also gone up.

OK, are you saying that as of the day that the euro became legal tender, rents increased by 10% all of a sudden? I'm reaqlly interested: waht was the price December 31st and what was it January 1st? I am pretty sure that all Euro states had laws that dissallowed prices on contracts (such as rents, utlities etc) to rise with the introduction.

Real estate price inflation is seen in many places for some time now but that has never ever been attributed to the introduction of the euro.

Cups of esppresso, yes, they didrise from Dec 31st to Jan 1st all of a sudden.

[Wulfman]

Cups of esppresso, yes, they didrise from Dec 31st to Jan 1st all of a sudden.

no, they didn't - at least here there were laws against that stuff. although they did rise before and after these laws were relevant, - september before the launch until july after, or something like that.

mfg
wulfman

[UtwigMU]

The inflation was 5.6% which is record high, we haven't seen such inflation since 1994ish or so. Last year we met Maastricht criteria with 2.9% before that it was 3.5%.

The prices didn't rise over night, however within the 2007 ( double pricing was in effect between July and June) everything went up, mostly before or after double pricing. Rents did not increase over night however when I watch appartments they are 50-100€ more one year afterwards. Also expenses such as garbage, electricity, heating went up. For instance with this new year electricity will go up 6% In the meanwile salaries didn't increase.

I'm not blaming everything on Euro. However food price increase (everything in shops now costs more than it used to) and espressos can be atributed to €. In Slovenian Spar stuff is more expensive than in Austrian Spar. Furthermore here they sell Milka and Nutella which are made in Czech republic or Poland instead of German one and they taste different.

Majority of Slovenians have wage below 700€ nett per month and in such situation you're extremely vulnerable to food prices and you feel drop in standard if you can't go for a beer, coffe, meal like you used to.

Situation is: You have 700€ salary, maybe earning 100-200 on the side. 350 rent or mortage, 100 expenses, 150 car TCO (31 euros for monthly ticket, again tickets in Vienna are comparable only there transport actually works), so this leaves you with 100-200 for food and espresso.


There are other reasons also:
The energy costs go hand in hand with oil price increase (China, India growth, Middle East situation)

The flats: Lots of people bought cheap flats 15 years ago and are now renting them out just jacking up prices. State doesn't tax them, they underreport rents or don't have contracts sometimes. Majority of economic growth comes from construction, who build mainly butique "above-standard" smaller developments.

In Slovenia if you want to live in your own flat you need to have highly valued skills and work your ass or have entire family including grandparents take up loans. A nurse in Austria earns 1700 compared to 800. Rent/mortage is same, food is more expensive here, clothes are more expensive, transport costs are same and espresso is cheaper.

Taxes are extremely high so all companies wash money and use gray areas to hire people. Also it's very hard to fire workers. Since people are paid badly due to high taxes on their wages this creates incentive for people to leave as soon as 8h are past to work in 2nd untaxed cash on hand job. Employee satisfaction is among lowest in EU. Some people are moving companies to Italy or Austria which are not known as offshore tax paradise.

The right wing goverment currently in power has 32% approval rating. They didn't carry out tax reform, didn't correct real estate market, didn't make it easier to create jobs due to left wing and union pressure. When lefties come in on next elections they will spend 4 years ousting people right wingers put in offices instead of actually doing something.

[Wulfman]

(31 euros for monthly ticket, again tickets in Vienna are comparable

has been some time since I last was in slovenia, so I can't really comment on the other stuff, but nowadays a regular ticket for the vienna public transport is exactly 49,50€.

1700€ for a nurse seems kind of high, unless she has already been working for some time. a regular post man (did that one as a summer job, so I know) earns less or around 1500€ around here, afaik.

mfg
wulfman

[UtwigMU]

Coming to Vienna by train at 22:00

You come to open Südbahnhoff with information kiosk where they give you a free useful city map with which you can find stuff. You can buy tickets at vending machine which actually has Slovenian language as an option. Then either walk 5 min, directions are clearly marked or take S3 I think train, then take subway which runs every 5 minutes still, walk 5 minutes to hostel.

Coming to Ljubljana by train at 22:00

Station is closed there are no markings where to go. It reminded me of being stranded on the Plzen train station at night :-). As you go through the underpass a woman approaches and asks in English if you need accomodation. You need to walk for 10-15 minutes to nearest bus station that still has buses running. Directions to there are not marked, you just know where it is and you can't take bus to there since it no longer runs or risk mising the other bus. Then you wait ~15 minutes for the bus which runs every 30 minutes at that time to go home. There is no way to buy weekly ticket or tokens so you pay 1 euro per ride. If you don't have change or forgot to exchange currency tough luck. There is a very good (voted best in the world) hostel at the train station but if you don't know where it is you're SOL.