Page 25 - ARUBA TODAY

BUSINESS Saturday 29 december 2018
A25

Euro currency remains a work in progress on 20th birthday

By DAVID McHUGH terity as a condition. There’s
DEREK GATOPOULOS also a standing rescue
Associated Press fund, the European Stability
FRANKFURT, Germany (AP) Mechanism. The European
— The euro is about to cel- Commission now scrutinizes
ebrate its 20th birthday, countries’ budgets before
but the countries that use they’re submitted to na-
it are still wrestling with how tional parliaments. Perhaps
the shared currency should most important was a 2012
work and how to fix flaws European Central Bank
exposed by the debt crisis promise to buy bonds of
that marred its second de- countries facing excessive
cade. borrowing costs, a pledge
The euro was launched on that helped calm the storm
Jan. 1, 1999, when 10 coun- on financial markets.
tries fixed their exchange But there’s little agreement
rates to it and handed de- on going further. Germany
cisions on interest rates to and northern European
the newly-founded Europe- governments like the Neth-
an Central Bank. Euro notes erlands resist sharing risks
and coins went into circu- and spending, fearing
lation three years later. they’ll end up paying for
The shared currency was shenanigans in less well-run
seen as a solution to the economies. From the other
constant quarrels over ex- direction, France’s Macron
change rates that had has pushed for a substan-
marked European politics In this Friday, Jan. 1, 1999 file photo, thousands of people stand around a huge Euro symbol tial central budget, against
after World War II and as displayed in a park in Frankfurt’s banking district on the day of the launch of the Euro, the European considerable resistance.
a logical extension of the single currency, officially adopted in 11 European states. “We have evolved into
European Union’s tariff-free Associated Press a new, post-Maastricht
trade zone. Britain, notably, European leaders called Meanwhile, the possibility that could blow up during framework, but we don’t
opted out, but 19 of 28 EU for some sort of central pot of a new crisis like the one the next recession, when- really have a political vi-
countries use the euro. of money in 2015 and are fi- that threatened to break ever it comes. sion which explains what
The euro is credited with nally working on how to set up the euro in 2010-2012 The original euro setup un- that new framework actu-
increasing trade between one up. lurks. Italy’s populist govern- der the Maastricht Treaty ally is,” said Lucas Gutten-
members. But countries Finance ministers were ment chafes at spending signed in 1992 made it clear berg, deputy director of
have struggled to adjust to tasked at this month’s sum- restrictions that go along that economic policy and the Jacques Delors Institute
trouble after giving up two mit with filling in the details with the euro and wants to spending were strictly na- in Berlin and a former ECB
big safety valves: the abil- by June. The budget re- spend more on social wel- tional responsibilities, and economist.
ity to let their currency’s mains, however, a severely fare. Italy’s dispute with the member states were forbid- An expert report carried
exchange rate fall to boost limited version of an original EU’s executive arm, the Eu- den from bailing each oth- out for the European Com-
exports, and to adjust their 2017 proposal from French ropean Commission, is on er out. That concept went mission as long ago as 1977
own interest rates to stimu- President Emmanuel Ma- ice for now. But Italy’s large by the wayside in 2010, estimated that a shared
late business activity. cron. debt load of 132 percent of when the more financially currency would need a
One partial solution could Another key patch — EU- annual economic output, solid countries led by Ger- central budget of 5 to 7
be a central budget to wide deposit insurance lack of pro-business reforms many gave bailout loans to percent of gross domestic
keep paying bills when to help prevent bank runs and slow economic growth weaker ones whose debts product. Without that, mon-
member countries are during times of stress — has over its euro membership were no longer sustainable, etary union was deemed
slammed with recessions. been put off. remain a simmering threat and enforced tough aus- “impracticable.”q

US pending home sales slipped 0.7 percent in November

By PAUL WISEMAN year and has recorded 11 pending home sales: The
Associated Press straight year-over-year de- West is down 12.2 percent,
WASHINGTON (AP) — creases. the South 7.4 percent, the
Fewer Americans signed The rate on benchmark 30- Midwest 7 percent and
contracts to buy homes in year, fixed rate mortgages the Northeast 3.5 percent.
November as higher mort- was 4.55 percent this week, From October to Novem-
gage rates and prices con- down from 4.62 percent ber, sales rose 2.8 percent
tinued to squeeze would- last week but up from 3.99 in the West and 2.7 percent
be buyers out of the mar- percent a year ago. in the Northeast but fell 2.7
ket. “The latest decline in con- percent in the South and
The National Association of tract signings implies more 2.3 percent in the Midwest.
Realtors said Friday that its short-term pullback in the Pending sales are a ba-
pending home sales index housing sector,” said Law- rometer of home purchas-
dipped 0.7 percent last rence Yun, chief economist es that are completed a
month to 101.4. at the National Association month or two later. So the
The index based on con- of Realtors. November index suggests
A realtor sign hangs in front of a home for sale in Pittsburgh on
Wednesday, Nov. 28, 2017. tract signings has dropped All four U.S. regions have that sales will possibly de-
Associated Press 7.7 percent over the past reported annual drops in cline through January.q