ABSTRACT
This chapter emphasizes the role of trading blocs with specific reference to Europe and its recent economic difficulties. It then turns to the related explanation of the rate of exchange of one currency for another. The important issues in the chapter are: Europe as an example of a trading bloc, with a study of why it had a financial crisis in 2008; problems with the euro currency and other types of currency issues; differences between a system of fixed exchange rates and floating exchange rates; and the current economic relationship between China and the United States. In a brochure released by the European Commission early in 2009, before the full force of the US recession had been felt in Europe, the creation of the euro was celebrated with what now looks like willful blindness. Greece in particular has been forced by the European Central Bank and the governments of Germany and France to adopt very stringent austerity measures.
