Posted on 06/01/2005 10:13:08 PM PDT by Ernest_at_the_Beach
Last Updated: Wednesday, 1 June, 2005, 16:17 GMT 17:17 UK
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Euro report whips up German storm
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A political storm has broken out in Germany over reports that the government may be distancing itself from the European single currency. Stern magazine said that Finance Minister Hans Eichel had been present at a meeting where the "collapse" of monetary union was discussed. The government is planning to blame the euro for Germany's economic weakness, the magazine added. The report was dismissed by both the ministry and Germany's central bank.
But it comes at a sensitive time for Germany, as the country gears up for a possible early general election following regional poll defeats for Chancellor Gerhard Schroeder's ruling Social Democrats (SPD). The euro dipped sharply when the report came out on Wednesday morning, hitting an eight-month low of $1.2218 by 1600 GMT. Struggling economy
The mere fact that it has been talked about means that it is a big deal
Public dissatisfaction with the government's handling of the economy is one of the greatest challenges facing Chancellor Schroeder. His ruling SPD/Green coalition is widely expected to lose a parliamentary vote of confidence, due to be held by 1 July, which would trigger a general election. The euro is seen as a potential source of political conflict. According to Stern, some 56% of Germans want to go back to the deutschmark.
And dissatisfaction with the single currency has proved a potent topic in the campaign ahead of this week's Dutch referendum on the European constitution. 'Absurd' Responding to the Stern report, the finance ministry and the Bundesbank described talk of the euro's demise as absurd. "Finance Minister Eichel and Bundesbank President Weber see the euro as a unique success story and an important step in securing the future of Europe," a Bundesbank spokesman said. Both men said they had not taken part in discussions during the meeting on the problems facing monetary union. "The mere fact that it has been talked about means that it is a big deal," said Jeremy Hodges, head of foreign exchange sales at Lloyds TSB Financial Markets. "I see no reason whatsoever to go against the euro move."
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Oh my!
George Soros...is sad!
Now it looks like it might be another Germany vs. the rest of Europe sequel.
Whatever happened to originality?
This is gonna start a stampede!
This whole deal with the Euro and the stupid Constitution they put together has me chuckling. Who would have thought the French would have started the downfall of the European Union?
Boys ( and ladies) This whole EU thing could start spinning down the toilet much faster than we thought.
So9
Yeah...all those suitcases of Euros trundling over the border into Switzerland.
The froggies (or at least their politcal class) have always viewed EU (and the EC, and EMU) as just tools for their conquest of Europe. They're perfectly willing to let the bureaucrats of Brussels nominally 'run' the show, as long as they get to dictate the terms OF the show.
This so-called Constitution -- unlike ours -- has three remarkably curious features:
1) Neither you nor I nor anyone not in the ruling elites of ESSR can name a single person who wrote one word of it;
2) Every time said 'Constitution' has been submitted to a vote of a legislature, it has passed. Every time it has been submitted to a vote of the populace, it has failed. One sees a trend here, no?;
3) The document itself not only DOES NOT limit the powers of the 'Federal' government of the ESSR, it is so amorphous in its content that it quite literally guarantees that the EU courts can do/say/rule in absolutely any fashion they like, with no structural (or 'Constitutional') accountability at all.
Anyone who thinks that 'emanations and penumbras' are merely a concoction of leftist American ''judges'' had better sit down and have another think. If the almost-slave citizens of the ESSR do not (assuming they've the opportunity) vote this excrescense of a pseudo-Constitution out of existence, well, I suppose they're going to get a lesson in judicial astronomy that will put former Justice Douglas to shame.
And, if they don't, they will deserve at least that level of tyranny.
EUR/USD is now down 13+ handles from its high. This is a far cry from any sort of putative 'failing'. I shouldn't be at all surprised if it works down into the 115-113 area over the course of a few months' time. No guarantee it will do, of course, but EUR/USD at 90, or .90 if you like) is just an opium-pipe dream w/in the next couple of years, bar only perhaps the Wahhabists paralysing ESSR by bombing their welfare offices.
After the demise of the Bretton Woods agreement, the last stand (as it were) of specie-backed currencies, can you name any non-3rd-world currency that has failed?
Go ahead, try it. Fact of the matter is that you can't.
Not because I'm a nasty b*st*rd, but because -- outside the 3rd-world -- the assorted nations will quite literally conspire to **maintain** the existence of a failing currency for as long as possible, AND, to reprogram the game so that said about-to-fail currency will once again, sooner rather than later, become viable.
Why? Easy. No civilsed nation these days can AFFORD to lose a trading partner; if ESSR's currency blows up, then BANG! goes a huge export mkt for a decade or so. Russia wasn't even a large trading partner in 1998, but when Yeltsin's loveable but box-of-rocks economic advisors (aided by the over-educated, under-intelligenced Jeffrey Sachs of Hah-vahd, and his minions) caused the Rouble to fail viciously in 1998, the repercussions were felt in almost every American bank that lent internationally, whether to Russia or not.
Now, given that gov't WILL drain off as much capital as it can do, in order to buy votes, but also given that there is a limit to such action -- after all, not the US or any other political class can keep buggering every citizen worldwide by continal devaluation, w/o sooner or later paying the piper, right? The operative word in that sentence is 'continual', btw) , what do you conclude?
Well, as long as all this doesn't simply destroy the world economy - it looks like it'll be fun as heck to watch.
From your lips to God's ear. {{{{snicker}}}
Nice. Very nice.
Meow! Euro cat fight!
As I understand it, Asian banks are heavily invested in euros. They don't want to see their assets devalued, so they will probably put the brakes on any sudden drop in the euro. That would mean selling dollars and other assets.
On the other hand, if the new EU countries say no to the euro, confidence will erode. Asian banks may opt to minimize losses by selling euros over several years. Either way I don't see much confidence in the euro.
Wonder what Warren Buffets positions look like these days...
I believe Spain had a referendum. But, hey, 2 out of 3 is good...
I missed WWIII - can you tell me when it happened?
"The German Government distancing itself from the Euro is like Dr.Frankenstein distancing himself from his monster creation child."
Sorry, but Germany never wanted the Euro from the start. The commom currency was one of the French conditions for German reunification.
A short recap of the opinions in 1990 regarding the prospect of a united Germany:
Bush (USA): Love the idea!
Thatcher (UK): Hate the idea (But will do whatever Bush says).
Gorbatchev (USSR): Don't really care. Never liked Honecker (GDR) anyway. Need huge credits fast.
Mitterand (Frace): Germany too powerful already with the Deutschmark. Need way of controlling them.
So, if there's a "father" of the Euro, that would definitely be Mitterand.
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