For your perusal. We are a long way from breakup of the Euro, but it might be interesting to watch what happens in the next recession.
Posted on 12/28/2006 1:33:36 AM PST by alnitak
The French people have turned against monetary union for the first time since the launch of the euro five years ago, underscoring the fragility of an experiment that draws its lifeblood from French and German popular acceptance.
A TNS Sofres poll released today by Le Pèlerin magazine found that 52pc of the French public now regard the euro as a "bad thing", blaming it for price jumps and job losses.
While the professional elites still favour EMU by a wide margin, some 71pc of blue-collar workers now say the euro has hurt them personally. A quarter of all French still think in francs "the whole time" when shopping.
France's loss of faith in the euro is a stark contrast to the euphoric mood on New Year's Day 2002 when crowds thronged cash machines to draw their first clutch of €10, €20, and €50 notes.
The flawless launch confounded those predicting monetary havoc as 12 nations switched currency overnight. British and American sceptics who said the breathtaking venture would never get off the ground had to eat humble pie.
For the French, E-Day was a triumph of diplomacy and national will. Monetary union was their project from the start, pushed by President François Mitterand as a means of taming the Bundesbank. Mr Mitterand secured his prize in a deal with German Chancellor Helmut Kohl in 1991, offering his support for German reunification in exchange for a fusion of the franc and the deutschmark, a scheme ultimately extended to the Club Med bloc, to the horror of German bankers.
The Gallic revolt against EMU comes after the first serious moves by the European Central Bank to tighten monetary policy. Interest rates have risen six times in a year from 2pc to 3.5pc, propelling the euro to $1.31 against the dollar, a far cry from levels near 85 cents that gave Europe's industry a shot in the arm in 2001-2002.
French growth slumped to a halt in the third quarter, led by an incipient crisis in the car industry, where PSA Peugeot Citroen is laying off 10,000 workers. Labour costs have crept up 20pc compared to Germany since the euro-launch, with consequences that are only now becoming evident.
Responding to the new mood of angst, French leaders across the spectrum are suddenly outdoing each other with frontal attacks on the euro system.
Premier Dominique de Villepin has urged Europe's politicians to reassert control over their national economies and curb the powers of the ECB.
"We must clarify matters in exchange rate policy, which means taking back our sovereignty," he said, causing tremors in Brussels.
Mr de Villepin was alluding to a treaty clause giving EU ministers power to shape the currency, a tool that could be used to force changes in interest rates.
Ségolène Royal, socialist candidate for the presidential elections in May, has gone even further, accusing ECB president Jean-Claude Trichet of usurping democratic authority. "It's not for Mr Trichet to dictate the future of our economies: it's a matter for our leaders chosen by the people. We must completely change the charter of the central bank," she said.
The financial markets have so far taken no notice, discounting the remarks as electoral rhetoric. In the light of today's poll, speculators now bidding up the euro may wish to ponder the risk that the French mean what they say.
For your perusal. We are a long way from breakup of the Euro, but it might be interesting to watch what happens in the next recession.
She got this part right. She just needs to extend the same thought to other aspects of EU, and also the UN.
French elites are so selective in espousing so-called "principle." They thought they can preside over Europe ordering people around, feeling like running a superpower called EU. However, they do not want to pay for the price of such a glory.
France is yet to hit the bottom. This is the disaster in progress.
Thanks for the post. Yes, I've read so many stories on how many ME nations are switching to the Euro and the Yuan. I don't see how Europe can easily extricate itself from the Euro and what it implies.
I believe each country has its own printing press, but they are controlled by the ECB.
The French double crossed the Germans, and the Germans were rightly angry.
The reason was because nations like Greece and Spain would not agree to control their debt, and Germany knew it would lead to economic hardship for all.
In the last few years, Germany has experienced its highest unemployment since the 1930's, and it once powerhouse of an economy is stagnant.
Good Morning!
I would like to see .85 euros. Makes a visit to Europe much cheaper than now! On the other hand, people visiting the US from Europe must be shocked how cheap everything is...of course, for Brits, a trip to the US is like going to Mexico. It's like a big half off sale.
How much of this shold be attributed to the Euro, and how much to their socialist employment policies?
Gresham's Law will settle the Euro' for keeps.
A Greek friend of mine visted last summer. I asked him what the Greeks like best about the Euro and the European Union. His answer? Nothing. Specifically, he said that Greeks do not like being ordered around by the EU "officials" and particularly the French. I came away with the impression that Greece might not be long for the EU....
We all thought that Kohl offered the DEM in exchange for the French approval of our reunification (although it required 2/3 of the parliament and nobody admitted it). The Brits got a push of the US in order to make them agree, and the US thought it would gain a powerful ally in Europe.
Unfortunately, the US were wrong, with a pacifist Germany in economic crisis for 16 years, that neither wanted nor was the "partner in leadership" (Bush 41) the US hoped for.
I say 16 years, because the sky is getting brighter, unemployment is going down, the economy is growing and the outlook isn´t bad at all. The French are disappointed that the ECB is caring about the stability of the currency rather than the economic growth - even under a French President -, because ("blame" Kohl) Germany dictated the rules.
The Euro is not the reason why we had bad years in the past, our politics are to blame.
1) Bad money will push out good. People will keep other currencies, and spend Euros as fast as possible, causing them to inflate rapidly, and lose more value.
2) Eventually, Euros will become so worthless, and other currencies so rare in the Eurozone, that bartering and other forms of exchange will return, denying taxes to Eurozone governments. However, it would be hilarious to see the French people forced to use British pounds until they could restore the Franc.
The new European flag, incorporating the "roadkill crow" emblem of the Holy Roman Empire, which the EU has long been trying to emulate.
So, French elites are unpopular even in Europe.
How does that match with the run-up in the value of the euro against the dollar? If anything it looks like the US Dollar is the bad currency being pushed out in that scenario.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.