Elec. Telegraph: "Bring back mark" plea as euro hits new low

greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread

From today's Electronic Telegraph:


'Bring back mark' plea as euro hits new low, By Andrew Gimson in Berlin

GERMAN Euro-sceptics are watching with horrified fascination the steady fall of the euro against the dollar, seeing it as the first confirmation of their warnings that the abandonment of the mark will turn out to be a disaster.

Prof Wilhelm Hankel said yesterday: "We predicted the euro's weakness, and it's going to go on getting weaker." Prof Hankel, one of the group of leading academics who tried and failed in the German courts to stop the launch of the euro, called yesterday for the timetable for conversion to the new currency to be torn up, with investors no longer being forced to change their marks or guilders into euros at the start of 2002.

He said: "Otherwise the flight of capital from the euro will grow. The mark should be kept indefinitely as a parallel currency. We must keep the door open for a return to the mark," arguing that this would help to calm investors' fears of the new currency.

Prof Hankel believes the euro will remain weak against the dollar as long as European interest rates are lower than those in America, but sees the European Central Bank caught in a trap: if it rescues the currency by putting up interest rates, it will also increase unemployment in Europe, "and all European governments will be furious with it".

The prospects for employment in Germany are already dark, with one of the country's leading economic institutes, the Berlin-based DIW (the German Institute for Economic Research) predicting yesterday that unemployment will next year remain above four million. This is because economic growth is too sluggish to make any appreciable dent in the figures.

There is little doubt that the majority of the German public agree with Prof Hankel and would much prefer to reinstate the mark. Readers of Bild, Germany's biggest-selling newspaper, complain bitterly in its letters column that their hard-earned savings are being jeopardised by the compulsory move to the euro. Michael Rvsler wrote yesterday from Kolitzheim, in Bavaria: "On Jan 1, 2002, we probably won't need to change the Deutschemark any more. With this euro disaster it will be worth absolutely nothing by then."

The fear is growing in Germany that Chancellor Gerhard Schrvder's description last year of the new currency as a "sickly premature child" is turning out to be all too accurate. The Berlin tabloid BZ commented yesterday that the euro had the "birth defect" of 11 conflicting national economies, with a mix of financial, welfare and wages policies that was like "a mixture of good and rotten apples".

Mr Schrvder made his "sickly child" comments when still in opposition. Now, as the most powerful politician in the euro zone, he finds himself condemned to try to nurse the currency into health.

His opponents have been unable to make political capital out of his changed approach, for it was they, under Chancellor Helmut Kohl's leadership, who foisted the euro on a reluctant German people. The euro yesterday morning hit a new low of only 1.0108 against the dollar before recovering slightly.

The question in Germany is how low it will have to go - and how seriously other euro members such as Italy will have to let the side down - before the German political elite abandons its entrenched cross-party approach to the new currency, which is to insist that it must be made to work at all costs.

-- Old Git (anon@spamproblems.com), July 14, 1999


It's well known that the mother's heavy drinking and use of tobacco have deleterious effect on her unborn child. Europeans smoke altogether more than is good for them, and are known for their consumption of alcohol as well. All this during the years of the Euro's developmental stages. No wonder it's challenged now as an infant. Fetal alcohol syndrome is difficult to overome.

(I don't know if this is serious, or not.)

-- Tom Carey (tomcarey@mindspring.com), July 14, 1999.

Moderation questions? read the FAQ