Euro Trash? Non!!
Everyone is Europe is apparently wondering what’s going to happen on Sunday when La Populace in France votes “No” in a referendum on whether to accept the proposed new European constitution. Some of them are worried that a Huge No (as opposed to, say, a 52% No) will cause the Euro to plummet.
What is this new European constitution? Well, nobody has really been reporting much on that, but as far as I can tell it’s mostly about having a common foreign policy (with a European Foreign Minister, like a sort of Secretary of State), a sort of Grand Fromage Presidential type character, and some kind of common defense policy. Theory is that a French No would scupper the whole thing, because, after all, France was the No 1 country responsible for the united Europe in the first place (back in the 50s).
The FT has an interesting little speech on why the Frogs should be croaking “Non!”:
“There is a sentiment that we are entering a new world where the rules of the market prevail and where the state plays a less important role” [says a local expert]. “And there is a feeling that part of society is benefiting from this globalisation, the people who travel abroad, have money, work in businesss and are the company bosses, the journalists, the experts. But we the people are threatened by globalisation”.
Sounds sort of how people feel in the US.
Anyway, why the hell should this cause the Euro to plummet? Even if they don’t get their precious constitution – and they probably will find a way to do it in the end – it won’t make Europe disappear. The common currency will still be there. In fact, with US bond rates back down to around 4% (amazing!!! Jeez, it’s enough to make any forecaster humble), and the Euro down at a six month low or something against the dollar – reflecting huge anxiety already – not to mention that they would be saying “No” to yet another fat layer of bureaucracy -- I think the Euro will actually go up. Anyone wanna bet?
What is this new European constitution? Well, nobody has really been reporting much on that, but as far as I can tell it’s mostly about having a common foreign policy (with a European Foreign Minister, like a sort of Secretary of State), a sort of Grand Fromage Presidential type character, and some kind of common defense policy. Theory is that a French No would scupper the whole thing, because, after all, France was the No 1 country responsible for the united Europe in the first place (back in the 50s).
The FT has an interesting little speech on why the Frogs should be croaking “Non!”:
“There is a sentiment that we are entering a new world where the rules of the market prevail and where the state plays a less important role” [says a local expert]. “And there is a feeling that part of society is benefiting from this globalisation, the people who travel abroad, have money, work in businesss and are the company bosses, the journalists, the experts. But we the people are threatened by globalisation”.
Sounds sort of how people feel in the US.
Anyway, why the hell should this cause the Euro to plummet? Even if they don’t get their precious constitution – and they probably will find a way to do it in the end – it won’t make Europe disappear. The common currency will still be there. In fact, with US bond rates back down to around 4% (amazing!!! Jeez, it’s enough to make any forecaster humble), and the Euro down at a six month low or something against the dollar – reflecting huge anxiety already – not to mention that they would be saying “No” to yet another fat layer of bureaucracy -- I think the Euro will actually go up. Anyone wanna bet?
posted by econoclast at 7:06 AM
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