Henry
Chris Burford wrote:
> At the beginning of the year I welcomed the start of the euro. It smoothly
> unified 13 currencies (if I recall the number correctly). A triumph of
> technical management based of course on computer technology, comparable to
> the gentle docking of space stations.
>
> The class content of this process has of course been controlled by the
> ruling class, finance capitalism, but like all technical feats in history
> it is also a feat of human skill and ingenuity.
>
> It has massive potential implications for the development of a world
> currency, which would lay bare more starkly the political interests behind
> the management of the world economy more than the unseen hand of the market
> does at present.
>
> BUT the predictions that the Euro would be strong, would soon rival the
> dollar as a reserve currency have not been fulfilled.
>
> There are several reasons and such a big shift in expectations demands
> comment. I hope others will wade in.
>
> In response to the 1998 world financial crisis the central banks of the
> west agreed together to lower interest rates to keep their economies
> circulating. The USA has done that more successfully than Europe, and the
> fact that Europe is now expanding less fast, without actually being in
> recession makes its economy comparatively weaker.
>
> But also there is a question of how much the European Central Bank wants
> the euro to be weaker. After they had got rid of the all too public
> Lafontaine, it was easier to make some gestures but not to vigorous ones to
> maintain the value of the Euro. Critically the left of centre Italian
> government has just won a loosening of financial criteria on the grounds
> that further retrenchment is irrational, and would cause more unemployment,
> and Germany significantly has seen no particular reason vigorously to
> oppose that.
>
> Chris Burford
>
> London