> Yeah. What's the deal with European unions? They're being strangled by the
> European Central Bank, yet they never seem to talk about monetary policy.
> Why is that?
In addition to what Max mentioned, the German unions have always been strongly anti-Buba (I have fond memories of a demo organized against a local branch of Deutsche Bank by the unions in Freiburg, which snagged probably a thousand people, back in 1996). It's just that Buba, being in the pay of pragmatic Eurobankers, never destroyed its industrial base the way Volcker's financier fundamentalism nuked the US; rates went from 8% down to 3% in the mid-Nineties.
The ECB, in contrast to its constituent national banks, has been very accomodating to growth. It dropped rates everywhere to 2.5% in late 1998 (this saved Italy and Spain, which were choking on 7% rates). Even now, Eurozone inflation is 2.4%, growth is 3.8% and short rates are only 4.5%. Wall Street doesn't like this, so they've been selling the euro; in response, the EU is apparently starting to sell its excess dollar reserves. There's no question the euro is 30-35% undervalued.
-- Dennis