> 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.
>
>
The ECB has been "very accomodating to growth"? How? The unemployment rate
in the Euro-zone is 9.1%. Yet real short rates are over 2%. The Fed would
never let that happen here. During the early '90's recession in the U.S.,
unemployment never hit 8% yet the Fed held real short rates down at 0% for a
long time.
Wim Duisenberg said a few months ago that the New Economy has not yet arrived in Europe. That means high unemployment in Europe as far as the eye can see. And not a peep from the European labor movement!
Seth