> The Euro Experiment: A Bold Idea That Isn't Working
> By FLOYD NORRIS
>
> Raising interest rates is another method to support a currency, and one that
> poor Wim Duisenberg, the president of the European Central Bank, has tried.
> Unfortunately, it is equity capital flows that now dominate the global
> investment scene, not bonds. Europe needs to find a way to persuade
> investors to buy stocks and businesses.
Ah, the NY Times, continuing a fine tradition of some of the world's worst economics coverage. (1) Equity capital doesn't correlate to investment; just look at Japan (low stocks, high investment rates) or the US (high stocks, low investment). (2) Europe doesn't need to persuade unnamed "investors". Europe is a global creditor; it *owns* the markets.
> Mr. Duisenberg never expected anything like the current situation, in which
> the United States can run an unprecedented current account deficit — now at
> 4.3 percent of gross domestic product, or more than $1 billion a day — while
> the dollar rises. "In the long run, such a deficit is unsustainable," he
> told a European parliamentary hearing. But for now, he added, "the Americans
> have no difficulty in having that deficit financed, basically by us,
> Europe."
And Japan. Funny, how our bourgie press can only think in terms of one country at a time: the EU is reduced to Germany, and Asia to Japan, with Russia and China as the anti-Teutons and anti-Nippons, respectively (a slightly modified version of Cold War allegory). They literally can't see the multinational networks of capital all around them. All that NASDAQ-babble must kill brain cells or something.
> But the euro may not have that much time to wait. Already the euro disarray
> is damaging hopes that Denmark will vote to join the currency union.
This is hilarious. Denmark is a pleasantly social democratic country and all that, but it has only 6 million people. The Eurozone: population 291 million. But who needs basic geopolitical facts when you're the Newspaper of Record!
-- Dennis