Tag Archives: european

Euro Still Dropping

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Having just posted on Afoe suggesting I expect a quieter day, I have just noticed this:

“The euro fell against the dollar after the manufacturing report. The European single currency traded at $1.2285 at 10:15 a.m. in Frankfurt, down from $1.2304 late yesterday in New York, according to electronic foreign-exchange dealing system EBS.”

Still this fits in with the general picture I described, every piece of bad news can drive down euro/USD. In this case it was the manufacturing survey. I suppose, taking this a step at a time, the question is how long it needs before we break below $1.20, at this rate, and if we get a bad enough day tomorrow, we can be getting near by the end of the week. Maybe this depends on the US jobs data on Friday. I should write a post entitled eurozone/USA: the great race to the bottom (remember most US commentators are expecting a further dollar decline associated with the current account deficit).

I agree with an earlier commentator (and MS’s Stephen Yen: parity by year’s end would be OK from the European end (although not in Washington). The thing is, by years end, right now what we need is someone to reach for the handbreak.

Update: It reach $1.2257 at 10:30 a.m. in London. In part this is a result of a story in Germany’s Stern magazine.

Update 2: 13:00 Washington post has this:

“The euro dropped to $1.2255 in European trading, also propelled downward by an unsourced report in the German weekly Stern that a possible failure of the monetary union was discussed at a meeting last week attended by Germany’s finance minister and central bank chief.”

Update 3 “The euro fell as low $1.2224 in European trading before climbing back to $1.2242, still down from $1.2312 in New York late Tuesday”.

‘Gloom’ After French Vote

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The Washington Times (of all places) carries a UPI text about a Deutsch Bank research note on the economic consequences of the French ‘no’:

“France’s rejection of the European Union constitutional treaty by a majority of 54.9 percent is a severe blow to European integration and threatens to depress European economy back into eurosclerosis as in the 1980s, warns Deutsche Bank in a research analysis published Monday.”
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Now For The Double Whammy

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Actually with the critical ECB meeting looming on Thursday, it could in fact be more like a ‘trifecta’ than a ‘double whammy’. Anyway, however you classify things, on Wednesday it will be the turn of the Netherlands. My impression is that the politicians don’t know quite how to respond.

Incidentally, with so much news coming in so fast, we will be directing most referendum information posts to our other page: A Few Euros More.

According to De Telegraaf Dutch Prime Minister is ‘disappointed’:

Prime Balkenende “has been disappointed” by the French ‘ no ‘ against the European constitution. He stated he had rather expected a positive result on Sunday evening. Balkenende called Dutch voters to vote ‘yes’. We should not our laws to be made by the French.

Frans draws our attention to an interesting post on the Dutch blog Steeph, and also writes:
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The EU and the case for a ‘non’ (Updated)

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A couple of weeks ago, Versac from the French blog Publius sent me a bunch of questions concerning my views on the EU and the Constitution. They’re interviewing a number of non-French bloggers in this way. I thought I’d publish my answers here. A sample:

The main negative thing is that it’s giving the EU more power, competences, and I think that’s inappropriate before the democratic deficit is addressed. Also, it may lead to more judicial activism, which is bad.

Voting no is a bit of a gamble, since you can’t be sure it will push the governments in the desired direction, and not for example rule out Turkish membership to get it passed, or end up drafting an even worse constitution. But the happy scenarios seem likelier than the bad ones. We need to bloody the politician’s noses. Above all the present situation is unacceptable, and no real reform seems imminent. We need to seize the rare chance to set the EU on a new course, towards democracy and accountability. By rejecting the constitution, all bets are off.

Full interview under the fold.
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Crisis Looming At The ECB?

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A right royal row is brewing at the ECB. Basically the old guard theorists of the ‘one size fits all’ monetary policy are being challenged by more pragmatic observers of day to day realities. For the moments it is the politicians who are making the running (but there are plenty of competent economists in Germany and Italy who are ready to back them up), and yesterday the OECD joined the fray.
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Le Petit ‘Non’

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Well, if you believe Times (and after last weeks episode with the Independent I believe no-one), le petit ‘non’, like its equivalent le petit mensonge, is not all that serious after all. According to the Times, Britain is working with other European states to draw up plans to keep the European Union constitution alive if there is a narrow ?non? vote in France next week. Just a soupcon of ‘no’ will, in the end ‘help the medicine go down’.

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Bird Flu Early Warning System

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This is no joke. The danger of a mutation of the virus is a real and present risk. The EU decision is a prudent and intelligent one.

The European Union will on Friday take another step towards creating an early warning system to prevent, or at least to limit, an influenza pandemic by the launch of a new continent-wide monitoring system. Establishing a round- the-clock surveillance network to identify any European outbreaks will be the first task for the newly created European Centre for Disease Prevention and Control (ECDC), which becomes operational in Solna, nearStockholm, on Friday.
Financial Times

EU Fast-Tracks China Textile Dispute

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The European Union yesterday issued a final warning to China over its booming textile exports, threatening sanctions against two categories of textiles to prevent ?irreparable harm? to European producers. EU Commissioner Peter Mandelson has proposed emergency talks with China on imports of T-shirts and flax yarn. T-shirts and flax yarn are two of the nine categories of textile imports from China currently under investigation by Brussels following allegations of a surge in exports. Under the emergency talks procedure the normal 60 day WTO procedure is by-passed:

Normally investigations can take up to 60 days, but the procedure allows for this period to be cut short and urgent consultations within the WTO triggered for any product where import surges and the risk of immediate damage to the EU industry are very high. “In view of the seriousness of market disruption in these categories, formal consultations need to begin immediately,” the European Commission said in a statement on Tuesday.

“Only if China does not take effective action will the Commission propose temporary limits or safeguard measures on the growth of Chinese exports in the categories concerned in 2005.”

Under WTO rules, the consultation procedure requires China to remedy the situation by slowing the growth of its exports in these area to the level of the first 12 of the previous 14 months, plus 7.5 per cent.

Does this decision mean people are really getting nervous about the upcoming French constitution referendum? I have a longer post on this topic here.

EU recognized by the CIA.

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Last week, on a visit to Germany, Henry Kissinger stated that Europe “now has a number”. Well, I’m not sure which one in particular he was referring to, or if the CIA’s decision to list the EU in its world fact book has anything to do with Kissinger’s realisation – but depending on the outcome of the Constitutional ratification process, the decision to include the EU at this point of time will either be judged prophetic, or unfortunate – or as another example of “divide et impera”, of supporting those in Europe who campaign against a “superstate” (whatever that may be). After all, it’s a “fact-book”, isn’t it? From the CIA World Fact Book “What’s New” section –

“…the European Union has been included as an “Other” entity at the end of the listing. The European Union continues to accrue more nation-like characteristics for itself and so a separate listing was deemed appropriate. A fuller explanation may be found under the European Union Preliminary statement.”

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