Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: X Y Zebra who wrote (28)	5/3/1998 2:39:00 PM
From: Henry Volquardsen	Read Replies (1) \| Respond to of 3536

Mr Z, A lot of interesting points in your post. Let me try to respond to them in order. If you go back to the the period just after WWII and follow the chain of institutions and the political and intellectual debates that have led us to the current system there is a very clear goal behind the drive to greater European economic and political union. That goal is to control Germany, tie it to western Europe and control its expansionist tendencies. You could see this last year when the process was having difficulty and Kohl mentioned this 'problem'. It is only recently that the idea of becoming big enough to compete with the US has even been mentioned. If you listen to a lot of the Mediterranean politicians, they want an economy that is big enough, not to compete, but to throw up a protective wall to allow them to maintain their current social welfare programs. The German economy has definitely been suffering from having 'purchased' East Germany at to high a price. This has been one of the reasons the German public has grown decidedly cool on the Euro and why the Bundesbank wanted to see devaluations of the Lire and a few other currencies. Latan America is an interesting block. I eventually see the dollar replacing local currencies throughout North and South America. Argentina has already been very successful in adopting a currency board with the US. The French do not, imo, have a desire to execute appropriate structural reforms. As I pointed out above many of them believe the Euro will allow them to insulate themselves for the need for structural reform. I am also not that sure whether Germany is willing to take the hard medicine needed. It is in fact the minor nations who have been more willing to bite the bullet and will benefit from the Euro. Watch out for Italy. The Italian economy could really surprise some people. The question of job mobility is vital. What has made the American currency union work is that there is no language barrier and there is the same basic culture. This allows the unemployed to follow the jobs. The question is whether unemployed workers from Germany would ever really move to Spain to follow job growth. This is one of the big questions to be answered for the future success of the Euro. No matter how hard I try I cannot imagine the French being less critical of their neighbours. Some things are genetic :) You state I am somehow suspicious that the ingrained bureaucratic mentality of the European leaders will cope with what is a task more suited for an entrepreneurial spirit, such as the US. I couldn't have said it better myself. Henry