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To: Henry Volquardsen who wrote (481)	8/26/1998 1:31:00 PM
From: X Y Zebra	Respond to of 3536

The big question vis a vis the future for the Euro will be how many non European central banks will want to diversify into Euros as a reserve asset and wether that will support the Euro for a time. If that were not an issue I believe the European currencies would be under greater pressure now. This sounds, like saying, let them gather some momentum between the disaster in Russia and in Asia, let's see how many suckers commit to this Euro dream, then start calculating how big the profit will be by going against it..... They [the French] are travelling the globe trying to sell the Euro as a strong currency because they want to be able to sneer at the US. At the meantime they want to argue for a devaluationist approach to promote jobs. Ah! the case of the snake oil salesmanship... or...? Bidding starts, do I hear any...?

To: Henry Volquardsen who wrote (481)	8/27/1998 4:19:00 AM
From: GUSTAVE JAEGER	Respond to of 3536

Henry, You wrote: ''As to why the 'currency mob' is not trashing the European currencies at the moment is not because they are trying to insure a smooth transition for Schroeder. The big question vis a vis the future for the Euro will be how many non European central banks will want to diversify into Euros as a reserve asset and wether that will support the Euro for a time. If that were not an issue I believe the European currencies would be under greater pressure now.'' Obviously I don't agree with that... But firstly, note that you're mixing up two different issues: the future for the Euro and its relative strength vis-a-vis the other currencies. Sure, the Euro has a future! But it'll be a cheap one.... For one thing, Asian countries will wholeheartedly put themselves down the Euro shopper roll, not because they praise the Euro per se but because they want to balance/hedge their (painful) dependency on the USD. Hence, Asian countries will fill their accounts with Euros not to please the French but to put some pressure on the US. After all, the European Union's still the second largest (consumer) market in the world. Regarding the current strength of the DEM, I don't agree with you. Do you know that, back a few months, candidate Schroeder had still a postponing of the Euro on its political agenda? 60% of the Germans don't want the Euro and several academics and scholars have even petitioned against it, argueing that the Euro wasn't complying with the German Constitution! Yet today, as a responsible political leader, Schroeder stepped back from his former anti-European heresy... But Germans haven't changed their minds: they expect a Euro as strong as their cherished Deutsch Mark, that's why the French didn't get Jean-Claude Trichet in the ECB's chairman seat: both the location (Frankfurt) and the chairman (Wim Duisenberg) belong to the Grosswirtschaftsraum (Germany's Larger Economic Space). Today there're over 5 million (officially) unemployed in Germany, and an economic disaster in former East Germany. Die Grunen (ecologists) have lost steam whereas far-right extremists have gained momentum... so, you don't want to see a DEM melting down in the midst of Germany's legislative election! Further, you're likely aware that in Moscow, new Prime Minister and billionaire Tchernomyrdine is negotiating with the Communist leader Ziuganov... This should be viewed as a warning flag: if social unrest in Russia intensifies, we might witness a reactionary move in the way Russians deal with the rest of the world. Throughout Eastern Europe, the former communist bureaucrats are still active, most of the time they've just changed their logos and political acronyms: they've renamed themselves ''Progressist Democrats'' or ''Liberal Socialists'' or... you name it! In some countries (Lithuania, Poland,...) the former communists have even defeated the staunch ultraliberal doctors who sat in the driver seat in 1989 (after the Fall of the Berlin Wall). Those will gain even more political clout if Russia were to step back from a Western liberal economical agenda. Isn't all these developments enough to put some pressure on the DEM/USD exchange rate? Or are the currency traders too dull and lazy in August?