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FRANCE SAYS NO TO THE EURO…!

By ATWadmin On November 1st, 2006

795151-529930-thumbnail.jpgInteresting to read that some of France’s most respected economists consider the launch of the single market and the € euro an utter failure when it comes to boosting trade, jobs and economic growth in the European Union, according to a devastating report from an official French think-tank. The research, a 300-page volume is the most damning indictment of European economic policy ever produced by an official French policy unit.

Europhiles who were convinced the launch of the euro would force European governments to reform their failing, high tax and high regulation welfare states have been proved wrong, the report says. (But who will tell Ken Clark) In an argument so radical that it has yet to be made by British eurosceptics, the French study argues that the single currency actually had the opposite effect.

"The single currency even seems to have had a numbing effect on the EU members, which no longer need to protect against a foreign-exchange crisis and have become complacent in their efforts to control spending and make structural reform…" .

And then this….

 "The situation we describe is perilous: the inability of the EU to revive the economy turns investment away from the continent; persistent under-employment and anaemic growth undermine social provision and the combination of agonising economic problems, poorly-managed enlargement and a manifest exhaustion with community procedures all threaten to trigger a vicious circle which will unravel the acquis communautaire."

How fascinating to read such a refreshing perspective from these prominent French economists. They should be congratulated on their brutal honesty and only a fool would wish to see the United Kingdom enter this economic  basket-case.  Suffice to say that it remains offical Liberal Democrat Party policy!!!

45 Responses to “FRANCE SAYS NO TO THE EURO…!”

  1. I think they are simply using this as an excuse to avoid the issues of dirigisme and protectionism. Without moving to change these French policies the euro cant do much and it serves as a useful excuse.

  2. Suggestions that the euro is an economic failure are met with the smug, facile declaration that it is a political rather than an economic project. So let’s not neglect to mention that it is also a political failure.

    Far from seeing the emergence of a European political identity euro-scepticism or euro-realism is on the march. The EU is set on an ideological course that simply fails to address the real issues facing its members.

  3. An interesting question: would growth in the euro countries have been any less if they had not launched the single currency?

    The problem is not just the euro with its deflationary insistence on a limit of 3% on government deficits (broken by Germany and Italy in recent years) but the anti job-creation culture which has led to France, Germany and Italy stagnating for most of the last 10 years. More of the same policies will produce more of the same results.

  4. Perhaps Scotland, Northern Ireland and England (and the English Regions) should have a separate currency also, for all the above reasons.

  5. let Oil trade on the Euro and see what difference that makes.

  6. Just a thought. If Scotland votes for independance, which it might and then joins the Euro, which it might, will that cause chaos or even worse?

  7. Too early to tell with the euro and it would be interesting to see what axe these people have to grind.

  8. It is already isnt DT? Iran…

  9. Hasnt that already started..(Iran)

  10. Alison,
    no it hasn’t. It was mentioned and then the US turned up the heat on Iran. The only country that tried such a move was Iraq under Saddam but he lasted less than a year after it.

    Some argue this was the main reason for the invasion, to stop the creation of the Petro-Euro.

    The main player needed for such a move is Russia because for one they sell a lot to the EU and secondly nobody is in a position to take them out to protect the mighty dollar.

    Gone are the days when the west could pressurise an impoverished Russia. The bear is well and truly awake. It has virtually no debt and is the world’s second largest oil exporter.

    By the way, Putin hasn’t ruled it out. Probably waiting until Germany’s very own personal pipeline under the Baltic is finished.

    If it happens, we will see a changed world. No more huge deficits for the US and a euro currency that is always in demand regardless of the state of the European economy.

    It could be a catastrophe for the US and a huge benefit to the euro. The "problem" is the EU doesn’t want a US disaster on a 1930s scale.

    However, other countries aren’t as concerned,such as Venezuela and Iran, so we will have to wait and see.

    At the moment, the dollar accounts for more than two thirds of all central bank reserves worldwide and all international oil transactions have to be in US dollars. This makes it the world’s reserve currency, regardless of the underlying strength of the U.S. economy.

    But with massive deficits now, America is increasingly dependant on this status. Any threat to the dollar’s dominance could result in a currency collapse.

  11. being the only world reserve currency is an extremely priviledged position. it is a major reason why taxation in the US can be kept to a minimum. i say its high time the US was made to live in the real world. bring on the petro-euro!!

    supporters of the free market should be demanding it.

  12. The idea of that we would be celebrating if the American economy went down the toilet is crazy. No supporter of the free market would want to see the Euro as dominant, seeing as the EU is the greatest stumbling block to free trade in the World.

  13. thanks Garfield, i sort of knew some of that but was under the impression the switch was going ahead. What im reading at the moment indicates that is the case…who know. As i said above re France I think those behind the report have hidden motives on this. The problem in France is dirigisme and protectionism. Until the French deal with these very French strategic ‘institutions’ i think the euro in this sense (of the post) is being used as a convenient excuse. the French are living through their ‘1970’s. Nothing much will change before 2007.

  14. Daytripper,

    why should free marketeers support a switch to the Euro for oil trading? The EU is one of the main blocks to free trade – just ask the Africans who’ve complained for years.

    Surely anything that has dire consequences for the American economy will likewise have negative effects across the World?

    Alison, you’re right about the French and their dirigist and protectionist tendencies. It’s not surprising that these tendencies are found in abundance in the EU institutions, seeing as how strong the French influence has always been, from Jean Monnet to the present. The main problem for the EU I think is their "social market" economies are not flexible in the face of world competition. The steps this Government has taken down that road have done nothing good to Britain’s competitiveness.

  15. richard, are you claiming the US isnt protectionist and an equally large stumbling block to real free trade?

    real free trade would bring equality to the world markets. our stock would fall and the third worlds would rise. eventually it would level out. but no politician would dare risk their generation of voters by making them poorer. its never going to happen under the current world economic system, which is completely western-centric.
    free trade would probably take anywhere from 20-100 years to see real benefits to the whole world. much too long for a political structure that functions week by week or, often, day by day. (thats my philosophical guess)

  16. Is daytripper unaware that if free trade increases the volumes of goods traded, then energy expended moving those goods also increases? I would have thought that if Nick Steyn et al are to be believed, then free trade must cease in favour of localisation.

  17. <i>Is daytripper unaware that if free trade increases the volumes of goods traded, then energy expended moving those goods also increases?</i>

    im very aware. oil depletion is going make localisation inevitable. infact it will completely bury any notion globalisation, and thus global free trade. thanks for reminding me of that litlle conundrum.

  18. DT,

    I agree, to paraphrase you(!), that political considerations, which are mainly of immediate concern, generally trump economic ones, and yes the US are protectionist, as are all countries I expect (look at China’s artificially weak currency, which allows them to export so competitively for instance), but the "anglo-saxon" model is based on free trade, unlike the social-market model, which predominates in EU countries, and bears more than a passing resemblance to Mussolini’s corporatism.

    Also, one of the tenets of free trade is that it enriches everyone. The idea that if the rest of the world gets richer, the US and the West must necessarily get poorer is rejected by liberal economists.

  19. DT,

    I agree, to paraphrase you(!), that political considerations, which are mainly of immediate concern, generally trump economic ones, and yes the US are protectionist, as are all countries I expect (look at China’s artificially weak currency, which allows them to export so competitively for instance), but the "anglo-saxon" model is based on free trade, unlike the social-market model, which predominates in EU countries, and bears more than a passing resemblance to Mussolini’s corporatism.

    Also, one of the tenets of free trade is that it enriches everyone. The idea that if the rest of the world gets richer, the US and the West must necessarily get poorer is rejected by liberal economists.

  20. not necessarily poorer, but less well off. if we allow the third-world to extract equivilant profit from their resources prices go up in the import nations. economics 101 id have thought.

  21. Garfield, if the enormous US trade imbalance is to be brought down the dollar will have to fall in value significantly anyway.

    I can’t see an overvalued euro helping the EU. It would just make it even more protectionist and deflationist.

    As to trade, the idea of flying flowers from Kenya to the UK or kiwi fuuit from New Zealand to the UK is inherently wasteful of limited resources and only possible because of the tax-free status of avviation fuel.

  22. " if we allow the third-world to extract equivilant profit from their resources prices go up in the import nations"

    Not sure about this. Could you give an example. With oil, the market sets the price based on supply vs demand, so if Saudi Arabia ramps up production the price drops for everyone. One of the main complaints from Africa I believe is that they can export raw material, say cocoa, which is turned into chocolate in the EU, but if they process it themselves they get hit with high tarifs. If the tarif barrier was removed, the price of chocolate for the consumer would most likely drop, due to the competition. In this case, jobs in the EU would perhaps come under threat, as they wouldn’t be so protected (the function of the tarifs) but the liberal economists would argue that this was a good thing overall.

  23. Peter,
    but having a recession-proof currency is a plus for any economy. It means you can play by economic rules that others can’t, including measures to help the eurozone that would be otherwise unthinkable. It’s pretty much a permit to print money.

    I don’t believe that the EU wants to see a weak dollar but it is in the EU’s interest to have the euro as a reserve currency.

    I don’t know if they want it to come about via Iran deciding to trade in euros at some stage in the near future. I think they would much prefer Russia to be the country to step up to the plate.

    After all, the majority of Europe’s oil and gas comes from Russia so it makes huge sense to eliminate the vagaries of currency fluctuations.

  24. Garfield,

    "After all, the majority of Europe’s oil and gas comes from Russia so it makes huge sense to eliminate the vagaries of currency fluctuations"

    The currency may not fluctuate, but the price of oil will, so what’s the difference? The idea of the EU cosying up with Russia and Iran in order to get one over the US is sickening, and there’s no such thing as a free lunch.

  25. Richard,
    Forget Iran for a second. It is in Europe’s interests to cosy up to Russia. It is the EU’s main oil exporter and a huge influence in Eastern Europe.

    Big difference between simple oil price fluctuations and price AND currency fluctuations.

    It would be to the benefit of Russia and the EU for both sides to deal in euros when buying and selling oil.

    Would you rather have your mortgage in the currency you are paid in or Japanese Yen?

  26. Garfield,

    As for the currency of my mortgage, the decision would be based on the repayment rates, not the currency it was held in. The more stable something is the easier it is to make long-term calculations, but nothing is certain.

    Having good relations is one thing, but Russia is drifting in a dangerous direction (e.g. the recent murder of journalist Anna Politkovskaya) and it amazes me that anyone in the West would advocate a closer relationship to Russia than America, or see their own interests in furthering Russian power and influence. Remember what happened to Ukraine’s gas supply, for an object lesson in what happens when Russia is in control.

    People rail against the US as the one superpower without, it seems, a thought for what the World we be like if Russia or China was in the position that the US is in. I’m not saying you’re doing this, but attempting to build up the EU as a rival to the US is a very dangerous game. You can see it in the Galileo satelite system which will have military capabilities, and will be constructed with a large chunk of Chinese money.

  27. Richard,
    I see where you are coming from but the EU has two choices for oil, the Middle East or Russia.

    There is also ideal of uniting Europe.

    The night the Berlin Wall fell, Enoch Powell was on a panel on the BBC. I believe Thatcher said earlier that she thought German unification would take at least 20 years. Everyone on the panel agreed or thought it would never happen.

    It came to Powell, who whatever else you may think of him was a clever guy.

    He said Germany would be united within a year. They all laughed heartily at his madness.

    He then said that Britain had to start talking to Russia right away because the greatest threat to Britain’s power and security in Europe going forward was if Germany and Russia got together. Britain should never allow this to happen. The dangers were immense. They all laughed some more.

    Germany will soon have its very own pipeline with Russia and the pair have never been closer. Germany and Russia lost tens of millions during their war with each other. They won’t war again and deep down want to work together from here on in to ensure their mutual safety.

    The continent of Europe can’t be united, which is basically what the European Union is about, without the support of Russia. It is an integral part.

  28. Garfield,

    "the EU has two choices for oil, the Middle East or Russia"

    surely dependency on one or the other is a weakness. George Bush himself has admitted the problem of the US depending on Middle Eastern oil. What is better is competition, not a monopoly position, that can be exploited by the producers.

    Interesting to bring Enoch Powell into the discussion, whose views were always thought-provoking. I think he was generally in favour of good relations with Russia, and he had an antipathy towards the US, probably because of the US / British rivalry over our Empire in days gone by. He certainly saw a large distinction between US interests and our own. But don’t forget he was passionately against our membership of the EU, which he saw as destroying our nation and all it stood for.

    What he said about Germany and Russia together posing the greatest threat is astute, and forms one of the original arguments for the EU; by tying Germany to Western Europe this scenario (lest we forget the Ribbentrop/Molotov pact) will not arise. But remember it was NATO that kept the USSR at bay, not the European Coal and Steel Community.

    I don’t have any wish to see the continent of Europe united, and see Britain’s interest in case of this eventuality very much in remaining outside such a block. Only a cursory glance at a map of the World tells you why you need to be wary of Russia.

  29. Richard,
    I would see Germanay’s ideal of having secure borders now being met following the latest expansion. All nine borders are within the EU and its economic spehere of influence. All are either in the euro or obliged to join it as soon as they meet the requirements. No opt outs allowed for them.

    All that remains is for Russia to be brought into the fold in some way or other. Better than having it on the outside looking in.

    I agree that the ideal would be no dependance but second best would be making Russia and the EU interdependant, if that’s possible.

    As for Britain, it is the western equivalent of the Russian bear, unbroken and unbowed but with much better table manners.

    I’m not surprised Britain wants to continue to go it alone. I don’t think its people would want it any other way but it should be interesting to see if it’s in its interests in the long run. Anything could happen in the next couple of decades, everything is to play for and everything is there to be lost.

  30. "Only a cursory glance at a map of the World tells you why you need to be wary of Russia."

    can you expand on this?

    Russia has been continually undermined by the west since the fall of the soviet union. they have been unable to reassert their regional power. that is about to end. strategically they are in the strongest position worldwide. they need to be positively engaged now.

  31. Sorry,
    eight borders are in the EU, the ninth is Switzerland.

  32. DT,

    I mean, by looking at a map and seeing the vastness of Russia – the largest country in the World – you must realise that you must be very cautious in your dealings. We can’t ignore them, but if you want to keep good relations with Russia, you have to do it from a position of strength.

    I don’t know what you mean by the West undermining Russia, since the fall of the USSR. Huge amounts of money flowed into Russia in the Yeltsin era and disappeared into a black hole of corruption. Russia’s economic position is undermined by organised crime and the autocratic Government.

    I have heard you criticise the US for crimes and torture etc, but surely you accept Russia is much worse than the US in this respect?

  33. Garfield,

    the bear metaphor for Russia is very fitting. Don’t annoy it, keep your distance, and keep a gun handy!

  34. thats only for those who are scared of it. the brave would feed it and train it to do all sorts of tricks.

    we all know which one fortune favours.

  35. DT,

    for a moment I imagine the pair of us on a camping expedition in the wind-swept Rockies. I’m prepared to put my technique on the line when a grizzly comes lumbering our way, are you? 🙂

  36. Richard

    Perhaps you could feed daytripper and train him to do all sorts of tricks ;o)

  37. "for a moment I imagine the pair of us on a camping expedition in the wind-swept Rockies."

    The teething problems continue – it appears that David has enabled the ‘gay personals’ module by mistake.

  38. Frank,

    I’ve never even seen "Broke Back Mountain"

  39. That give my last comment additiona meaning that hadn’t occured to me ;o)

  40. Aileen,

    don’t sink to Frank’s level. Can’t two men have a wholesome experience in the mountains with bears and fully-loaded weaponry without titters about their heteosexuality? DT’s a real man, he tames bears – I just shoot the buggers when they come too close.

  41. Richard

    If I ever get stuck in the forest and I call out for help I hope that it’s you in earshot and not DT. I don’t know what would constitute a tame bear in his eyes ;o)

  42. Aileen,

    rescuing damsels in the forest is the sort of thing manly chaps like me relish (unlike Frank, who’s a scaredy cat, as was revealed on the Halloween horror movie thread!)

  43. You’re protesting too much now. And we all know you just want to rescue damsels in order to hang out with the knights afterwards.

  44. Just thought – supposing Richard mistook me for the bear. I might be better of with DT. If he mistook me for the bear at least I’d get fed! ;o)

  45. "for a moment I imagine the pair of us on a camping expedition in the wind-swept Rockies. I’m prepared to put my technique on the line when a grizzly comes lumbering our way, are you? 🙂 "

    if an entire coutry came lumberig through the rockies id be more concerned about the mushrooms i put in the soup. and anyway, i build the camp so go away and make your own

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