IN THE heart of the Money Museum, a shrine to economic rigour in the grounds of the Bundesbank in Frankfurt, a large machine allows visitors to see what would happen if French populists took control of Europe's single currency. In truth, the simulator is not labelled in quite that way—museum-goers are merely invited to grab a lever, and choose how much money to supply to a slowing economy.
But for anyone seduced by French complaints over an overvalued euro, and the need for the European Central Bank (ECB) to concentrate more on pursuing growth, the lesson is plain. If you ignore the post-1945 German focus on fighting inflation and pour in easy money, then disaster follows.
The machine shows prices running out of control, warning lights come on and the game ends. “Sorry, but you've failed,” reads an illuminated rebuke. “Go back and review the basics of money again.” The real-life costs are spelled out, a few metres away, by sombre displays and newsreels describing the miseries of currency instability.
...
French complaints about the strength of the single currency have been rumbling for some time, as the euro has climbed in value against the dollar and Asian currencies. They became louder than ever when the currency recently broke through what a French minister called the “psychological” barrier of $1.50 to the euro.
But what precisely do the French want? It is unclear, given that their comments are mostly couched in code. French business leaders have asked the EU to “wake up”. In an interview with Le Monde, Dominique Strauss-Kahn, a former finance minister who runs the International Monetary Fund, said the euro was overvalued and blamed the “excessive power” of the ECB. On the one hand, Mr Strauss-Kahn said, the ECB had done well in controlling inflation (its mandate, to focus on medium-term price stability, was inherited from the Bundesbank). On the other, he said, the ECB lacked a “political” counterbalance in the form of a “finance minister for Europe” to promote growth.
President Nicolas Sarkozy has been attacking the strong euro for months, saying that the currency should be put “at the service” of growth and jobs. Yet he also insists that he does not question the independence of the ECB. More recently, he has preferred to hint at dark dealing by America and other rivals with weaker currencies, saying that European industry must not be “penalised” out of existence by “monetary dumping”.
The euro's strength was debated at this week's meeting of the “Eurogroup”, the club that brings together euro-area finance ministers with the ECB head, Jean-Claude Trichet, and Joaquín Almunia from the European Commission. France was clearly “hoping for a depreciation of the euro”, comments one minister. But he adds that “what France says outside is a lot stronger than what they say inside.” Still, there are deep differences of opinion. Germany pulled off an export boom last year, despite the strong euro. Other countries whose trade is mostly within the euro area point to the inflation-controlling benefits of a strong currency, when it comes to buying imports and above all oil (which is priced in dollars).
...
.
Also the greedy @*&%$'s that made the irresponsible loans should take their medicine, write them off and go directly to JAIL!
