Saturday, February 23, 2002

[President of the European Central Bank] Duisenberg steps down " [the euro is] a disappointment to those who see the currency’s external value as somehow symbolic of Europe’s economic strength ... " " ... the euro-area’s performance has given much greater cause for concern. ... Germany ... is in recession. ... reform has been slow to materialise ... " " ... American manufacturers have recently begun to complain about the strength of the dollar, both in relation to the euro and to the yen: they are finding it harder to compete in world markets. ... t is possible to argue that the euro’s continuing weakness is at least partly an inevitable reflection of the dollar’s strength. ... any pronounced and prolonged decline in its value ultimately depends on there being attractive alternative assets for people to hold. But it takes time for a currency to build up reserve status." "More troubling is the structure and operation of the ECB. ... it is thought to lack transparency ... The European Commission is expected to propose reforms in the bank’s structure, probably some time this year. ... Improved economic performance might also help. And that much- talked-about reversal in the dollar’s fortunes might then take place. ... But it might be unwise to bet on a sudden and prolonged upturn in the euro’s value just yet. ... [more] 3:33:43 PM    comment  []

The Future of the Euro-Dollar Relationship Depends a Lot on the U.S. " [the euro] ... could become a rival for the dollar and have some far-reaching effects on the U.S. economy. ... provide a place of refuge if mounting U.S. debt finally leads to a weaker dollar ... the euro may never reach the supremacy the dollar enjoys today [but] it is likely to become a respected equal over the long term ... 'we will have a bi-polar world'" " ... the rise of the euro could reduce the cushion that U.S. consumers get from the dollar’s global stature. 'People all around the world accept U.S. dollars and they cost us nothing to print. That allows us to have protracted deficits and an imbalance of trade. Basically we’re financing our consumption for nothing.' ... countries are likely to buy euros as a reserve currency to diversify the holdings that back up their own money. ... eventually the euro could account for half of all reserves. ... Other countries ... that view the dollar as politically incorrect might also be interested in switching to the euro." " ... the U.S. current account deficit will eventually erode the value of the dollar. ... 'What will really trigger a turnaround is that at some point markets will stop focusing on relative growth and start focusing on the long-term debt buildup and a day of reckoning will arrive' ... That day could come in around five years ... the euro should reach parity with the dollar in several years. ... 'All the estimates indicate the euro is undervalued against the dollar.' ... But the future of the euro-dollar relationship will be determined not by what Europe does right, but by what the U.S. does wrong ... 'But if the U.S. has hyperinflation or imposes capital controls, or if our current account balance should start to soar again so people worry about the solvency of the dollar' ..." ... [more] 3:20:58 PM    comment  []

On the right side of history [U.S.-European relations re Muslim world] "The EU supposedly fears massive ‘destabilisation’ of the Muslim world. ... The population of the Middle East is growing at a rate six times faster than that of Western Europe ... Islam is turning out ever greater legions of poorly educated young men with little or no economic opportunity at home and every incentive to head to Frankfurt or Marseilles or Luton and drift into Islamic terrorism while living off Euro welfare. ... if you look at even the official figures for Muslim immigration to Europe. If Washington isn’t getting much support for its plans to take out Saddam now, France and Germany and co. are going to be a lot less keen in five or ten years." "'American patriotism, obesity, emotionality, self-centeredness: these are the crucial issues.' ... a continuous stream of preposterous criticism of the Americans has had at its core the assumption that such a demotic [of or pertaining to the common people; popular] culture must necessarily be a profoundly stupid one. ... There’s evidently a powerful psychological need among the non-American Western elites to believe that, if America is big, it must also be blundering; if it’s powerful, it must also be clumsy; if it’s technologically superior, it must also be morally inferior." ... [more] 12:33:44 PM    comment  []