Cool, I feel all warm and fuzzy now.

I think I'd better ramp up my efforts to find a job in the States...

I agree with Joe that the Europeans will blame us for their own mistakes in this as in everything else.

Well, now, hang on just a minute here - it is actually the Americans fault.

It was Americans, after all, who stopped us all from killing each other back in the Forties.

And now, in a gross over-reaction, we all pretend we love each other. If you'd just minded your own business and left us to our own petty squabbles, we'd have all been far too busy hating each other to hate Americans.

I guess being hated is just the price you have to pay for doing the right thing.

No, no, no.

By having abandoned the lira in favor of the euro in 1999, Italy gave up all macro-economic policy flexibility to stabilize its economy. No longer having its own currency, Italy cannot engage in periodic exchange rate devaluations, as it did in the past, to rectify losses in international competitiveness.

This guy is missing the point. Please, ask yourself what devaluation means in a country with no raw materials.

A country that does not have raw materials lives from transformation: it buys what it needs in the international markets, transforms it and sells the products back for a profit.

OK, now you devaluate your currency. Are the raw materials and imported products going to be cheaper? NO. Will the products exported be less expensive? YES. Why? Because the manpower is cheaper (remember, you don't produce raw materials).

What is a devaluation for an European country then? A hidden decrease in salaries forced by the government. Porco governo!

In addition, the raw materials directly consumed suffer an increase in prices. That is, you feel the decrease in your income as you pay at the gas station.

And no longer having its own monetary policy, Italy has to accept the interest rates set by the European Central Bank even though these rates might not necessarily conform to Italy's particular circumstances.

That is, the will of its politicians.

Don't you realize that it is simply a God's gift that politicians such as Zapatero, whose economical knowledge aproaches zero, cannot influence monetary policy? Don't you realize that building a big free market (though the EU is far from the optimal free market) gives an economic security to all Europeans? Don't you know that it enhances competitiveness among corporations and trasnational fussions? It is simply wonderfull that the devaluation button is not in the hands of our politicans!!

How you compete then? The same way countries with very strong currencies have always done: increasing productivity. (BTW Italian output in tool-machinery was up in 2005 compared to the previous year): Design, Technology...

What is the difference between a country that can devaluate its currency and a country that cannot? The country that cannot should adapt itself to the new times, changing the products it serves and adopting new technologies.

Don't you realize that the only hope for some Europeans that their low-tech low-salary economies change into a First Class ones is that politicians cannot devaluate their currencies?

Of course, structural changes have to be made. In Italy they are difficult to push, due to political rivalries but, it is also the truth, that PM Berlusconi has carried out important advances from the most stable government since World War II.

There is no other way but moving forward. I know, we crossing uncharted waters... like our ancestors.

And that is not a threat to the U.S. It wasn't done to bother Americans, though some politicians used it as a flag. Monetary Union was carried out because there was no other manner to continue building a big and free market needed to sustain the 600 million Europeans, and the freedom of this market is the freedom of every citizen.

The Euro is not in any way a threat to the US, nor was I trying to portray it as such. And I hope the future is the one Joe Aguilar described.

If asked to bet, however, I'd bet that the future in a number of places is one of no or few adjustments due to Euro-sclerosis. Followed by escalating political friction over the Euro. Which will in turn feed anti-Americanism as the refuge of the EU elites.

Actually, with respect to Italy, stresses caused by the Euro are as likely to tear Italy apart as they are to tear the Euro zone apart.

Economically, Italy is really two countries. You can draw a line on the map along the provincial border of Toscana, Umbria and Marche. The unemployment rate south of that line is at least 5% higher than it is to the north. Public deficits to the north of the line are also small. Arguably, the provinces north of the line are actually running a surplus.

This disparity is getting worse, not better. Northern Italians have been surprisingly supportive of carrying the South but it is not impossible that it will eventually occur to them that they can solve most of their economic problems by jettisoning the everything from Rome south.

J. Aguilar, and people, JA had an interesting post. But there was just one signal problem therein.

Supposedly the Monetary Union was established to create a vast and flourishing free market zone, where capitalism would triumph. But there is a problem. The Elites who established that Union, designed, thought it out, were AND are leftists. They're socialists, they're not friends of free enterprise, nor free markets.

What would lead us to believe that those hostile to the free market, created a system wherein free market forces would flourish, indeed, dominate?

Doesn't make sense.

Unless I'm missing something. Which is possible.

So somebody enlighten me.

Europe is socialist, but the elites are smart enough to know that they need a capitalist engine to run the socialist machinery else they will become like the UK in the early 1970s or the USSR at any time between 1917 and 1991. They don't like capitalism, they just tolerate it.

Europe has problems. Not all of them are economic.

Here is how the Euros are spending their money:

http://powerandcontrol.bl*gsp*t.com/2006/03/follow-money.html

Here is how the muslim immigrants are steaing it:

http://powerandcontrol.bl*gsp*t.com/2006/03/war-in-sweden.html

Joe, you suggested that the failing Europeans would need a bogeyman and that it would be the U.S. I think they might choose some other group -for several reasons. First, the U.S. is very strong, and there isn't much the Europeans could do to them without getting much worse back. And it's no fun having a bogeyman if you can't beat him up, pin a yellow star on him, and take him away in a freight car to a horrible death. Second, Americans live a long way away. A good bogeyman is right here, just down the street, available. Of course, it has to be someone the Euros don't like anyway, someone who is "not one of us."

Somebody like, well, you know....

"So somebody enlighten me."

Gladly :)

It is true that, for a time, the Eurocracy has been dominated by a combination of socialists and economic nationalists. Namely, the Franco-Germanic axis, exemplified by (former) German Chancellor Schroeder and French President Jacques Chirac, comes to mind. In recent years, however, this regime has been slowely replaced with a more market-friendly, pro-atlantic regime backed by nations such as the UK and Poland, and observed in the current commission of Jose Barroso, Peter Mendelson, etc.

For a time it appeared that the "Rhineland" coalition of France and Germany was attempting to turn the EU into an instrument of their own foreign/economic policy. This is evident in such attempts at "tax harmonization", and President Chirac's now infamous bout towards the Eastern "New European" nations of "missing a good opportunity to shut up" in reply to their participation in the US/UK lead coalition in Iraq. As the EU expanded (and continues to expand) to include new members, however, it becomes clear that it is too unwieldy for the Franco-Germanic axis to dominate. Not to mention, the Franco-Germanic axis appears to have been neutralized by the accession of current Chancellor Angela Merkel.

Enter the "Atlanticists". This group of reform-minded free marketers has held pretty consistent control of the EU's direction over the past couple years now, and appears in no danger of losing that control. It is now becoming commonplace to hear among the Eurocrats that the entire European project will only suffer at the hands of the sort of "economic patriotism" that characters such as French Prime Minister Dominic de Villepin tote.

In 2001, the Euro was worth about 80 to 90 cents. Today, is is worth $1.20 to $1.30. You are going to have to do better than fancy rhetoric, my friend.

Dan (#7)

The Elites who established that Union, designed, thought it out, were AND are leftists. They're socialists, they're not friends of free enterprise, nor free markets.

Good point. 11A5S (#8) has the answer. After World War II the European elites realized that economic (National) Socialism, that means closed economies, had played a capital role in triggering the conflict (that Lebensraum or vital space where source raw materials and have a colonized population to consume your goods). European politicians slowly (1952 Coal and Steel Community, 1958 European Community) embraced some kind of classic Liberalism, at least in market issues.

Please, note that they did so after the bloodiest war and because they did not have any other option. The European Union was born as the solution found to try to solve the problem, not something done directly to compete with Americans.

Soon it was recognized that without a common currency, a common market was just a falacy. The Euro is simply the last monetary step to ensure a free common market (though, the actual one is still far from being free and common).

ende,

It is true that the new state members have strengthen the American influence (BTW Mr. Chirac left a meeting in the last summit because a Frenchman was speaking in English), though they are still trapped in budgetary issues and they cannot hold a hard position.

M. Simon,

It is true, the EU gives triple digit million of Euros to the Palestinian authority. Other Leftists help with associations and subventions (and they keep a part of the money for the formalities). In fact, many Palestinian terrorists should be considered European Union Civil Servants.

I know that the Euro was a way of pulling the European Nations together but I dont think it worked out to well. I lived in Germany when it was still the Mark and the economy was great. When the euro came into effect, the economy wasnt doing so well. With the mark the exchange rate was $1= 2 marks which was great. then the euro came and the for every US dollar it was like less than 1 euro. Thats crazy! You wonder why militray in europe dont buy to much euros?