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Balanced Fare: We Report, You Deride

Sunday, October 20, 2002


OK, the Euro is the common currency introduced in much of Europe. The Euro-zone stability pact is meant to assure that no one country "cheats" by running a large budget deficit and forcing the rest of the Eoru-participants to take steps to assure the credibility of the common currency. All for one and one for all. In fact, the Times describes it thusly:

"The 1997 Stability and Growth Pact, as it is called, is the fragile if grand framework for the European single currency. It requires each of the 12 governments that have adopted the euro to hold its deficit to less than 3 percent of gross national product each year and to balance its budget by 2004."

You got a problem with that? Well, the normal governmental tools for dealing with a slow economy are monetary policy, and fiscal policy. Monetary policy is out of the hands of member nations participating in the Euro. Fiscal policy is tied by the stability pact. Pretty clever, huh?

The current president of the European Commission, Mr. Prodi of Italy, did not think so. His preferred word is "stupid", as in:

" 'I know very well that the stability pact is stupid, like all decisions that are rigid.' "

Awkward moment, since both France and germany may be about to violate the stability pact. Surely the Euro-diplomats can smooth this over? What do the French have to say?

"Francis Mer, France's finance minister, ... has likened the zone's members to a family of "big people, small people, fat people, thin people," who must compromise to get along. After Mr. Prodi's remark, Mr. Mer noted with apparent satisfaction, "The president of the Commission himself declares that the Stability and Growth Pact may need to show a bit more flexibility and a little more simplicity."

Oh my, the French calling for "simplicity"? A bold new approach!

On the other hand, the Greeks may have a word for it:

"Greece's finance minister, Nikos Christodoulakis, ... called the pact "a very essential tool for fiscal stability," and likened it to Christianity, in which "we have the Orthodox, we have the Catholics, we have the Protestants — but we believe in the same God."

The rising tide of anti-Semitism in Europe. Not to mention the obvious anti-Muslim slant.

As for German reactiom, let's try this:

"In Frankfurt, the business daily Handelsblatt said: "Prodi is known for putting his foot in it, but whether his description of the E.U. budget rules as `stupid' was intentional or just another clumsy `faux pas' is not important. Credibility is vital to the pact, but following these unspeakable remarks, that credibility is more damaged than ever before."

Subtly worded, but they seem to be unhappy.

So, a fine day in Euro-land, and just one more reason to reflect sadly on the inability of the US to develop a coherent foreign policy in coordination with our vital, sensible, and always entertaining allies.

UPDATE: Less fun, but more content with Prof. DeLong. Good link to the Economist, but you'll have to take de long way.

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