The Dutch voted 'No' to the European Constitution partly because they found out that their savings were devalued by up to 10% when they ditched the guilder for the euro, prominent Germans are saying: 'Der Euro macht uns kaputt!', and now this.

Who will be next - the French wanting the franc back? What fun for those countries who have wisely kept their own currencies!

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Now Italy hints at return to lira as euro plunges
By Malcolm Moore, Economics Correspondent, Daily Telegraph (Filed: 04/06/2005)



Italy became the latest nation to air its discontent with the single currency after a minister proposed resurrecting the lira.

Roberto Maroni, welfare minister and a member of the eurosceptic Northern League, was asked by an Italian newspaper whether Italy should ditch the euro.


PICTURE: Roberto Maroni: ‘The euro has turned out to be inadequate’.

"I say we should not discard this hypothesis because it is not impossible. During three years, the euro has turned out to be inadequate to face the slow-down in economic growth, loss of competitiveness and employment crisis," he said.

Mr Maroni's comments sparked off a frantic sale of the euro in the currency markets and it dropped almost a cent against the dollar to $1.2233 in a brief spell.

He also praised the pound, saying: "Shouldn't it be better to go back, temporarily, to a system with double currencies? In Europe, there is one perfect example, Great Britain, which grows and develops while maintaining its own currency."

David Bloom, a currency strategist at HSBC, said it was an indication of how sensitive the euro is at present that comments from a eurosceptic had caused it to drop nearly a cent "without touching either side". He said he was close to the level at which he would consider buying euros because the bears had oversold.

Earlier this week, Germany's economy minister, Wolfgang Clement, lashed out at the euro, claiming that the perverse effects of monetary union were strangling German industry. However, Otmar Issing, chief economist of the European Central Bank, quickly leapt to its defence. "Italy would have to think about this many times. It would be economic suicide to leave monetary union," he said.

"The euro is good for all countries in differing degrees depending on the efforts of the countries themselves to make themselves better prepared for monetary union." Asked about a possible break-up of the eurozone, Mr Issing said: "Some considerations are in the region of absurdity."

In the end, the euro finished the day slightly down against the dollar at $1.2274, against $1.2286 on Thursday. The currency was buoyed by very weak employment figures and manufacturing data from America. The US non-farms payroll rose by 78,000 in May, down from 274,000 in April. "It is becoming increasingly likely that the Fed will be forced to call a halt to raising rates sooner rather than later," said Paul Ashworth, at Capital Economics.

Mr Bloom at HSBC said that in the light of such dollar-negative statistics, the euro's performance had been "pretty pathetic". "We had a number which should have fed some kind of revival and the best it could manage was to stay unchanged. All the ducks were lined up and nothing happened," he said.

A spokesman for Chancellor Gerhard Schroder said the German premier was not worried about the future of the euro. "Neither the chancellor nor the federal government fear this," he said, adding: "The euro has proved itself".

The Germans might have a legitimate complaint, as the mark was a pretty strong currency. The idea of the lira as a stable or strong currency is rotfl funny.

The euro or the lira - which is the lesser of two evils?

I've asked before - is it possible for a country to claim its true currency back?

I was under the impression that its impossible - ie a 'one way street'

<<<I've asked before - is it possible for a country to claim its true currency back?>>>

At the end of the day, if a country wants to go back to its own currency, who is going to stop them?

"the club" (or EU to you and me).

To break that pact (including the setting of rates and divergence zones) would only lead to sanctions, embargoes or other such punishments.

They already punish EU euro states if their fiscal position gets out of line - they do it financially.

Hands up who likes the euro now?

MAMA MIA!!


Euro godfather commends lira's return

By Ambrose Evans-Pritchard in Frankfurt (Filed: 20/06/2005)


A leading currency expert and "godfather" of the euro has suggested that Italy might be better off abandoning monetary union, given the harsh sacrifices required to remain in the system.

Stanford professor Ronald McKinnon stunned a European Central Bank conference in Frankfurt by seeming to endorse calls for a return to the lira by ministers from Italy's Lega Nord. "There is some credence to the view that maybe Italy should be split off and have its own currency, even if we know it would all go wrong", he said.

The comments came as tens of thousands of Lega supporters converged on Bergamo yesterday to vent their fury against the euro, paying for their panini and espressos with "neuro" notes mimicking the old 2,000 and 5,000 lira paper.

Lega's leaders have refused to back down after causing a furore - and unsettling the currency markets - by demanding a vote to ditch the euro.

Roberto Calderoli, the reform minister, said over the weekend that the currency was the 'plaything of madmen'. "The moment has come for us to flee before the whole edifice comes crashing down", he said. "The euro will soon be waste paper. Lots of banks have shown interest in our proposals for a Padana [North Italian] currency with a constant value adapted to the cost of living", he said.

Robert Mundell, the Nobel Prize-winning theorist of currency unions, told the ECB conference that Italy faced certain "disaster" outside EMU, warning that interest rates on its huge public debt (106pc of GDP) would spiral out of control.

But the latest data from the European Commission shows that Italy's predicament is becoming untenable. Unit labour costs have risen 38.7pc since 1995, while Germany's costs have fallen 1.3pc through a squeeze on wages and rising productivity. The gap is continuing to widen, driving Italy deeper into recession.

Rome has devalued in the past to rectify such massive imbalances, but this is no longer possible within the eurozone.

Otmar Issing, the ECB's chief economist, said: "Several countries did not fully understand what signing the Maastricht Treaty and joining EMU would imply".

I suggest they listen to wise words in 'Hitch-hikers guide to the galaxy':

"don't panic"

re (Stan): "...suggest they listen to wise words in 'Hitch-hikers guide to the galaxy': 'don't panic'":

REPLY: Or 'Dad's Army'