The beginning of the year coming up, 2012, offers a rather bittersweet anniversary. Do you remember? It was from midnight on 1 January 2002, literally as fireworks still lit up urban skies, that euro banknotes first issued from ATM machines inside the 12 original Eurozone members, and that banks and merchants first returned eurocoins in change, all of those with a national emblem reflecting where they had been minted on one side.

No prize for guessing why any commemoration of this 10-year milestone is lacking so far in the press – everywhere I look, really. For 2012 promises to be a difficult year for European national finances, and therefore for the euro; to many, an exit from the Eurozone of one or several states is likely, and from that possibly even the common currency’s “collapse” (although I think that, no matter what, there will be a rump core of states – Germany, Netherlands, Finland, etc. – still using it for quite a while).

But enough of this depressing talk! We have all read and heard quite enough of it, at least before the onset of the holiday season (when the bureaucrats and bank officials in charge left their desks for a while).* Let’s rather follow the Luxembourg lead and consider the euro from a different perspective:

http://t.co/eNBpc2Z7 Dix ans de l’euro Pas vraiment de mixité dans les porte-monnaie http://t.co/b3mtHfyx

December 27, 2011 12:40 pm via HootSuiteReplyRetweetFavorite

@luxembourg_news

news luxembourg

That perspective is “integration,” always a hot European topic: to what degree are the various European peoples mixing with each other and getting along while they do so? Except that here, in this essential piece from the French-language Luxembourg paper L’essentiel (no byline), the subject is rather the degree to which all the various eurocoins are mixing with each other in people’s pockets. The lede:

Ten years after the arrival of the euro, the coins which sport a national symbol on one face are not yet totally mixed in European wallets.

(more…)

Currency reform: Back in Cold War times that phrase always sent a cold shiver of fear down the spines of those living in the Communist Bloc. What seemed so reasonable in the government announcements – hey, too many zeroes have accumulated on the currency through inflation, let’s simplify things by knocking some of them off all prices! – all too often turned out to conceal hidden measures designed to punish earners of “black” wages (by forcing them to go to official offices to exchange the cash hoard they were holding that was about to become worthless) or even simply eliminate large swathes of purchasing power from the economy (e.g. by declaring notes of certain denomination to be no longer valid).

Citizens of what was then known as the “Free World” have by-and-large been spared such abuses. Indeed, here in the Eurozone we have the common European currency, a medium of exchange not subject to the whims of any one national government. What’s more, it was adopted on 1 January by yet another EU member-state, Estonia. Yet that was recognized by most observers as somewhat of a bittersweet occasion; taking up the euro does say important things about the extent of that country’s European integration, yet the sovereign debt financial crisis with which the EU has struggled for a little over a year has revealed several cogent reasons for a country to regret ever giving up its own national currency.

But I’m not out to talk about any of those here. Rather, let’s get back to the “currency reform” scam: it’s the damndest thing how prices seem to rise whenever a country adopts the euro! You see, all prices, wages, etc. have to be converted then by a fixed conversion-ratio – for example, it was 2.20371 for the Dutch guilder – and usually the new price that results is not a very round number. No, much better to make it so – and do you think that merchants then round it upwards or downwards?

Any of you out there over the age of twelve knows the answer quite well – strange, isn’t it, how wages and bank-account totals don’t benefit from a similar rounding? – and so the result inevitably is an otherwise uncalled-for bit of inflation. That’s what made the Germans nickname their new currency the Teuro (teuer is “expensive” in German); on a local note, I can remember how Amsterdam bars, in particular, raised their prices under the quite shameful assumption that their customers were not capable of doing elementary division with a calculator.*

Naturally, then, the same thing has come to Estonia, as we see in a pieces from the Polish national daily Gazeta Wyborcza: Inflation in Estonia highest for two years. Specifically, December’s inflation rate was 5.7% higher than it was in December, 2009. (And how much was that? Annoyingly, the article prefers to use differential rather than absolute inflation rates.) We do know that inflation was high there throughout the last part of the year, as last month’s rate was also only 0.5% higher than last November’s. The main commodities driving this are listed as mainly foodstuffs and non-alcoholic beverages. (Can we hope, then, that the owners of Estonian drinking establishments actually restrained themselves?)

Anyway: Welcome to the club!

*Interestingly, grocery-store prices were mainly converted in a straightforward manner – mainly because Dutch consumer-rights organizations promised to watch them like a hawk!

Enough of the levity (see previous). It’s time to get serious – even “apocalyptic.” Specifically, The apocalyptic cost of the collapse of the Eurozone, a recent entry on the blog of Libération’s famed Brussels correspondent, Jean Quatremer.

That article basically calls attention to a recent, publicly-available and English-language study from ING Bank (main writer: Mark Cliffe) entitled “EMU Break-up: Quantifying the Unthinkable.” It’s quite an eye-opener, and Quatremer has performed quite a public service in calling his readers’ attention to it. For the “unthinkable” when it comes to the euro has become quite a bit less so this year, including the two “unthinkable” extremes between which Cliffe structures his report’s analysis: 1) The departure from the Eurozone of Greece (only), and 2) The collapse of the whole thing, with the current member countries simply reverting to their currencies of prior to 1999. Both developments, and various others in-between, have increasingly been raised as distinct real-world possibilities, and not just as horror-scenarios but also as measures to be induced deliberately (particularly the ejection of Greece) as punishment for the fiscal failings of various naughty governments. (more…)

You might have become aware late last week of a brief kerfluffle involving the new Hungarian government of Prime Minister Viktor Orbán. It didn’t involve Orbán directly, however, only some figures closely associated with him, such as another top figure in his FIDESZ political party, Lajos Kósa (mayor of Hungary’s second city, Debrecen), and Péter Szijjártó, his government spokesman, who together spread the word to the world at large that the Hungarian budget deficit was actually rather higher than previously reported and that their country could soon find itself in a simlar fix as Greece. This quickly led to a mini-financial panic breaking out the world over – including in Far Eastern markets, which suffered price-losses – at the thought that the EU suddenly had another fiscal basket-case member-state to deal with, one that moreover had already had a joint EU/IMF bail-out back in 2008.

“Sorry – did we say that? We weren’t really serious” was roughly the reaction from that same Hungarian government once they realized the wide-ranging storm their comments had unleashed. Clearly, the amateurs were now in charge within that government’s highest reaches, and you can get a quite informative treatment of the incident – with pictures of the major protagonists – from the realdeal.hu weblog. There writer Erik d’Amato makes a convincing case that all this was simply an attempt by the new government to position itself politically to impose some austerity measures in its upcoming budget, albeit one that went spectacularly awry.

But such incompetence cannot go unremarked upon for long, and as the Danish daily Politiken reports (Hungarians go off on top politicians’ mysterious pronouncements) feedback has now started to arrive. For one, the economics editor of one of the major national dailies, Zoltán Baka of Népszabadság, called last week’s pronouncements “completely idiotic.” The IMF chief, Dominique Strauss-Kahn, also told the Associated Press that, in his view, there is “no basis to be worried” about Hungary’s fiscal situation. Other European finance ministers, however, couldn’t be bothered to offer an opinion: they are busy these days trying to find a solution to the ever-weakening euro, whose recent downward course last week’s Hungarian mini-fiasco only served to accelerate.

The finance blog Naked Capitalism today linked to a current article of high interest which happens to be available only in a foreign language, in this case French. I’m referring to the interview with French Finance Minister Christine Lagarde in the business newspaper Les Echos – newsworthy at any time, but of crucial interest appearing just now.

This is not the first time this has happened on Naked Capitalism, but my intent here is certainly not to scold. In many of those previous instances I have been happy to step in and provide a translation of the article in question on this site, and I do the same below after the jump with the Lagarde interview. The piece’s lede is “‘There’s a determination to construct a new edifice, to reinvent the European model,’ declared the Minister of the Economy in an interview with Les Echos.” (Interviewer’s questions are in bold.) (more…)

I have to assume that my Euro-savvy readers will be quite aware of the growing financial crisis involving the euro and the so-called “PIIGS” countries that are in fiscal trouble (“Portugal, Ireland, Italy, Greece, Spain,” though these days Italy is usually left out). Greece is at the center of attention now, and the main issue when it comes to its fiscal problems – combined with its government’s dishonesty in reporting these in the past – seems to be the conflict between the emotional impulses to bail it out from EU or European Central Bank funds or punish its sins instead by simply letting the country suffer. The EU summit in Brussels on Thursday (11 February) is shaping up to be decisive in deciding which way things will go – assuming that the assembled EU heads of government discuss the problem in the first place, as I understand that that is not really on their formal agenda!

The dominant EU country within the governing structures of the EU and the European Central Bank is of course Germany, which is also the main economy in an opposite fiscal situation to that of the PIIGS states and so theoretically able financially to provide much of the aid that Greece needs. That is why it has been interesting to read coverage of this problem in Die Welt, the mainstream German paper not quite as authoritative as Die Zeit (and the latter is more of a pure opinion-publication anyway), but still with a respected reputation as a daily that is distributed nationwide. (more…)

Hungry for some sort of financial news now, at the beginning of a brand-new year, that’s actually good, that reflects things flawlessly going ahead according to plan? How about this: As of 1 JAN 2009 Slovakia adopted the euro as its currency, just as the European Central Bank (ECB) and various other responsible Euro-authorities had authorized it to do last May. That’s right: Slovakia – I mean, who even knows where that place is? It was only a separate country as of 1 JAN 1993, yet it has beaten out (among others) its former big-brother state, the Czech Republic (which could be said to date back to Greater Moravia of 833 AD if you’re willing to stretch the affiliations a little bit), and Poland (dating from 966 AD) to the safe-haven of the euro. And make no mistake: these days the euro-zone is definitely the sort of currency safe-haven that all sorts of countries still standing outside it (e.g. Poland, Denmark, Iceland) wish that they were within, given the demonstrated weakness of numerous small-state-currency regimes.

Against this background, it’s amusing to take a look at comments from the Czech press. (more…)

It was heartening to read, from this European vantage-point, the article about Suddenly, Europe Looks Pretty Smart in the New York Times last Saturday, mainly describing the European “bailout plan that has now set the pace for Washington, not the other way around, as had been customary for decades.” At the same time, so far the poster-child victim of the financial crisis has been poor Iceland, a country that is rapidly running out of foreign exchange with which to pay for any imports and so is in contact with the International Monetary Fund for a rescue. But Iceland has gotten some company in the IMF petitioners’ ante-room recently from (among others, but just to name a European country) Hungary. The three Baltic states – Estonia, Latvia, and Lithuania – are likely soon to join them there, although of course the European Union is also offering its own assistance.

So Europe may look “pretty smart,” but still European countries can suddenly find themselves in a deep financial hole in the present dire international conditions – yes, even EU member-states like Hungary and the Baltics. The one common denominator that seems to remove a European state from vulnerability, though, is membership of the Euro-zone, i.e. those 15 states out of the 27 member-states of the EU who use the euro as their common currency. Hannes Gamillscheg of the Frankfurter Rundschau recently picked up on this phenomenon (The guardians of the crown – alone) but from the point-of-view of a couple of those countries now outside the Euro-zone who in the past have explicitly rejected opportunities to come inside, namely Denmark and Sweden. (So the “crown” in the article’s title refers to the two different “crowns” that are those countries’ currencies.) (more…)

Lately in EuroSavant we’ve been reviewing articles complaining over economic slowdowns in the Netherlands and in Germany – “complaining” from outsiders’ points-of-view, that is, so perhaps you can assume some element of Schadenfreude. Now comes a piece in the German opinion newspaper Die Zeit (United in Stagnation) advising us not to count too much on the European Union to pull such countries out of their economic problems, not if the draft EU Constitution is any guide. At least when it comes to economic policy, author Petra Pinzler writes, that Constitution is “as superfluous as a bicycle for a fish.” (more…)

The votes are in, the Swedish people have spoken: 56% of the voters said “No,” and so they prevail, for a while at least.

I had hoped to find something interesting to tell you about the referendum’s result in the national press of Germany: the nation that, after all, was once the guiding power behind the idea of one single currency for all of the EU, yet which now, by its misbehavior in getting its own fiscal house in order and staying under the 3%-of-GDP limit for government budget deficits, is quite possibly driving away those EU members (such as Sweden) who do not use the euro but are/were contemplating that. But the on-line German newspapers that I’ve looked at for today aren’t very on-the-ball: they’ll tell you little else than what you already will have been able to find out from your own newspaper of choice (with one exception, noted below). OK, they quote Bundeskanzler Schröder lamenting the continued absence of Sweden from the ranks of EU countries using the euro. Well, he would lament, wouldn’t he? I’d definitely file that bit of news under “dog-bites-man.” (more…)

Outside reality intruded for a while to hold up my planned survey of commentary in the Danish press over the murder of Swedish foreign minister Anna Lindh and the effect of that incident on the upcoming Swedish referendum over whether to adopt the euro. But I did gather the relevant URLs on the subject from the main Danish on-line dailies, and am posting this early enough for there still to be suspense about the referendum’s outcome (for prompt EuroSavant readers, anyway.)

I start with Berlingske Tidende’s rather simplistic editorial leader, Svenskernes valg, or “The Swedes’ Choice.” (more…)

That’s the title of an interesting commentary piece in the latest Die Zeit by Uwe Jean Heuser – a remarkable mea culpa for Germany from a German writer, which puts into stark relief the striking (if rather unfortunate) ironies attending the birth of the Euro and the current state of finances in Euroland (that is, in those twelve-out-of-fifteen EU countries that have adopted it as their common currency). (more…)

Czech President Václav Klaus doesn’t want to reveal his voting preferences in the Czech EU accession referendum, to start on Friday – although he certainly promises to vote. (Indeed, he’ll be voting soon after polls open on Friday, as will premier Spidla and ex-president Havel and their wives.) Revealing his presidential preference is not his presidential function, he says; his pres. function is “rather to give arguments, to shake up citizens so that they think about these things.”

But you know this already, since you’ve read yesterday’s EuroSavant entry. Still, on Wednesday Klaus granted an in-depth interview to Lidové noviny, his favorite newspaper. (He used to write a regular column for it.) This interview deserves in-depth examination, since it lays out many of the Czech President’s shall-we-say unconventional and even abrasive views on the referendum and on Czech EU membership in general. Maybe we’ll finally get some “asking of the tough questions,” the absence of which I decried in my long entry about the Polish referendum of last weekend!

(Before we go to “More…”: Sick of Poland? Sick of Czech? Sorry about that. Remember, EuroSavant is also versatile enough to do France, Germany, the Benelux, who-knows-what-else. We’ll get back to other parts of Europe soon, but I did want to take a good look at these once-in-a-lifetime accession referenda. Anyway, if you don’t like this weblog’s direction – e-mail me! I might be so taken aback as to actually listen to what you say!) (more…)

Here in Wroclaw, it’s a bright and sunny first day of voting in the Polish EU accession referendum. More guerrilla anti-EU material has popped up, in a last-minute attempt to change people’s minds – this time, it was in the form of posters showing the famous EU twelve-yellow-stars-on-a-dark-blue-field emblem – with a swastika in the middle, and the caption up above “Rozbior Polski” – the partition of Poland. That should strike a chord with historically-oriented Polish voters: in the famous 18th-century partitions of Poland, Poland’s neighboring states (then Prussia, Russia, and the Austrian Empire) agreed among themselves to simply reach out and grab the pieces of Polish territory that they wanted, and Poland was too weak at the time to do anything to defend herself. There were three of these land-grabs, and by the end of the third there was no more Polish land to seize any more, as it all had been taken – and Poland was not to re-emerge as an independent nation for more than a century, namely in 1918 directly after the First World War. (more…)