Italy's muttering about putting the lira back in circulation...for some reason Italians have lost faith in the euro. Another nail in the coffin.
The Euro is going to give. From another story, French Jean-Louis Debre, a key Chirac ally, said that the French government would increase social spending regardless of whether it broke EU deficit rules.
"Today that is no longer the problem," he said.
Whoa! D'ya hear that?
These countries (especially Germany & France) have been cheating a bit on the deficit agreement thingy, but this blatant statement is quite a surprise to me. When the traders get wind of this, and it spreads through the other European nations, I think there will be a huge reaction.
The way this dumb EU system works, if one country, say France, does their little local inflation bit (but depend on Euro's "stability") other EU countries either have to inflate or end up paying for France's bills! That macroeconomic reason dictates the "deficit rules" in the first place. Someone is going to get very mad about this, and real soon.
The Euro is going to be abandoned very soon by those EU countries with the strongest balance sheets. They'll have to, because the weak ones don't have a choice but to inflate themselves out of their socialist overcommitments.
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