Tuesday, July 3, 2007

Italy's and France's great budget plan (fg)

Here we go again. Remember the times of the European Monetary System (EMS) in the 80s? The never ending story of realignments? Italy among France and others crying wolf about economic disadvantages in the face of losses in European competitiveness? Last week, Italy's and France's "intellectual" league pushed forward by calling for exchange rate intevention of the ECB to get the single currency adjusted downwards. To add insult to injury, both countries promise "fiscal shocks" and plan a yet unspecified increase in budget deficits. Hooray!

It took eurozone less than ten years to see the same countries dancing solo and eluding European institutional economic frameworks, i.e. the independence of the ECB and the Stability and Growth Pact! This all looks not like a sustainable path for the single-currency project in the future!