“In 1996, Phillippe Maystadt, then the Belgian Finance Minister and now president of the European Investment Bank, said that: ‘The purpose of the single currency is to prevent the encroachment of Anglo-Saxon values in Europe.’”
http://www.brugesgroup.com/news.live?article=18&keyword=14

The valuable Financial Times compilation of commentary by its journalists: The Birth of the Euro (Penguin, 1998) is out of print now but available in used copies via amazon. Very likely there are academic papers which cover the subject but (sadly) I don’t have access via JSTOR and the like to hunt around scholarly archives.

An interesting wider issue is whether out-of-print books should default to the public domain.

Why not, bob?

Isn’t it true, or is it too silly still to assert? (Not your fault, but FT’s)

“The French election campaign brought the streets of London to a halt last night as Nicolas Sarkozy became the first presidential candidate to hold a rally outside France.

“Police struggled to control the crowd of hundreds of French citizens living in Britain as they attempted to see the dynamic Interior Minister, who is favourite to succeed President Chirac.

“Addressing 2,000 cheering expatriates at the old Billingsgate fish market, Mr Sarkozy spelt out his vision of a modern France no longer trapped in the past. The audience of students and business people shouted ‘Sarko!’, waved the Tricolour, and sang La Marseillaise as video screens declared: ‘Together, everything is possible.’ They then broke out into Happy Birthday — in English — in tribute to the centre-right candidate’s 52nd birthday on Sunday. . .

“However, the London election campaign is not without risk. Dominique Réynie, a political analyst, said: ‘France hasn’t suddenly renounced its ancient enmity with England, and it is still the “little America” in Europe. So it could reactivate the accusation of ‘Sarkozy the Anglo-Saxon’.”
http://www.timesonline.co.uk/article/0,,2-2575574,00.html

C’mon. Why the pejorative overtones? The British Pound’s exchange rate is determined by market forces – as are the exchange rates of the US Dollar, Japan’s Yen and the Canadian Dollar. Is all that ol’ fashioned too?

What keeps the Pound so buoyant is hardly Britain’s trade balance – which has a widening deficit – but the continuing inflow of foreign investment into Britain:

“BRITAIN was in the vanguard of the biggest global boom in foreign direct investment (FDI) for five years during 2005, attracting a lion’s share of surging direct investment inflows to rich nations, the Organisation for Economic Co-operation and Development said yesterday.

“A near-trebling in FDI inflows into the UK, fuelled by several multibillion-pound takeovers of leading companies here, meant that Britain leapfrogged the United States to become the top direct investment destination in a bumper year for the activity, the Paris-based OECD’s figures showed. . . ”
http://business.timesonline.co.uk/article/0,,16849-2248152,00.html

On the Eurozone, the OECD is making much sense in my view in stressing these priorities in its latest policy brief for the area:

i) reducing labour market rigidities so that economies can cope with change more easily. A key part of this is to make wages more flexible;
ii) boosting competition, especially in the protected service sector, to make inflation less sticky and take some of the pressure off monetary policy; and
iii) continuing to integrate and develop financial markets. Some countries are already a long way down the road of structural reform, and are performing well as a result. Others have some catching up to do.
http://www.oecd.org/dataoecd/32/28/37867660.pdf

But that is evidently not how leading French politicians see it in the run-up to the coming Presidential elections there:

“In December France’s Prime Minister Dominique de Villepin urged Europe’s politicians to reassert control over their national economies and to restrict the powers of the [European Central Bank]. Ségolène Royal, socialist candidate for the [French] presidential elections in May, has gone even further, accusing ECB president Jean-Claude Trichet of usurping democratic authority. ‘It’s not for Mr Trichet to dictate the future of our economies: it’s a matter for our leaders chosen by the people. We must completely change the charter of the central bank,’ she said.”
http://www.finfacts.com/irelandbusinessnews/publish/article_10008531.shtml

That looks remarkably like a call for going forward to the past.

On another note, I find that the following chain of thought is seldom followed:

Germany has increased its competitiveness in no small measure thanks to draconian restraint in wage growth. This is not only due to ECB policy. Global and European wage arbitrages (the latter reinforced by the recent EU enlargement) play a big role.

The phenomenon has been characterized by some as “competitive deflation”.

Wouldn’t this competitive deflation, in a hypothetical EU without euro, incite such countries as Italy and Spain (but also France and in all likelihood many of the new Eastern European members) to old-school competitive exchange rate devaluations? Wouldn’t both processes reinforce each other, potentially sinking Germany in a deflationary hole truly worthy of the name and causing high inflation and perhaps a financial scare or two in the devalutation-happy states? Couldn’t that put the EMS (still in place under this scenario) under enormous, even fatal strain?

That’s not what I read at the time, but so what? What difference does it make how much debt they have?

Denmark and Sweden didn’t join anyway, the laggards!

Try: Table 1: Indexes of hourly compensation costs in U.S. dollars for production workers in manufacturing, 33 countries or areas and selected economic groups 1975-2005
http://www.bls.gov/fls/hcompsupptabtoc.htm
ftp://ftp.bls.gov/pub/special.requests/ForeignLabor/ichccsuppt01.txt

By the data there for 1998, hourly compensation costs in Germany converted to US Dollars, at the prevailing exchange rate, were higher than in any of the other 32 countries covered in the survey – which was not a propitious beginning. The issue then becomes whether productivity in German manufacturing industries was sufficiently high relative to that in trading partners to offset the disadvantage of the comparatively high German employment costs. The short answer is that in some industries/businesses (eg automotive engineering) productivity was sufficiently high in Germany to offset the disadvantage but overall there weren’t enough such businesses.

The second telling point is that the German economy accounts for about a third of the Eurozone economy. Hence, if the German economy is depressed because of its relatively high employment costs that has a depressing effect on the whole Eurozone economy.

Re: #15 by “suvi”: “all of them qualified, except for Belgium on debt”
Sorry, but I have to say that is untrue.

In the lead up to the launch of the Euro, the Financial Times kept up a running commentary on which EU were likely to meet the five Maastricht criteria (in summary):

On this, I’ve no online links and I’m relying on the report in: Financial Times: The Birth of the Euro (Penguin Books, 1998), chp.3.

For starters, the following EU countries did not meet the Public Debt condition at the time: Austria, Belgium, Denmark, Germany, Greece, Ireland, Italy, Netherlands, Portugal, Spain, Sweden.

And France didn’t meet the Budget Deficit condition.

Re: #17 by “Doug”: “I remember very well the letter of the German economists. In purely economic terms, it also made a fair amount of sense.”

Quite – a lot of folks were led up the garden path by politicians and Euro enthusiasts. I don’t accept the claim that there was a unique window for launching the Euro. A lot of work still needs to be done in the major Eurozone economies to improve market flexibility, work should should have been done before the launch. See the recent OECD take on the relative importance of the Euro and market flexibility:
http://www.iht.com/articles/2007/01/04/business/euecon.php

Checking his blog, I note that a certain Professor Emeritus has done so.

iirc, all of them qualified, except for Belgium on debt (which doesn’t matter, because they can’t print their own money anymore anyway) and Italy on something or other.

“In a remarkably frank interview with The Times, the one-time bogeyman of Eurosceptics also predicted that Britain would stay out for years, not least because Gordon Brown was so ‘passionate about his contempt for Europe’.”

Whatever. But he’s almost certainly apprehensive about the mayhem effect that lower €€ rates would have on the housing market (as if it wasn’t bad enough anyway). And the crash that must inevitably follow.

And he seems uncertain what it will mean for city jobs.

Can’t someone galvanise DSquared into posting?

“While the average punter may not draw the precise causal connections between (a) the institutionalized imperative for the European Central Bank to avoid inflation at all costs and (b) high interest rates and slow growth”

What? Between 2002 and 2006, GDP per capita grew faster or just about as fast as it did in the USA in almost half of the euro area countries. Is the USA a slow grower?

Or take Jacob’s point on whether “the Stability Pact – Inflation Goal – High Rates link is too complicated for the Ordinary Joe”. Well, it is too complicated for me. The point of the Pact, by controlling public finances, is to keep rates down. As for Henry’s contention that the Pact forces governments to run a surplus, well that’s just not true. The Treaty obliges EU Member States to avoid excessive deficits, by which is meant a deficit to GDP ratio and a debt to GDP ratio not exceeding reference values of respectively 3% and 60%.

Finally, Henry’s point “that consumers may not be aware exactly of what is happening, but they do correctly perceive that economic times aren’t what they should be, and retrospectively assign some of the blame, as it should be assigned, to the introduction of the euro”. It’s ironic that Italians don’t like the euro, because they’d be paying a lot more to service their debt and finance their mortgages if they didn’t have it.

The German economy and its people have been through much pain because the DMark entered the Euro at an overvalued exchange rate. This was because German employment costs in manufacturing (according to the US Bureau of Labor Statistics as well as other sources) were notably higher than those of other prospective Eurozone member countries in the lead up to entry. What has happened since is consistent with that diagnosis – as reported in The Economist of 25 January 2007 (subscription):

“Germany’s recent history shows how hard it is for a member of the euro club to recover from a cost-induced slump. Devaluation might have been an obvious remedy, but can only be achieved by leaving the currency union. The only other solution is to drive down wage costs relative to those in competing countries. This option is also costly: Germans have paid the price in terms of high unemployment and stunted growth. Cost reduction is also painfully slow. Workers are resistant to pay cuts, so the necessary reduction in real wages relies on a long period of below-average inflation. This kind of wage discipline has underpinned Germany’s revival.”
http://www.economist.com/finance/displaystory.cfm?story_id=E1_RGDTQRG&login=Y

The painful looming adjustment problems were widely foreseen by academic economists in Germany prior to the start of the Euro as this report in the Financial Times of 9 February 1998 shows:

“More than 150 German economics professors have called for an ‘orderly postponement’ of economic and monetary union because economic conditions in Europe are ‘most unsuitable’ for the project to start.

“The call to delay Emu ‘for a couple of years’ is made in a declaration signed by 155 university professors and sent to the Financial Times and the Frankfurter Allgemeine Zeitung newspaper in Germany. It signals intensified opposition to the government’s euro policy.

“The declaration was organised by Manfred Neumann, professor of economic policy at Bonn university and chairman of the Bonn economics ministry’s council of expert advisers. It signals concern among professional economists about Bonn’s determination to begin the single currency on January 1 1999. . . ”
http://www.internetional.se/9802brdpr.htm

At least in retrospect, even Jacques Delors – President of the EU Commission at the time of negotiations for the Maastricht Treaty – agrees that there were unresolved issues at the launch of the Euro:

“JACQUES DELORS, the former President of the European Commission, fuelled the controversy over the euro yesterday by admitting that Britain was justified in opting out of the single currency because its launch was flawed.

“In a remarkably frank interview with The Times, the one-time bogeyman of Eurosceptics also predicted that Britain would stay out for years, not least because Gordon Brown was so ‘passionate about his contempt for Europe’.

“In another startling admission, the veteran French leftwinger said that the European Union was in a ‘state of latent crisis’ because of weak leadership. He blamed member state leaders, including President Chirac of France, for putting national interests before the common good. . .

“But his most surprising comments were on the euro. He lamented that EU leaders had failed to heed his warning that monetary union must be matched with close co-ordination of economic policies, and argued that the euro was consequently less attractive than it could have been.”
http://www.timesonline.co.uk/article/0,,740-967150,00.html

As I recall it, in the official assessments made of eligibility to join the Euro according to the criteria set out in the Maastricht Treaty, only Luxembourg qualified. Britain would have qualified too but for the fact that the Pound had not been in the Exchange Rate Mechanism for the required two years prior to the launch – famously, the Pound was taken out of the ERM in September 1992 and Britain’s economy has performed better on trend since than the other major EU economies. By the end of 1995, the standardised unemployment rate in Britain was lower than in the other major EU economies and the employment rate of working age people higher.