Sunday, May 25, 2003

Has John Snow declared war on the euro? William Keegan makes a pretty good case. Let's not leave this simply in the arena of global finance and economics. Let's bring in politics and see what happens.

The Bush adminsitration bent over backwards -- well, OK, at least slowed down to catch its breath -- to placate Tony Blair's concerns before and during the Iraq war not only because the US needed at least one ally to make a "coalition of the willing". The US also used Blair to interrupt the continuing unification of Europe. Rummy playing on "old Europe" v. "new Europe" is more of the same -- making sure Poland plays its assigned role of US trojan horse into the EU.

If the Europeans unite behind a common foreign and especially defense policy, things could get dicy for all the American imperialists. Better to hit the EU where it really lives, in the euro. Keegan is bold enough to say the words "competitive devaluation" in reference to the US dollar policy. What the US would count as victory over the euro is as yet unclear. Forcing an ECB interest rate drop? Forcing structural adjustment in European labor markets? Jamming GMOs down European markets? The war is on, but victory remains undefined.


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