In a recent purge of the old magazine stack, I came across an article on the Euro in The Economist. It really hasn't been that long since the Euro officially replaced national currencies in Germany, France and a number of other EU countries. This group has become known as the Euro-zone.
I remember many North American leftists trumpeting the Euro as a harbinger of Europe beginning to replace North America as the world's economic driver. However, as The Economist pointed out in this article (Jan 5 2002 - p 39):
"It's a glittering new currency, no doubt. But behind the glitter there is no glittering economy"
- and quite correctly so. The Euro's keystone economies - those of Germany and France - were not healthy. German unemployment was approaching 4 million. It's budget defecit was close to the Euro-zone's required 3 percent of GDP limit. Quarterly GDP growth was alternating between negative territory and neglibibly positive.
France's economic picture was not nearly as gruesome - but unemployment was at about 9% and rising again.
Since then, look what's happenned - the French and German economies have been duds. The United States has outperformed each by a wide margin:
United States: (Department or Commerce)
Bear Stearns' economist David Brown stated the problems succintly:
"The German recovery is dead in the water right now and the French recovery looks like it has hit a brick wall as well." (Nov 12 2004)
France, Germany and the US all have budget deficits in the 4% of GDP range - but the US seems to get economic growth as a result. Despite efforts to deossify their economies, the Euro-zone's non-dynamic duo have at best spun their wheels. Perhaps after decades of convincing their citizens that there is a free lunch, it may take a decade or so for the reality to sink in.