April 13, 2005
BROTHER CAN YOU SPARE A WHEELBARROW?:
French No could trigger euro chaos, says Deutsche (Ambrose Evans-Pritchard, 13/04/2005, Daily Telegraph)
Deutsche Bank warned yesterday that a likely French 'No' to the European constitution could begin a wave of currency speculation across Eastern Europe, setting off a chain of economic disruption.Norbert Walter, the bank's chief economist, said rejection of the treaty in France's referendum on May 29 could halt the eastward expansion of the euro-zone. The Turkish lira is also vulnerable.
"There could be a wave of currency attacks in the new member states. These countries would then have to raise interest rates. We could see enormous exchange rate swings," he told FT Deutschland.
"The problem is that the EU has no strategy for dealing with a rejection of the treaty. People may well question whether the eurozone should have any new members at all," he said.
On the bright side, the carrion crows that pick over the remains of Europe will be able to feather their nests with euros. Posted by Orrin Judd at April 13, 2005 12:00 AM
It will be interesting to see if the dollar or the pound is the beneficiary of the Euro's imminent lira-like collapse.
Posted by: bart at April 13, 2005 7:07 AMIf the Eastern Europeans wanted to use the euro anyway, why couldn't they just make it legal tender of their own like Panama and Ecuador did with the US dollar?
Posted by: Chris Durnell at April 13, 2005 11:39 AMIf the effect of a French "NO" vote is expected to produce this level of chaos, what is the likelyhood that the vote will be manipulated to get to yes?
Posted by: Luciferous at April 13, 2005 12:25 PMChris -
I just got back from E. Europe a few weeks ago. I had no issues when trying to use the Euro and even had to use US dollars once. This was in Prague and Budapest, don't know about the country side. From what I gathered, switching to the Euro does not seem like a very popular idea.
Posted by: BJW at April 13, 2005 2:54 PM