ECB chief Trichet is on the wires saying the euro is a credible currency and has proven successful. The euro enables “us to protect the continent and maintain high levels of security. ”
Hard to argue that the euro has brought unprecedented stability to the weaker members of the eurozone. Much less severe economic disruptions than this one caused massive currency dislocations in the 80s and 90s within the exchange rate mechanism.
The unintended consequence has been that stability has also amplified vastly different productivity levels in various parts of the eurozone. High value-added manufacturing is more concentrated in Germany than ever while manufacturing elsewhere in the zone withers. It will be interesting to see if the “have-nots” in the eurozone revolt against the tight-money Germans as the economy slips deeper into recession.
