Tuesday, September 25, 2007

EU Starting to Fragment

I've always said that the European Union will fall apart. Don't believe me? Take a good look at this.

ECB attacks France over finances
European Central Bank chief Jean-Claude Trichet has attacked France for being Europe's "number one spender".

Mr Trichet warned that in comparison to its GDP, the country was well on the way to spending much more than its European neighbours during 2007.

The warning came as Prime Minister Francois Fillon warned that France's finances were in a "critical" state.

So how bad are things in France? Well, they have 8.7% unemployment and the debt is 64.7% of their GDP as of 2006. Of course, some in France are blaming the European Central Bank for their troubles and are looking to break away from the EU in response.

Euro Threatened with 2007 Meltdown, as French Economy Slumps
French Premier Dominique de Villepin even called for limits on the power of the ECB, espousing the need to reassert national control over the economy.

"We must clarify matters in exchange rate policy, which means taking back our sovereignty," he said. A clause in the EU's Maastricht Treaty (111-4) could allow them to do exactly that. The "get-out" clause allows EU states to set their own interest rates, effectively stripping the ECB of independent control."

"Derek Scott, Tony Blair's former economic adviser, clearly believes the British view has been vindicated. Describing the euro system as " unworkable" he said, "The ECB faces an impossible task because there is no such thing as euroland: there are groups of countries going different ways."

He noted that while "Germany had clawed back competitiveness by squeezing its economy . . . Italy, France, Spain and others have been enjoying property booms. Boom goes bust," he said. "In the end, the ECB may have to respond to the needs of the weakest economies, or monetary union will fall apart."
Yep. And constantly having to address those weaker economies will wear the EU out.

It's just a matter of when.

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