Word: euros
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...figure out how much of that was tax cuts/rebates, and how much of that went straight into the bank. Also, the ECB has a chance to cut rates (it's not shown nearly the desperation so far that Greenspan's outfit has) and some say the relatively strong euro makes that likely...
...economic downturn. After expanding 3.4% in 2000, the single-currency system could see its growth plummet to 1% or less this year. But here's the rub: even as the 12 member countries' economies languish, the European central bank, which conducts a single monetary policy for all euro-zone nations, has been very skimpy in lowering interest rates. After seven rate increases within a year, the ECB grudgingly dropped rates just once, on May 10--and then by a quarter of a percentage point...
...dragging its feet? Because despite the region's subpar growth and high unemployment (8.3%), every one of the 12 euro-zone countries has inflation rates in the red zone, defined as anything above 2%. Higher energy costs, rising wages and the outbreak of livestock disease have plunged the Continent into stagflation, a brutal combination of poor growth and high inflation. That could prove to be the first big test for Europe's 2 1/2-year-old single-currency system. If the ECB fails to respond soon, it will antagonize European governments and possibly influence coming elections in Germany and France...
There could be calls to revisit the Maastricht Treaty, which established the ground rules for the single-currency system. The plan would be not to scrap the entire euro system but to rewrite some of the rules to enable each country to have more control over its domestic economy. "No one is questioning the basic premise of the euro," says Carl Weinberg, chief international economist of High Frequency Economics. "It is here to stay, and it's going to work. But the ECB may be subject to more criticism...
...There could be calls to revisit the Maastricht Treaty, which established the ground rules for the single-currency system. The plan would be not to scrap the entire euro system but to rewrite some of the rules to enable each country to have more control over its domestic economy. "No one is questioning the basic premise of the euro," says Carl Weinberg, chief international economist of High Frequency Economics. "It is here to stay, and it's going to work. But the ECB may be subject to more criticism...