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Tuesday, November 25, 2003

The Long, the Short and the Tall

Hi everyone, I'm back again in the land of the living, after a long weekend in the country: a busman's holiday doing fieldwork. Meantime back home things don't seem to change much. I think it should be patently obvious to any objective and independent observer that lomg term damage is being done in the ineterest of short term comfort. This damage will at some stage be reflected in the financial markets, it may also be reflected in the euro group composition. When the going really starts to get tough, and push comes to shove, who is going to be in and who is going to be out? Anyone offering odds on whether the Netherlands will still be in five years from now?

Europe's biggest countries will today join forces to save France and Germany from the threat of heavy fines under the European Union's fiscal rules. Italy, Britain and Spain are expected to support France and Germany in their fight against sanctions under the EU's stability and growth pact, which is supposed to punish countries that repeatedly run excessive deficits. The move has infuriated some smaller member states, which see the stability pact crisis as further evidence of the "big five" riding roughshod over small members' interests and EU law.

The Netherlands, Austria and Finland are among those attempting to halt the disintegration of the budget rules, warning that long-term interest rates and inflation would rise as a result. Bosse Ringholm, the Swedish finance minister, said: "It is unreasonable that a country like France, which has shown no willingness whatsoever to do anything, should be allowed to delay their problems further."
Source: Financial Times

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