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Central European Banking

Many of these obstacles are related to the expansion. The discontent on the part of members of the club established by the admission of Central European countries in May-04 general hostilities on the proposed admission of Turkey played a major role in recent referendums. In addition, the divergence of economic performance, productivity growth, inflation and fiscal performance among member countries are fodder for further turmoil. It should be noted is the broad-based economic malaise in Italy. Italian manufacturers of consumer products are losing the battle with the Asian countries and, consequently, the trade balance is moving toward the red.

Unemployment is up, as is the budget deficit. Being part of the euro, and therefore have a relatively high rate, in essence, precludes any effort to compete with Asia on price. Without its own currency, Italy can not devalue out of position non-competitive. Therefore, the above comments by the Italian Minister Maroni. Countries such as Portugal and Greece in the economic health more Sad. The first budget deficit has already reached 7% of GDP. Many have noted that the EU constitution may be dead but not buried yet. I’m not so sure I would agree as the approval of all 25 counties of members is required for ratification.

The initial idea was that any dissent is likely to come from smaller countries or the EU’s newer and a little economic arm twisting of the size of France and the Netherlands could be encouraged to reconsider. Without doubt, the long-standing skepticism of the British was to be a problem. However, the rejection of the Constitution by two founding EU members undoubtedly throw a wrench in the works. Do not think you have to worry about the European Monetary Union (EMU), breaking the short term. In other words, the euro will continue to be actively marketed in the global commercial market. A Reuters poll in early June suggested that there is only a 5% chance of a collapse of EMU in the next 15 years. However, almost at the same time the German weekly Stern reported that the failure of the EMU was discussed at a meeting attended by German Finance Minister Hans Eichel and Bundesbank President Axel Weber. That said, I do not think there’s any doubt that there is a higher risk premium implies that the euro was a month ago. In the coming months, look for continued political wrangling in the EU. More bad news is likely to be achieved, which should help keep the euro under pressure, creating business opportunities not only against the dollar, but in the types of cross. Mr. Grant is Vice President of Operations for CFS Capital Management, an alternative investment firm in Lakewood, Colorado.

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