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There's an undercurrent to all of this which is important to consider: given the current monetary environment, there is bound to be friction between Berlin and Paris.

A mainly consumer-goods exporter, France is hurt by an overly strong Euro, because this makes French exports less competitive. And so it is unsurprising that France's Current Accounts deficit is at record highs.

On the other hand Germany, a capital-goods exporter, loves an overly strong Euro, because the upper-end machinery it sells, increasingly to Asian nations, sells at a much more loose band of relative Euro strength.

Thus, when the Euro is strong, German manufacturers simply make more money, while French industry generally suffers (and Italian even moreso).

Given how much pain Germany visited on the rest of Western Europe in the early 1990's by re-unifying in a way which pretty much assured that the pain was greatly exported to other EU nations, and given its increase of the VAT to balance its books not so long ago essentially devalued German goods at the expense of goods from other Eurozone nations (and, coming from the "heart of Europe," ensured an acceleration of the fiscally regressive race to the bottom in finance ministries across the union), if anyone is now moving to axe the Franco-German engine, it is certainly the Merkel government and the ECB.

If the Germans think they are weakening Sarko by attacking him like this, they are dead wrong.

Though perhaps this is the point?

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Tue Sep 11th, 2007 at 11:12:00 AM EST

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