The Euro – What’s The Point?

The Guardian ran a charming story from Abbeville a small town in France, which has decided to start using the French Franc as currency once more. Well aware of the political implications of using the old currency, local traders are very carefully making comments which cannot be interpreted as negative about the euro, all faithfully quoted by the EU-loving Guardian.

A lady called Claire, for example, claims she ‘stumbled’ across a bundle of French Framc notes (still useable as legal tender until 2012). It’s funny how so many other people also found that, once shops would take their old money, they also had bundles which fell out of old pockets ‘forgotten’ long ago. In fact hundreds of others also ‘stumbled’ across their ‘forgotten’ stashes, which is not surprising as apparently there are still about 5.7 billion Francs in ‘circulation’. Business in Abbeville is booming.

But while Claire, who started off the whole exercise of getting shop-keepers to accept her old Franc notes, is getting these old notes moving around the local economy and boosting sales for local shop-keepers, the Guardian ensures that such enthusiasm for a national currency is firmly categoried as nostalgia and is not for real – as follows –

For the majority, that nostalgia does not translate into a concrete desire for the permanent revival of the franc. Abbeville’s traders insist that their two-week experiment is not a political statement. “Personally, I think the euro is great,” said Jean-Marc Locoche, the manager of Gourmandises delicatessen. “You no longer have to show tourists where the cash machine is and they no longer have to do the conversion.”

Yeah – right – as if he gave a fuck about either supposed advantage in the age of credit cards. Tourists can spend in local currency easy enough anywhere in the world these days, but..

Claire agreed. “The French are very patriotic, and the franc was always part of that,” she said. “But the euro is much more practical. I don’t think anyone would want the franc back for good.”

Come on Claire!! Who are you trying to kid?

The fact is that in French peoples’ minds, the Franc still exists as the primary notional currency. By their own admission they all calculate back from euros into Francs before evaluating a potential purchase. The Euro is a usurper that is little use, has little value and which is not in the hearts or even in the minds of the French people.

Listen to the Guardian who clearly have assessed the situation –

Many older people have a sense that the spent currency has an inherent value with which the euro cannot compete – and almost everyone will admit to still performing the conversion in their heads before making a big purchase.

“Even people of my generation do the sums in francs if they’re thinking of buying a house or a car,” said Aurore Collemare, a shop assistant in her 20s.

So there you have it. The Euro is merely a facade. Only when a currency becomes the currency of the mind is it really a currency. The Euro, even after 8 years has not even comee close to achieving that status. Nor is it going to. The French, like the Germans, are just waiting for the return of their real currency, when they can stop maintaining the pretence, and talk real money once more.

The effects of accepting real money in Abbeville are that people have the confidence to buy, and boost the town’s economy.

France could enjoy the same effects across the whole country if they rejected the farce that is the Euro, where each note is marked with the issuing nation’s letter, and where bankers charge different rates of interest depending on which country’s Euro they are dealing in.

Come on, Claire, tell us the truth. You’d love the Franc to return as would the whole of France. You’d feel whole once more, and not as if you’re being cheated every day by inflation that is far higher than the official figures admit to. Vive La France. Vive Le Franc!

UPDATE – Meanwhile the rain in Spain falls mainly on international banks, and maybe the Euro will crash too.


The root cause of the bubble was the extremely lax monetary policy imported by Spain after it joined Europe’s monetary union. Interest rates were slashed on EMU entry, and then fell to 2pc until late 2005 – far below Spain’s inflation rate. However, Mr Solbes has been reluctant to link the crisis to Spain’s euro membership. As Europe’s economics commissioner at the launch of the euro, his career is inextricably tied up with the whole EMU experiment.

For now, smaller Spanish banks are getting by on funding from the European Central Bank, in many cases issuing mortgage bonds with the express purpose of using them to secure loans from Frankfurt. ECB loans have tripled to €47bn over the last year, causing rumblings of concern among regulators. The ECB is not allowed to prop up banks with long-term funding under EU treaty law.

Morgan Stanley said there was 40pc chance of a “bear scenario” leading to a 0.5pc contraction of the Spanish economy next year, with a mounting risk of an even more extreme case that replicates the ERM crisis (or worse) and leads to a 1.4pc contraction in 2009.

The report said construction investment made up 18pc of GDP last year, much of it funded by foreign investors. The concern is that a “sudden reversal of capital inflows” could leave the economy unable to finance its current account deficit, now 10pc of GDP – the world’s second biggest after the US in absolute terms. The corporate sector has debts equal to 130pc of GDP. This too requires foreign funding.

Morgan Stanley said it had become concerned about the banks after the €5.1bn (£4bn) collapse of Martinsa-Fadesa, the country’s biggest builder.

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