Is the mighty euro headed for a fall? Maybe:
ROME (Reuters) – Italy should consider leaving the single currency and reintroducing the lira, Welfare Minister Roberto Maroni said in a newspaper interview on Friday.
Maroni, a member of the euro-skeptical Northern League party, told the Repubblica daily Italy should hold a referendum to decide whether to return to the lira, at least temporarily.
He also said European Central Bank President Jean-Claude Trichet was one of those chiefly responsible for the “disaster of the euro.”
The euro “has proved inadequate in the face of the economic slowdown, the loss of competitiveness and the job crisis,” Maroni said.
Don’t make too much of this story – Maroni’s Northern League party is a bit of a crank. It doesn’t just want out of the eurozone; it wants out of Italy. No, really. The party was formed to split Italy in two, north and south. But his complaint is still valid.
Before the euro, Italy kept its boutique manufacturing base competitive by devaluing the lira as often as necessary. That’s why a glass of cheap red wine used to cost something like 3 trillion lira. Things got so bad that, one time, the entire nation ran out of zeros.
Anyway, the euro prevents Italy from devaluing their currency – and their current recession is the predictable result.
So why the “I Told You So” headline? Because I did just that, back when this blog was all of a week old.