Why the Euro's Handlers Are Watching Greenspan

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Wim Duisenberg, head of the European Central Bank and monetary lord of the Continent, is not a happy man. The euro, the newfangled currency he has been charged with shepherding since its New Year 1999 debut, is down 23 percent, and on Monday finance ministers from the 11 euro-zone nations arrived for their monthly meeting in a deepening panic. "It is quite evident that we have to address the euro situation," said Luxembourg's Jean-Claude Juncker. "We have to be more creative." But the finance ministers have already signed away all their powers to the ECB. And though speculators' hearts raced Friday after a sorrowful Duisenberg hinted at a euro-buying intervention to goose demand, such moves are usually stopgap measures at best. Long-term, there's not a whole lot Duisenberg can do except wait for Greenspan's rate-hike medicine to take effect in the U.S., because it's the U.S.' supercharged economy — 4.5 percent annual growth to Europe's 3.4 percent — that's the most visible culprit, attracting dollar investment and leaving the euro stranded.

For those non-banker Continentals whose reputations do not rest on the international credibility of their currency, the euro's steady fall is not bringing the sky with it. The sagging euro has Continental goods selling briskly overseas and its economy humming (3.4 percent is gangbusters compared to a year ago). And the very fact of the euro makes currency fluctuations largely irrelevant to the German in France or Italian man in the street, as long as they're buying their goods from each other. But Duisenberg's in charge not only of Europe's economy but also of that fragile European pride, and he's biting his nails at the suggestion that in the monetary equivalent of Airbus vs. Boeing, the euro can't seem to stay aloft. Perhaps it's some comfort to know that the Fed chairman across the pond is moving as fast as he can.