Traders and dealers in London's financial markets have found a new subject for speculation: Is the EU's eurozone going to collapse after the "no" votes in referendums in France and the Netherlands on the European constitution?
The City has always been sceptical about the project that has led 12 EU members to adopt a common currency but until now few have imagined that it could collapse, with EU states reverting to marks, francs, pesetas, drachmas and other former currencies.
It is a "highly political" issue, according to one economist with an investment bank who did not want his name associated with discussion of the issue.
"It is not something I see as a plausible outcome, nevertheless it is something that's clearly affecting market sentiment and capital markets," he said.
Economists' imaginations have been stirred by the two "no" votes last week and by statements about the possible collapse, temporary or otherwise, of monetary union.
Many London traders doubted whether the euro would ever see the light of day and now they lend a ready ear to rumors of its impending death.
Julien Seetharamdoo, economist at Capital Economics, said speculation about an implosion of monetary union would intensify as the implications of the French and Dutch rejection of the European constitution are considered.
Deeming the break-up of monetary union unlikely, he said that that did not stop London foreign exchange dealers and economists from talking about it.
"But because the idea has a superficial attractiveness, there is a danger that it could be mooted as a real possibility in some countries," he said.
In the view of Stuart Thomson, economist with Charles Stanley, the idea is a little more than an outside chance.
Not only could some countries want to pull out of the eurozone by 2008, but without political union the euro's demise is "inevitable" by 2020, he says.
He thinks the key lies in Asia, where a kind of monetary union exists because central banks intervene to maintain fixed exchange rates. A chain reaction there, he says, could create an unmanageable economic situation in Europe.
If and when the Chinese yuan breaks its link with the US dollar and Asian monetary cohesion breaks down, the US dollar will weaken, he argues.
The euro will appreciate by between 20 percent and 30 percent against the US dollar. EU countries, particularly "Italy, Greece and Portugal, which traditionally used devaluation as a safety valve," will "be unable to cope" and will be tempted to leave the eurozone, he said.
A Chinese freighter that allegedly snapped an undersea cable linking Taiwan proper to Penghu County is suspected of being owned by a Chinese state-run company and had docked at the ports of Kaohsiung and Keelung for three months using different names. On Tuesday last week, the Togo-flagged freighter Hong Tai 58 (宏泰58號) and its Chinese crew were detained after the Taipei-Penghu No. 3 submarine cable was severed. When the Coast Guard Administration (CGA) first attempted to detain the ship on grounds of possible sabotage, its crew said the ship’s name was Hong Tai 168, although the Automatic Identification System (AIS)
An Akizuki-class destroyer last month made the first-ever solo transit of a Japan Maritime Self-Defense Force ship through the Taiwan Strait, Japanese government officials with knowledge of the matter said yesterday. The JS Akizuki carried out a north-to-south transit through the Taiwan Strait on Feb. 5 as it sailed to the South China Sea to participate in a joint exercise with US, Australian and Philippine forces that day. The Japanese destroyer JS Sazanami in September last year made the Japan Maritime Self-Defense Force’s first-ever transit through the Taiwan Strait, but it was joined by vessels from New Zealand and Australia,
CHANGE OF MIND: The Chinese crew at first showed a willingness to cooperate, but later regretted that when the ship arrived at the port and refused to enter Togolese Republic-registered Chinese freighter Hong Tai (宏泰號) and its crew have been detained on suspicion of deliberately damaging a submarine cable connecting Taiwan proper and Penghu County, the Coast Guard Administration said in a statement yesterday. The case would be subject to a “national security-level investigation” by the Tainan District Prosecutors’ Office, it added. The administration said that it had been monitoring the ship since 7:10pm on Saturday when it appeared to be loitering in waters about 6 nautical miles (11km) northwest of Tainan’s Chiang Chun Fishing Port, adding that the ship’s location was about 0.5 nautical miles north of the No.
SECURITY: The purpose for giving Hong Kong and Macau residents more lenient paths to permanent residency no longer applies due to China’s policies, a source said The government is considering removing an optional path to citizenship for residents from Hong Kong and Macau, and lengthening the terms for permanent residence eligibility, a source said yesterday. In a bid to prevent the Chinese Communist Party (CCP) from infiltrating Taiwan through immigration from Hong Kong and Macau, the government could amend immigration laws for residents of the territories who currently receive preferential treatment, an official familiar with the matter speaking on condition of anonymity said. The move was part of “national security-related legislative reform,” they added. Under the amendments, arrivals from the Chinese territories would have to reside in Taiwan for
RSS