I'm wondering what happens if one of the countries that makes up "Euroland" starts misbehaving (according to the established rules). Suppose that Holland (for example), is run by a government that borrows a lot to finance big cheese parties. I understand that there's a penalty (imposed by the Eurobank?) if the government's deficit gets beyond some threshold percentage of GDP. But what if we see the further effect of confidence in the guilder being undermined, so that the free-market guilder differs significantly from the rate at which it's fixed to the Euro? Traditionally with a fixed exchange rate, the Netherlands would have to raise interest rates to restore confidence and attract funds (as happened when a previous effort to fix exchange rates in Europe failed). But can it do that in the new system, where it's the Eurobank that's in charge of monetary policy? How does this all work? BTW, is the Italian Lire really high in its parity with the Euro? There sure seemed to be a lot of Italian tourists when I visited New York in early January. (Or was it the airline I flew, Delta, that somehow focused on the Italian market?) Jim Devine [EMAIL PROTECTED] & http://clawww.lmu.edu/Faculty/JDevine/jdevine.html
