Vol. 12, No. 2,856W - The American Reporter - March 18, 2006

Market Mover

by Mark Scheinbaum
American Reporter Correspobndent
Antwerp, Belgium

ANTWERP, Belgium, Mar. 18, 2003 -- Queen Elizabeth cancelled a visit to Belgium this past week because of international tensions, and one London daily's headlines now spell the name of France's Jacques Chirac as Chiraq. These are just signs of rough times between the Euro World, the United Kingdom World, and the Rest of the World.

While the French seem to have set themselves up as foes of United States anti-Iraq United Nations Security Council resolutions, a submissive German, and perhaps more reluctant Belgium tag behind.

We thought at the outset of the innovative Euro currency three years ago that the ultimate test would not be whose likeness was on the face of a Euro coin, or how easily retailers and tourists accepted the uniform currency, but rather political realities. As a European economy attempts to embrace developing priorities of Greece or Portugal, with economic recession in Germany, and internal identity crises in Belgium, it will be nationalism which dooms the Euro in the next few years.

The Brits, at first lured by trade promises to embrace the Euro in future referenda, now seem to relish the safe haven alternative provided by the Pound Sterling versus the U.S. Dollar. The Pound even provides an alternative to the other major non-Euro currency in the region, the Swiss Franc.

Truth be told, only two currencies started the 20th Century and ended the 20th Century in essentially the same forms and denominations: the Dollar, and the Swiss Franc.

Gerhard Schroder, German chancellor, has stamped "official" on econometric reports of his nation's deepening recession. It was five short, or long, years ago, that I walked into a shop in Tuzla, Bosnia-Herzegovina and a shopkeeper looked at my U.S. currency, and politely, but apologetically, explained that he preferred the Deutschmark. I had been forewarned, and stocked up on DMs in Germany prior to the trip, but this speaks to the residual feeling that Germany should, or could, be the linchpin of the world's strongest currency. Now, as one piece (albeit a key one) of a Euro money puzzle, political realities which are negative, float or sink all ships in a storm.

Schroder decided to cut unemployment benefits, ease of up state socialism, and basically infuriate many labor unions and members. In a move that would make even the best tax-and-spend Washington politician or lobbyist proud, he inexplicably added a $15-billion corporate welfare package to construction giants to "spur growth." In other words, the key to a stable and growing Euro, versus other currencies, is cutting money from consumers, wage earners, research and development, and innovative small entrepreneurs, and subsidizing the same German-based transnational giants who overspent and mismanaged in the first place.

Meanwhile, here in Belgium, it seems as if the French decision to lead continental Europe is met with less than universal enthusiasm. In a supposedly bilingual or even trilingual society, if a visitor's Dutch or Flemish is shaky, go directly to English, do not speak French, do not collect any prize. English is encouraged. In contrast to, say, Canada, where even in western and northern reaches of British Columbia all government documents and many public printings are in English and French, the northern tier of Belgium seems to be a no-French zone.

It is fascinating to watch both French and Belgium television cover the same stories. To hear the French tell it, Belgians are wayward children with residences in areas adjacent to French soil, filled with historic French cultural pride, yearning to rejoin the French and to take up French citizenship. One would think that a francophile uprising and civil war in Belgium is ready to rival the Basque separatist movement in Spain.

On the Belgian side, many residents interviewed (including many of French heritage) talk about a history of two world wars fought on Belgian soil, a proud nationalism as the capital of Europe ((NATO) is in Brussels), and a role in the international family of nations that stands on its own, thank you, with France's help.

If one senses a common bond in troubled Europe these days, it is probably the post-Sept. 11 tensions that have led to heightened security measures. Arriving at Charles de Gaulle Airport in Paris (where an obnoxious customs officer wanted to know if my wife supported the policies of President Bush), security was drum-tight. While driving, we noticed Belgium police patrols and police truck inspections seemed a more serious surveillance of both passenger cars and trucks, with many spot checks and longer inspections.

Some anti-war and anti-American signs are posted in the large Cathedral Plaza in the city center, but privately, people seem to have a less strident, more fatalistic tone about U.S. foreign policy. But these are scary times, and even the war protests cause more security concerns.

A drive around the huge Antwerp harbor reveals cement barricades around many warehouse and shopping areas, limited access to roads, narrowing of lanes to restrict the number of vehicles in an area, and video cameras both visible and invisible. Local reporters also broadcast quite detailed reports of police patrols that have been beefed up in the global diamond center of Antwerp. Plainclothes detectives and private security forces are also around many jewelry shops and jewelry fabrication facilities. In the fabled dancings, though, life goes on.

One German businessman from Hamburg, who spent 10 years living in Oregon, was visiting Antwerp to close his company's local export accounting office. You never like to fire people, and everything is about the bottom line. But there comes a point when to stay profitable you just can't justify expenditures in any place which is not producing a maximum effort for the bottom line. He looked serious, troubled, and grim.

When I ran into him in the hotel lobby the next day, he said he had taken care of the unhappy management deed, and assured me, "It's a nice day. I'm off to play golf."

Mark Scheinbaum, a former UPI newsman and political science instructor, is chief investment strategist for Kaplan & Co. Securities, (www.kaplansecurities.com) members of the Boston Stock Exchange, based in Boca Raton, Fla.

Copyright 2006 Joe Shea The American Reporter. All Rights Reserved.

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