PALO ALTO, Calif. — The more French President Nicolas Sarkozy attacks the European Central Bank and the strong euro, the more he is criticized in the European media, by European finance ministers, European Union officials and the ECB itself.
The critics are right. The fundamental reason behind France's current economic weakness is its lack of competitiveness even in other euro-zone economies where the euro is not a factor.
But Sarkozy has a point. A perfect storm is forming in the foreign-exchange markets that threatens to catapult the euro to levels that will make even the euro zone's most efficient exporter — Germany — unable to compete in world markets. If German exporters can't compete at 1.50 euro to the dollar, what chances do French exporters have?