Bye Bye, Euro.

Certain EU economies are struggling, mostly as a result of thier structural problems on the suppply side. Germany being a poster boy for this problem, 5 million unemployed, low to zero growth, stifling regulation, huge tax wedges and a heavy tax burden in general.
As minor examples of the bureaucracy, consider that only at railway stations can a baker bake bread on a Sunday, a shop may have sales for only two, two week, periods a year, the amount of discount allowed is controlled by law and shop opening hours are still controlled nationally. There is even (although I find this hard to believe) supposed to be a law that one must recycle drinks cans to the specific store one bought them from, not just recycle them in general.
So, what should be done in such a situation? A bonfire of regulation one might think? Unclog the arteries of the economy with a bit of supply side work?
Err, no. Appoint a 70s style Keynesian as the Chief Economist for the European Central Bank? Ramp up deficit spending (already over 3% of GDP) ? Lower interest rates? Run the printing presses? More State spending?
Unfortunately, yes.

Chancellor Gerhard Schroeder now hopes to replace him early next year with Professor Peter Bofinger, the leading advocate of a ''New Deal'' spending blitz to cut unemployment and lift the country out of protracted slump.

The government slashed its growth forecast for 2005 yesterday from 1.6pc to 1pc after a week of grim confidence figures from German industry. Morgan Stanley has warned that the country may already be in recession.

The slot of chief economist is tacitly reserved for Germany under a deal giving the post of president to France's Jean-Claude Trichet.

Mr Bofinger's call for a massive stimulus through extra public spending would appear to shatter what remains of the EU's Stability and Growth Pact, which limits budget deficits to 3pc of GDP. Germany's deficit is already expected to touch 4pc this year.

A member of Mr Schroeder's Council of Economic Experts, he is a follower of Karl Schiller, the 1970s economy minister and patron saint of dirigiste demand-management - now broadly discredited among economists.

This might sound a little overdramatic but if this guy gets in it might lead to the death of the euro itself.
On a lighter note, his appointment would be a signal to buy property in euros. Financing costs (as they already are here in Portugal) would be less than inflation. Free money, in effect.