EURO WEAK CURRENCY, WEAK ECONOMY

The euro's slide against the dollar is unambiguously bad for Europeans planning their holidays in Florida. It is embarrassing for those European politicians and central bankers who bragged about knocking the dollar off its perch. But does it mean that the new currency is a failure? The short answer is no. Fights between politicians and central bankers, the leadership vacuum at the European Central Bank, and Italian back-tracking on fiscal promises, have all dulled the euro's lustre. A posse of central bankers and politicians shooting from the lip - contradicting each other and, sometimes, themselves - has not helped matters. Nor has the war in Kosovo. But the euro is weak mainly because the euro-zone economy is weak. The US economy is strong and so is the dollar. The ECB is not going to raise interest rates and may have to cut them further. The US Federal Reserve has announced its predisposition toward raising rates. It is no surprise that the euro is falling.