Who’s he kidding? Maroni’s nostalgia for the lira is little more than a transparent-- and irresponsible-- election ploy by Italy’s Northern League, an attempt to divert blame for the country’s present economic troubles onto Romano Prodi, former EU Commission president and center left candidate in the forthcoming general elections. A return to the lira would be “economic suicide” for Italy according to ECB chief economist Otmar Issing.

The euro has made Italian government bonds as good as German government bonds, because the ECB is willing to accept both on an equal basis as collateral for ECB loans. This has dramatically reduced the cost of borrowing for the Italian government. Has the Italian minister thought for a minute how his government would pay for all its public spending on welfare, and other items, if Italy’s interest rates no longer were subsidized by the ECB?

Perhaps Maroni wants to go back to the lira so that Italy can de-value it. This suggests an important advantage of the euro for Germany, where misplaced nostalgia for the deutsche mark -- no doubt aided by the steady invective against the common currency by government officials -- is growing. The euro stops countries like France and Italy from playing their old protectionist game of devaluing their currencies at German expense.

Because of this, the competitive advantages Germany recently gained from its economic reforms are being protected by the euro from offsetting currency devaluations inside the euro-zone. This is good news. Improved competitiveness facilitated by the euro bodes well for Germany’s medium term economic prospects.

The German public — hungry for economic recovery and tired of excuses -- has not been fooled by the euro and ECB bashing of its present government, and handed German Chancellor Gerhard Schroeder a decisive defeat in the recent North Rhine-Westphalia elections. (Had they been fooled, perhaps they would have been more forgiving.) Jacques Chirac -- another of Europe’s great euro and ECB bashers -- also suffered a severe personal reversal at the polls when the French rejected the EU Constitution. The public seems to be saying to the on-their-way-out leaders of the Franco-German alliance: Stop the excuses, and start getting our economies working again.

Does anyone really believe the French would have voted No had France’s economic growth rates been double or triple their current levels?

The same is true in the Netherlands where the EU Constitution was also rejected. Unlike the French, however, the Dutch have not been euro bashers even though, as a medium sized country, the Netherlands do have some legitimate grievances against the EU—namely, how the so-called “Stability Pact” to control fiscal deficits is being enforced. Holland has played by the stability pact rules but, so far, the big countries -- France, Italy and Germany-- have been getting a free pass from the responsible authorities.

This is neither fair nor smart -- and no doubt contributed, to some extent, to the Dutch No vote. France, on the other hand, has been the beneficiary of this discrimination — yet it bashes the euro and votes No into the bargain.

The good news for Europe is that the big country politicians — Schroeder in Germany, Chirac in France and Silvio Berlusconi in Italy — all are on the way out. The path will soon be clear for a new set of leaders to get Europe’s economic growth engines going again.

The bad news is that all three politicians are lame ducks unlikely to undertake the reforms Europe so badly needs before their final goodbyes. This is a point made most recently by former ECB president Wim Duisenberg in a CNN interview -- Europe must wait before its dormant growth engine re-ignites.

In the meantime, the euro has come down in the foreign exchanges, and there has been scare talk in some quarters -- correctly labeled as “absurd” by Otmar Issing and Bundesbank president Axel Weber -- that the “European project” is in danger. As the currency declined, Asian central banks have been seen buying euros hand over fist to bolster their euro reserve assets. Smart money is buying the euro — not bashing it.