In order to keep the value of the Euro intact—as many are predicting its collapse—German Chancellor Merkel and French President Sarkozy met on Monday in Paris to discuss a joint proposal for the upcoming summit meeting on Thursday, seen as the last chance this year to stabilize the euro zone. This is somewhat reminiscent of the erosion of faith in the gold standard in the 30’s which led to market speculation in various countries, such as the UK, where gold reserves were depleted despite attempts to defend its currency. Market speculation currently threatens the struggling economies of Italy and Spain. The gold standard worked very effectively before WWI because the UK was the global financial leader, and there was absolute faith in the gold standard. After the war, faith in the gold standard eroded, and the US was not able to effectively lead the global financial market. Will Chancellor Merkel and President Sarkozy be able to provide the leadership necessary to restore faith in the value of the Euro?
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