The Frau Dornbusch Factor

ARE WE going to have a hard or soft euro, wide or narrow? Is the single currency process in danger of being derailed? How far will the pound fall? Are interest rates set to rise? Will summer closing time be extended into the autumn?

All hangs in the balance after the recent embarrassment in Bonn. The row between the German government and the Bundesbank over the plan to revalue the bank's gold reserves, in order to help Germany qualify for monetary union, is set to run for some time.

There is a notable (and predictable) lack of sympathy in the EU for Germany's predicament. France and Italy, in particular, have been gleefully indulging in public schadenfteude, without even bothering to translate the word into their own languages. They have caught out the EU school bully in a deeply compromising position and are making the most of it.

But with all the concern over the euro, one factor has been overlooked. Much may depend on the simple Hausfrauen of Germany. As the eminent Germanborn economist, Rudiger Dornbusch, has remarked, "Anyone who. thinks the Germans will give up the Deutschemark for a soft euro doesn't know my mother".

As it happens, I know Frau Dornbusch quite well and she is just as strong a woman as her son implies. While living in Bonn many years ago, preparing my monograph on Schitler's Die Verschworung des Fiesko zu Genoa, Frau Dornbusch was my landlady. Her housekeeping skills taught me - and indeed Rudiger - a lot about basic finance and the importance of a strong currency. Many a time she would ask to see an Irish pound note, or preferably the to shilling note (it was that long ago) in order to have a good laugh.

The concept of the euro, when first floated, immediately had Frau Dornbusch on the defensive, but Rudiger gradually brought her round to it. I recall many wonderful nights when the three of us sat talking together at the kitchen table, tended by Elsa, the rather attractive (and flirtatious) maid, who kept us well supplied with garlic salami and foaming mugs of draught Hoffmanbrau for Frau Dornbusch and myself - the strong export variety too: she had no time for the three per cent alcohol content advised by Rudiger, who himself stuck to the rare glass of well chilled Liebfraumilch. "Three per cent man" was Frau Dornbusch's mocking name for her rather careful son.

Some of my German friends see it as a cruel irony that in accordance with the Maastricht criteria, government borrowings must now come below the same magic three per cent figure in order to qualify for the single currency.

At first, the notion of a common currency appalled Frau Dornbusch, who was of rather highborn descent. Rudiger however explained to her that it had nothing to do with class erosion and all to do with strength and unity. These, as Rudiger well knew, were exactly the characteristics to appeal to his beloved Motter, and she soon became a vociferous supporter of the euro campaign. But never for an instant did she take her eye off the Dmark.

It is women like the formidable Frau Dornbusch who will keep the Dmark strong, long after the Kohl/Waigel/Bundesbank shenanigans have been forgotten. The Hausfrauen of Germany are the secret economic bulwark protecting its currency.

It is interesting then that while an EU report has put Ireland at the top of the housewives league, with the largest proportion of stay at home women in the EU, our housewives are doing little or nothing to halt the decline in the increasingly soft pound, now heading towards marshmallow consistency. It is all very well to say they do enough already, what with housework and childminding, but perhaps they need to consider the example shown by Frau Dornbusch, and use their substantial muscle behind the scenes in the marketplace and the currency centres.

A recent EU survey has shown too that we are the most Eurofriendly nation - as well as being one of the least trusted nationalities in Europe: only the Italians and the Greeks have a lower trust worthiness rating.

So we are an almost idiotically friendly nation, delighted with our European neighbours, who, while fond enough of our country for tourism purposes, believe we are not to be trusted. Just imagine the international atmosphere when we begin to share one currency.

This report did not greatly surprise me. I recall that while staying with Frau Dornbusch, the liquor cabinet was always secured when she was away. Thank God I was even then mature enough not to take this as an insult - and of course there was there was always the barrel of Hoffmanbrau, and the attractive Elsa, in the kitchen.