Constraint on growth
       “The euro zone lost competitiveness to an alarming degree the last time the dollar/euro rate was above 1.30,” Stephen Lewis, chief economist at Insinger de Beaufort Holdings SA in London, said in a note to investors. “It is prudent to anticipate a similar constraint on euro-zone growth, if, as seems likely, the euro continues to strengthen.”
       The protests, therefore, are hardly surprising. “We have to be attentive and we will do everything so that this gap doesn’t get bigger,” Breton said in a speech in Paris last week, referring to the euro’s rise.
       European Union Monetary Affairs Commissioner Joaquin Almunia weighed into the debate telling reporters in Brussels the euro area needed “soft or moderate movement in exchange rates” and “disorderly movements” must be avoided.
       It is easy to say. The harder bit is making it happen.
       After all, the French government, in particular, has done just about everything to make the euro-area economy as unattractive to global investors as possible.
Capital flight triggers
       Stop and think about the things that usually cause investors to flee. How about unleashing a wave of economic protectionism, preventing takeovers and protecting industries?
       It’s already been tried and it hasn’t worked yet.
       How about riots in the streets over flexible working hours, and a government that caves in to pressure from a few militant protesters to abandon a law that would have created new jobs?
       That’s been tried as well, and still investors keep buying the euro.
       Maybe a stern anti-inflationary hawk could be appointed to run the European Central Bank—someone who will insist on pushing up interest rates just as the first green shoots of recovery seem to be flowering. Or how about getting a political has-been from the 1970s to write a new constitution for the EU, then watch it get thrown out by voters across the continent, plunging the euro into a potential political crisis?
       Bother. We already gave the ECB job to Jean-Claude Trichet, and that hasn’t stopped the currency’s appreciation either. As for Valery Giscard d’Estaing’s constitution, the less said about that the better.

US lessons
       The euro area, especially France, has done as much as it could to deter people from buying its currency. Perhaps it should think about taking a completely different direction. The US could give some valuable lessons on how to get a currency down.
       The euro-area governments could try embarking on a massive borrowing spree, causing huge budget deficits, so that vast amounts of foreign capital have to be imported every year.
       They could shut down all the factories, import everything from China, and have massive trade gaps—rather than persist in making lots of things and selling them all around the world, as the Germans still do.
       Another option might be to encourage people to spend more money on their credit cards and get banks to lend recklessly for the purchase of homes that are becoming more overvalued.
       They might even want to start invading countries, embarking on long, costly and dangerous occupations of hostile territory.

Dollar as refuge
       It might not be that healthy in the long term. Yet it would certainly bring the euro back down, and investors might even start fleeing to the relative safety of the dollar.
       More seriously, politicians shouldn’t try to manipulate the currency markets. Instead, they need to create a more flexible, open economy. And the region needs to cut interest rates to help its own expansion—and to reduce the imbalances that are behind the dollar’s fall and the euro’s rise.
       That would certainly be more effective than just telling the markets what to do. That won’t make any difference to the value of the euro at all.

Matthew Lynn is a Bloomberg News columnist. The opinions expressed are his own.