The outlook in Germany is also dire. With the recession intensifying and transfers to the east becoming increasingly onerous, the deficit problem can only get worse. Against Germany, France seems like a paradise: a strong government, a lower deficit and much less severe recession. Yet in the view of the markets, France will still have considerable difficulty in further cutting interest rates unilaterally. The mark may no longer be the anchor currency of Europe, but the franc is not yet seen as a viable alternative.
The mark is undoubtedly in for a rocky time, and the next year is going to be tough. But don't write it off yet. The very fact that George Soros has publicly become a bear of the mark must, to all believers in contrary thinking, be a good long-term sign for the currency.