In the supposedly bad old days of raging free markets, we all grew used to the imagery of trading-room chaos: frazzled currency dealers with half a dozen phones jammed to their ears, chewing through cables in their desperation to grab (or offload) a piece of the action. But last week the dealing rooms were quiet, almost leisurely.
Coffee machines hissed beneath pot plants in roomy theatres that resembled the first-class lounge at an airport. Traders in swivel chairs glanced at computer consoles, which flickered like air traffic control systems, recording the tiny swings and roundabouts of world money. Every now and then they would lean forward and tap a finger against a screen, buying or selling 10 (million) of this, 50 of that. But the atmosphere wasn't quite as tranquil as it looked.
On the cavernous trading floor of Barclays Capital on Friday morning, business in the euro was brisk. The peace deal in the Balkans had been triumphantly announced overnight, so if the Kosovo war had been leading the world's investors to shy from the new currency, perhaps now was the time for a recovery.
It wasn't happening. The price jigged about on the screens like a float, as the world probed to see where the bottom was. It changed every couple of seconds, by a few thousandths of a decimal point: 1.0298, 1.0310, 1.0293, 1.0300, 1.0299, 1.0298, 1.0300, 1.0298, 1.0296 . Every time it bobbed up, something seemed to drag it down again.
One of the proclaimed purposes of the euro was that, by eliminating nearly most of Europe's currencies from the international markets, it would cut down on transaction costs and deflate the breezy traders who'd been dive- bombing the central banks.
President Mitterrand once referred to foreign exchange dealers as "the Aids of society", and no one objected. But the new quietness in the markets feels spooky. So far as the euro is concerned, it has something to do with the fact that no one quite knows where the goalposts are. Traders like round numbers, memorable emotional landmarks. Nigel Lawson went to the mattresses to prevent the pound falling below three marks, but the euro, being a new currency, lacks such clear signposts. "I mean, 1.23, what kind of a number is that?" said one trader.
"I think most people think we're headed for parity," said Jane Foley at Barclays Capital (meaning one euro equals one dollar). "One of the factors is that the euro came straight out of the ecu. And the pound was in the ecu, so taking it out has weakened the euro." The real problem is that the European Central Bank doesn't have any credibility yet, not in the way the Bundesbank used to. Investors don't feel they can rely on it to do the things that'll make the currency strong, like restructuring European labour markets. So they're testing it.
These long-range economic considerations are compounded by the fact that traders are, in the short term, nervous. As the American market rages up, foreign exchange dealers are squinting to see where the edge of the cliff is, and where all the dollars will run to when the gas runs out in Wall Street.
"Everyone knows we're running on empty," said a trader at one European bank. "We're going to break down long before we get to the beach. So it's a scary time to be dealing. There's a lot of fear. As Confucius would have said, he who picks up pennies in front of a steamroller is going to get squashed."
Whether it really matters that the euro is so visibly weakening is another question.
"No one's allowed to say they're pleased to see the euro fall," said Jane Foley. "It's a matter of political pride not to let currencies weaken, and it would be alarming if investors started to shun Europe because of worries about the currency. But what we're seeing in a way is a competitive devaluation. European exports are getting cheaper, and that could be the road to growth."
One trader said: "The margins have gone, and the pickings have grown thin. A lot of us are saying, 'Why are we selling these baked beans for 19p when it costs us 19p to buy them?'.
"There are more than 1,000 participants in the market, and they've all got electronic access to the tightest prices. The big players will be all right, Goldmine Sachs and so on. But for the rest it's a declining industry."
President Mitterrand would have smiled.