Food For Thought on The EUR As Ireland Gets Ready To Vote Again On The Lisbon Treaty

This Oct. 2nd will be ‘the’ day of reckoning for Euro-land. Ireland will be holding its 2nd referendum on the Lisbon Treaty of EU institutional reforms. The Irish public overwhelmingly rejected it on the 1st go around in June 2008 (53.4% said ‘No’ and 46.6% said ‘Yes’). The initial impact was rather benign for the EUR trading countries, but, within a matter of month’s investors and dealers turned risk adverse. The EUR had a similar experience in 2005 when the French and the Dutch rejected. There have always been questions about the cohesiveness of the EURO members, whom have such a diverse culture and political make up. Currently consensus expects the ‘Yes’ vote to prevail. However, recent polls shows that 46% would vote ‘Yes’, a drop of 8-points since May, while 29% say they would vote ‘No’, an increase of 1-point. More importantly, the number of people in the ‘Don’t Know’ category has increased by 7-points to 25%. If the ‘No’s’ prevail, then once again the Lisbon treaty will not be ratified by the EU. End result, the European Union will be thrown into confusion about how it should be governed by its member states. No doubt investors will shy away from owning the EUR and question the sustainability of the Union. We have 4-weeks till we know!

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