There are a lot of smug faces in Frankfurt right now. Shortly after the Euro was launched, it pitched into the sand, down to US$0.90, and some economists thought it was on the way out. But political economists knew that too much political capital had been invested in the Euro for the EU to let it fail. And, indeed, now it seems to be riding high.

A lot of that is of course because the dollar is languishing due the effects of terrorism, wars, China and the inevitable hangover that follows a credit-led boom. The pound too, if less so. The Euro has become the currency of choice for all those who are nervous about leaving their money in America. And while America and Britain's prospects look grim, the European economies in general seem to be doing OK.

Europe and the Euro may be on the up, but the fundamental problems of the Euro remain. A single currency, along with a single exchange rate, can never be right for all the peoples of Europe all the time. Inflation in Ireland is now 5%, well outside the European Central Bank's 2% target, and inflation in Spain is not far behind. Meanwhile, these economies are not doing well. They got a huge boost from low Euro interest rates during the early years of this decade, and how they too are suffering a hangover. Property prices in Dublin are off by 20% and more, unemployment is creeping back, and people are talking again of stagflation.

The strong Euro does Ireland, in particular, no favours. Its main customers are the UK and America after all, with whom it has strong cultural, linguistic and ethnic ties. A lot of people presume that Ireland's boom was due to its membership of the EU, of EU subsidies and cheap credit thanks to Euro membership. In fact, Ireland's real growth was pushed off by an enlightened tax policy that drew business to Ireland, and certainly, access to the wider European market and some infrastructure grants certainly helped, as did changing social patterns and the participation of more women in the workforce. But that real boom was compounded by an inflationary boom that was down to Euro membership. In the long term, the Irish would have been better without it. And that hasn't changed.