If the President of the European Central Bank (ECB), Mr Wim Duisenberg, cherished any doubts about whether he is in trouble, they must have evaporated when he awoke yesterday to find himself under attack from Germany's mass-circulation Bild newspaper. Under the headline "Do Something, Mr Duisenberg", the paper that led the campaign against the former German finance minister, Mr Oskar Lafontaine, turned its sights on Europe's top central banker.
"We were promised a strong euro. If it is now as soft as a jelly baby left out in the sun, it's time for something to be done. You're not paid to look on, Mr President! You're paid to act!" the paper said.
Mr Duisenberg believes that the slide in the euro's value against the dollar is a temporary phenomenon and that, thanks to the ECB's rigid anti-inflation policy, Europe's single currency would prove in the long term to be as stable as the deutschmark.
As Bild pointed out yesterday, Mr Duisenberg's assurances have had little impact on the financial markets, which appear determined to drive down the value of the euro to just one dollar.
Instead of blaming the austere central bankers in Frankfurt, German critics of the euro's performance might be better advised to look to Bonn for a solution to the currency's problems. The euro's future depends, more than anything else, on decisions to be made during the next four weeks by Mr Hans Eichel, the mild-mannered, former Latin teacher who is now Germany's finance minister.
Drafted in to replace Mr Lafontaine following the controversial former minister's abrupt resignation in March, Mr Eichel will unveil his first budget on June 30th. His task is a formidable one - to make big savings without further depressing Germany's economy and stifling job creation.
The dramatic reaction of the financial markets to last week's decision by EU finance ministers to allow Italy to increase its budget deficit to 2.4 per cent has served as a sharp warning to Mr Eichel. If Germany were also to attempt to relax the Stability and Growth Pact, the effect on the value of the euro would almost certainly be disastrous.
Just to maintain Germany's budget deficit at its present level, Mr Eichel needs to save DM30 billion (€15.1 bn) next year. Each cabinet minister has been instructed to make savings of 7.4 per cent - an injunction that is certain to remain unfulfilled.
The Defence Minister, Mr Rudolf Scharping, for example, points to the Kosovo crisis as evidence that his department cannot be expected to make any savings. "We have nothing to cut," he said.
If he is to avoid the politically unpopular step of increasing the rate of Value Added Tax, Mr Eichel will be obliged to engage in the kind of creative accounting practised by one of his recent predecessors, Mr Theo Waigel.
An optimistic prediction of employment trends by the Labour Minister could offer Mr Eichel a significant boost - taking 200,000 people off the dole would save the state DM6 billion. He might also step up privatisation plans, selling off such assets as the government's 72 per cent stake in Deutsche Telekom.
Regardless of what specific measures he takes, Mr Eichel has already changed the atmosphere of German politics by preparing the public for a period of belt-tightening.
Mr Lafontaine believed that the best recipe for economic success was to give consumers more money to spend by cutting some taxes and agreeing big pay rises.
Mr Eichel, who boasts that he "always gets the sums right", takes a more cautious approach and has moved swiftly to mend fences with business leaders and the ECB.
Although most Germans have given up the fight to retain the deutschmark, and accept the introduction of the euro as irreversible, the new currency's continuing slide is arousing popular anxiety. Germany's post-war economic success has long been a source of national pride and the country's present, sluggish performance strikes deeply at the collective psyche. Yet there is little appetite for the reforms that most economists believe are necessary to take most of Germany's 4.5 million unemployed off the dole.
Employees are unwilling to work more flexible hours and companies are not prepared to create a more competitive business environment or, indeed, to respond to the demands of consumers.
A modest attempt to reform Germany's expensive health care system has provoked threats by doctors to stop offering patients the best level of treatment. Like many other interest groups, the doctors are represented by lavishly-funded organisations that have bought prime-time television slots to attack the government's plans.
In this context, many German businesses welcome the euro's poor performance as a simple way to boost exports without taking tough decisions. Even Mr Duisenberg admitted this week that this effect meant that the euro's decline in value is music to many exporters' ears.
