It is early October in the year 2007, the month when stock markets are known to be jittery. Some early rumblings are felt when, on the second Friday of the month, after-hours trading on European exchanges begins to reflect the late news release in New York of the European Union's new budgetary figures for the year 2008. When late night computer trading ends, European stock indexes are down an average of 8.6 percent, to be following by a further 9 percent drop when normal trading reopens the following Monday.

European financial markets are shocked by the rumor at 11:30 a.m. on the same morning that the president of the European Central Bank has been assassinated in Frankfurt, apparently by a private stock market trader who has been ruined by recent developments in Europe's currency and stock markets. For European stock markets the news means that there is only one possible direction for share prices: down, and fast at that.

Is this the horror vision of some frustrated séance medium? Not at all. Bruno Hollnagel, a German financial commentator holding a degree in economics, has penned a novel entitled Euro Crash 2007-Der Countdown läuft [Euro Crash 2007-The Countdown Has Started], in which he outlines his scenario for the future demise of the euro. Some aspects of his vision, interestingly enough, are not entirely discounted by other observers.

Hollnagel's decision to write his book was prompted by his irritation over what he considered to be the positive bias in reporting on the treaty of Maastricht, which provided the basis for the European Monetary Union, i.e., the euro. Hollnagel has carefully analyzed that treaty, and his novel reflects what he believes to be the major weaknesses of the impending monetary union. He projects in step-by-step manner a coming great depression in Europe, which has its origins in the prerequisites for participation in the euro, including limits on the national rate of inflation and deficit spending required of all participating countries. In Hollnagel's opinion, those goals can only be met by bookkeeping shenanigans, a view shared by a number of respected politicians and economists in Germany.

In his criticism of the Maastricht treaty Hollnagel seizes on a weakness seen by other observers in Europe as well: individual countries in the monetary union continue to determine national economic and tax policy on their own, with no requirement to coordinate policy within the euro zone. As Hollnagel portrays it, the mid- to long-term result will turn out to be instability within the entire euro region, as the instability of individual member countries, resulting from their domestic economic policies, is automatically exported to all other countries within the euro zone. His comment on the lack of political responsibility in addressing this potential problem is scathing: "Europe's politicians are like fortune hunters on the prowl for the best offer."

In Hollnagel's scenario, the European Central Bank president and his team are unable to stem the tide. The ECB is supposed to be a supranational bank responsible for the financial stability of the euro region, but in reality the bank will not have the power to counteract the finance ministers of member countries. The result, according to Hollnagel, will be increased deficit spending within "euroland," an inflation rate that hits 45 percent and capital flight from European financial and equity markets, all of which reach their peak in 2007. Following the assassination of the ECB president, euro member countries refuse to shoulder EU debts generated by the monetary union, and the euro is abandoned in favor of individual currencies.

The climax of Hollnagel's book-the demise of the euro-reflects his personal opinion on what Europe needs to do anyway. He supports a referendum within the euro zone member countries as a potential face-saving way to ease out of the euro before it is too late.

For English-language readers, American author John Newhouse published a book in 1997 entitled Europe Adrift with his prediction that the euro would eventually cause the demise of the European Union. One year earlier the London Center for the Study of Financial Innovation worked its way through a hypothetical report from a parliamentary investigative committee in which the demise of the euro by the end of 2003 is predicted. Interestingly enough, all three projections have common ground in their reasoning for the predicted failure of the euro: Europe is not a political union, and without that political union the euro member countries are still too economically divergent to have a successful common currency.

Will Hollnagel's scary scenario become reality? In the author's opinion, it is far too early to tell. On the one hand, recent public opinion surveys in Germany and the Netherlands reflect growing concern over the perceived weakness of the euro, especially in relation to the U.S. dollar. On the other hand, the weakness of the euro in recent months has provided a price advantage for euro zone exports that has resulted in major German car manufacturers like Volkswagen and BMW announcing record annual earnings achieved largely through sales to merchants outside the euro zone.

Pedro Solbes, the European Union's commissioner for economic affairs, views the worrying within euroland over the perceived weakness of the euro as a psychological overreaction. "A euro is a euro," he tells his listeners. "I tell people the depreciation against the dollar will not affect their living standards with the euro zone. You will not pay anything more when you go on vacation in Spain or Italy. And your house is worth exactly the same in euros as it was a few months ago-unless you want to sell it and buy something in the United States."

Euro Crash 2007-Der Countdown läuft, by Bruno Hollnagel, published by Langen Müller/Herbig, costs 38 German marks. WNP