The "weak" Euro is still way above it's original value v. the US dollar (2015, debt)

[kanhawk]

I keep reading stories of how endangered the Euro is with the economic turmoil in Europe, yet today the Euro traded at $1.29.
Do people remember that the Euro, when it was introduced around 2000 was originally set at a $1.10?
I remember traveling to Ireland in 2002 and at that time the Euro was worth almost exactly $1. It made for easy calculating of how much I was actually spending over there!
So with it trading at a $1.29 is it really that weak, or is the US Dollar even weaker?

[gwynedd1]

Originally Posted by kanhawk

I keep reading stories of how endangered the Euro is with the economic turmoil in Europe, yet today the Euro traded at $1.29.
Do people remember that the Euro, when it was introduced around 2000 was originally set at a $1.10?
I remember traveling to Ireland in 2002 and at that time the Euro was worth almost exactly $1. It made for easy calculating of how much I was actually spending over there!
So with it trading at a $1.29 is it really that weak, or is the US Dollar even weaker?

look to the restricted denominator with regards to the euro which does not monetize da guberment debt notwithstanding its crappy numerator(except for Germany).

[Jaggy001]

I remember buying Euros for 80 cents

But the issue is not so much the strength of the Euro but the weakness of the dollar over the past 6 - 8 years or so. The Euro has held well against the dollar, the pound and the Yen but against 'safe-haven' currencies like the Swiss Franc, the Norwegian Krone or the Australian dollar it has done less well.

Also worth considering that the core economy of the EU remains robust. Countries like Greece or Portugal don't contribute that much to EU GDP.

[wawaweewa]

The Euro is highly overvalued in its present form.


I think that investors truly believe that some of the weaker nations will be forced to break from the Euro which will weaken the EU politically but strengthen it monetarily.

[bale002]

Originally Posted by Jaggy001

I remember buying Euros for 80 cents

But the issue is not so much the strength of the euro but the weakness of the dollar over the past 6 - 8 years or so. The euro has held well against the dollar, the pound and the Yen but against 'safe-haven' currencies like the Swiss franc, the Norwegian krone or the Australian dollar it has done less well.

Also worth considering that the core economy of the EU remains robust. Countries like Greece or Portugal don't contribute that much to EU GDP.

I agree with this argument: both the US and Europe (and Japan) carry heavy baggage as the rest of the world industrializes, but eurozone monetary policy is relatively less a mess, or relatively more disciplined if you want a positive spin on it, than US monetary policy. I have to say that I admire German discipline; the most recent German economic data was pretty robust.

There is some logic to the risks that the more disciplined eurozone policymakers are taking, favoring long-term fiscal rigor over short-term monetary bail-outs.

The ECB has recently "printed" enough money to keep the system afloat for three years, but has kept limited the quantity of long-term bond purchases.

I see less risk of a eurozone break-up in 2012-2013, but potentially more so in 2014-2015.

In short, the eurozone laggards have two-three years to pass and effectively implement pro-growth policies in a framework of fiscal discipline, a tough square to circle. By 2014, countries like Italy must achieve at least around a sustainable 2% growth rate.

Facing the headwinds of global competition for some years now and going forward, at stake, in my view, is an acceleration in the absolute decline of the standard of living vs. a slower relative decline in the standard of living for the average eurozone worker.

Average US workers face the same stakes, though the policy-making framework and dynamics are a bit different, however close enough to those of the eurozone that the EUR/USD exchange rate has hovered around 1.36 for the better part of seven years now.

[silfwer]

I think the simple reason is that FED prints so much money.

[gwynedd1]

Originally Posted by silfwer

I think the simple reason is that FED prints so much money.

You mean they allow the banks to print so much money.

[gwynedd1]

Originally Posted by wawaweewa

The Euro is highly overvalued in its present form.


I think that investors truly believe that some of the weaker nations will be forced to break from the Euro which will weaken the EU politically but strengthen it monetarily.

Thats really the problem. It is a mangled form of currency that buys a mule ride or a ticket on a speed train. Its overvalued in the PIGGS, but then you have Germany. A currency that allows you to buy German stuff is still worth something. However the real reason it retains its value is because the central bank does not finance sovereign debt. They don't get bubbles, but its the same pressure differential meaning it just makes them subject to depressions with no way out. However because of the structure of the EU, the depression is concentrated in certain nations and more or less benefiting Germany.