Skip to comments.Euro Parity With the Dollar? US, China Better Watch Out
Posted on 05/11/2012 11:55:39 PM PDT by Olog-hai
The situation in the eurozone has become so bleak that it is giving rise to the most improbable rumors. The latest to make the rounds of European hedge fund managers suggests that the euro will be tied to the dollar at close to parity, a dramatic fall from its current level of just under $1.30 and one that would involve the printing of hundreds of billions of euros.
However unlikely, the speculation is an indication of Europes plight in a world with little growth and every government looking at exports as a way to grow. A cheap currency giving an artificial boost to competitiveness is more palatable than austerity.
The euro remains relatively strong for a variety of reasons. Despite domestic tensions, Europeans are not taking their money out of Europe; they are just moving it to safer homes within the region. Moreover, European banks continue to sell off dollar assets and bring the proceeds home. In addition, central banks in emerging countries continue to hold the euro as something of a reserve currency.
Meanwhile, the Americans and Chinese prefer to see the euro remain strong since exporters on both sides of the Pacific compete against Europeans. To the extent that the euro does drop, pressure will increase on the Fed to consider another round of quantitative easing to keep the dollar relatively depressed.
If the euro collapses, that will be especially bad news for China though, since 18 percent of Chinas exports go to Europe.
(Excerpt) Read more at cnbc.com ...
Greek/Spain/France are better off in EURO where they can’t print money to bail out their problems. They’ll have to deal with it now
Sure. We rich American peasants will buy enough products from Europeans to make them rich, too. Pegging the euro to the dollar will fix everything. It’s not as if our political/regulator/NIMBY nation didn’t outlaw small manufacturing starts or just about all other small developments by us.
After the euro-distraction, US bond collapse is coming for us. Our artificially, internationally propped dollar is going to look mighty small after default and readjustment. Everything will be cheaper then, except for imports.
Deal with what?
There would be a major crux of the problem. Same thing happened to all of our big businesses too, and it has been going on for decades. (Mayor Robert F. Wagner Jr. scared lots and lots of manufacturing out of Manhattan when he instituted his myriad social programs . . . yup, Manhattan a manufacturing center; wouldnt think so by looking at it today, right?)
Its not as if our political/regulator/NIMBY nation didnt outlaw small manufacturing starts or just about all other small developments by us
Agreed, and thanks.
No problemo, Bwacky and Bernacky will just print more dollars till the euro inflates back to 2x.
I’d looove, looove, looove to short the Euro right now. If only I could scrape together a few thousand dollars, I’d be all over it. Granted, my other trading forays haven’t been too successful, but I have a feeling about this one!
That's always been the only solution short of dissolving the monetary union.
in a world with little growth and every government looking at exports as a way to grow
Right. Governments which are in the process of destroying their own domestic economies through inflation always look to exports. They hope that, out there somewhere, there's a sane country that isn't debasing its currency that will buy all our stuff.
It never works, of course.
P.S. If Europe inflates, Germany's vaunted trade surplus will go bye-bye.
They don’t need to ‘print currency’ to inflate the Euro.
Europe doesn't have that sort of asset base!
“Socialist François Hollande”
BEHOLD FELLOW FREEPERS a libtard soon to be reduced to searching for a the celebrated MR. JOHN GALT. I got news for ya Monsieur Doodlebug....the french producer class is about to vote with it’s feet. ‘Adieu Sucs’ heh heh heh.....
AND there’s this. Last night the inestimable Marc Levin had a guest caller on his show from la Belle France who intimated that a certain Monsieur Wronghead Hollande own 3 count ‘em 3 homes ...one of which is encounced on the Rivera....
AHHHH MONSIEUR HOLLANDE QU’EST-CE un fluage MISERABLE VOUS ÊTES
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