Monday, July 16, 2007

Eventually the euro will fall back to a more competitive exchange rate, but in the meantime a huge shakeout of the European economy will occur. In short, the strength of the euro will guarantee a serious downturn in the European economy, even if one is no

The euro's rise and rise is unsustainable

Most commentators seemed to have no doubt about the explanation for last week’s most important economic event – the 26-year highs hit by the pound and the euro against the dollar, which now threaten to open the floodgates on a tide of currency speculation, transforming economic conditions for British and European export industries in the months ahead. The Financial Times explained this momentous event very clearly in Saturday’s leader, saying: “The dollar slide came amid another week of negative market movements, principally driven by more bad news from the US sub-prime housing market. The gap between growth in and outside the US explains some of the fall in the dollar. The large US trade deficit also puts inevitable downward pressure on the currency.”

Posted by chris :-)) @ 08:37 AM (380 views)
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One thought on “Eventually the euro will fall back to a more competitive exchange rate, but in the meantime a huge shakeout of the European economy will occur. In short, the strength of the euro will guarantee a serious downturn in the European economy, even if one is no

  • Stoatgobbler says:

    Wow Anatole, really putting it on the line there for us.

    An object lesson in why economists are the world’s biggest shysters. ‘I think that if it goes up a bit, then it’ll go up a bit more, but in the end it’ll fall.’ I find this stuff totally infuriating, and having heard Kaletsky at numerous conferences now fully understand the art of economic punditry. The trick is to leave escape hatches throughout your piece so you can always say you were right, and never, ever, ever commit capital to your ‘view’. Awful.

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