Why the Euro Does Not Stand a Chance
Why the Euro Does Not Stand a Chance For many years the United States has been the economic powerhouse of the world. The American economy has seen faster and larger growth when compared to any other industrialized nation. During national elections, one of the issues the media loves to discuss is how well the economy is doing, which candidate can create jobs, and which one can stimulate the economy better. However, there is very little that politicians can do to create jobs and stimulate the economy. When comparing the American economy to foreign economies there are many indicators to look for and watch. Foreign GDP growth, market stability, unemployment rate, imports and exports, inflation rate, and entrepreneurial growth are all excellent indicators to watch when comparing the American economy with foreign economies. Within the last thirty years however, the market has really enjoyed looking at currency rates and currency value has another indicator of economic strength. For years other nations currencies have been compared with the American Dollar in order to judge the value of that currency. For example, it would take approximately $1.30 to buy one Euro and one Dollar could buy 104.55 Yen. (Figures as of 3/16/05)
More Americans with jobs means more Americans with money and more Americans with money means more spending. This is the relatively new and historic currency in most of Europe. In order to calm the tension on Wall Street and Capital Hill I think it needs to be said, and universally known, that the Euro will always outperform the Dollar and that is to be expected and not a bad thing. But the Euro's value is a subtle blessing for the Dollar. Since America is most assuredly the number one oil consuming country on the planet, OPEC tends to prefer payments in American Dollars. It does, however, have rampant inflation due to the governments over printing of the Yen. This is not to say the American markets have not had their hiccups along the way, the Great Depression being one of them. The fact is this: America is dealing with an outstanding trade deficit of $665. This, however, is not to say that Americans will stop buying Asian goods and products. The issue presented is, what are the effects and future outlook of the Euro on the Dollar and how this will change American exports and imports on goods? Tackling this question is what economists, politicians, and Wall Street investors are actively trying to understand. This gives you an example of how investors judge economic stability. In most countries in Europe gas prices are at three or four Dollars a liter. Future conflicts in the region might cause countries to withdraw from the European Union and revert back to old currency or simply devise a new currency. No one person knows or can accurately predict what the future holds for America or Europe.
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