Yes, it was 10 years ago that the European Union introduced the Euro as a financial currency; paper money and coins followed in 2002.

Many Europeans are still critical of the new currency (some shops even still display prices both on Euro and in the old local currency) but financial experts all agree – the Euro has contributed to increased financial stability for the European Union, more jobs, more competition and decreased inflation.

The current sub-prime crisis is a good example. Without the Euro, a financial crisis of this scale would have greatly devalued weak currencies like the Italian Lire and the Spanish Peseta, while boosting the German Mark. While the Euro has increased in value to the US dollar, the effect has been neutralized by the common European currency.

According to the Sueddeutsche Zeitung, annual job growth in the Euro countries has been 1 million new jobs; five times higher than during pre-Euro times. And the consumer price index has risen just 1.5 per cent since the Euro was introduced, significantly lower than the previous annual rise of 2.6 per cent.

Here’s to the Euro!

Image from usmint.gov 

Post from: EveryJoe

Happy 10th Birthday, Euro!

The dollar’s day may well be over, at least as the sole refuge in hard economic times. As discussed in this article in the Financial Times, the dollar has been the currency of choice when times get tough for over fifty years, due in large part to the size of the US market and the strength of the financial sector. Now that financial sector is weak, and the strong Euro is quickly supplanting the dollar for major international transactions (as well as Giselle Bündchen photo shoots).

Now, the Euro has been increasingly served as an alternate currency in international transactions over the past few years, but the FT posits that the current economic troubles will be enough to earn it a pole position in the no-longer-new century. What do you think?

Post from: EveryJoe

The dollar has had its day

The dollar’s weakness has been a very big story this year, and one which I’ve followed with keen interest. On one hand, as a fairly frequent traveller, the high euro has made those trips much more expensive. On the other hand, as an attorney who charges fees in dollars, my fees have become more reasonable over the past year, which I suppose should help my business (at the same time making my home market less attractive). The change over the last year is very evident when you look at this chart from indexmundi.

I’m not much of a pop culture type, but when hedge fund managers and supermodels like Gisele Bündchen are both avoiding the dollar, you have to wonder if there’s any way to turn things around. I’ve seen a number of predictions of a recovery, if not a robust one, in 2008. That said, I think the Economist’s extremely cautious optimism is about the best we can hope for. That means those of you selling in Euro or pound will continue to suffer in the US market, as will those of us earning and buying in dollars.

image from gisele-bundchen.info

Post from: EveryJoe

Weeping for the dollar