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Comments
mike (Wednesday, 10.29.08 @ 18:05pm)
Just short, I like Euro, but economic reality without market speculation is:
Value for one currency is what you can buy with it in the home country.
Sadly but in my Europe I can buy more, more less with same amount in dollars in US. :(
Pendleton (Monday, 11.3.08 @ 14:36pm)
Almost certainly the Euro-- in terms of economic size, soft power, production, what's shaping as a German-led European Union is already eclipsing the USA and the dollar. Although Europe's getting hit by the credit catastrophe, most of Europe (outside of Iceland, the UK, Ireland and Spain to a lesser extent) is holding up OK. All the hard-hit European countries had massive bubbles (real estate bubbles in the UK, Ireland and Spain in particular), but most of Continental Europe focuses on manufacturing high-value high-quality goods.
This is one of the things that's shielded Germany in particular from low-cost foreign competition-- nobody else in the world can make quality products at the level of firms like Daimler-Benz, Siemens, Zeiss, Bayer and Hoechst, so this effectively protects Germany from global downturns to an extent. And since other European countries are more or less following the German model in this regard, this helps to ensure that the EU in general maintains a high-quality economy. The European Union also continues to expand into Eastern European countries (though I strongly doubt Turkey could ever join, for demographic and economic reasons), and Europe attracts a lot of the best and brightest talent from Asia, South America and increasingly North America. (Many of my old friends have been snapping up language books in French, Dutch, Italian, Danish or especially German-- which is sort of a sci/tech and business lingua franca for Europe and leaving the United States to work and raise kids in the EU, where education costs are subsidized.)
Also, the EU isn't burdened by the ridiculously expensive military expenditures of the USA, especially the War in Iraq and our nuke arsenal (we have what, 8,700 nukes or so?), which costs us literally trillions of dollars-- you only really need about 50 nukes to deter an invasion, heck North Korea did it with about a half dozen!
We're already about $12 trillion in debt when all the bailouts are tallied up, and the Baby Boomers are just starting to retire-- there's no way we could pay this debt other than defaulting or allowing Zimbabwe-style hyperinflation to set in, which the rest of the world is wise to. So the dollar's on its way out, and the Euro will be coming in.
Still, as far as which currencies to 1. invest in and 2. store value in, that's a toss-up. I'd say the Swiss franc may be the safest currency in the world. The yen is always popular due to the carry trade. The Chinese yuan may be the best investment currency, as Jim Rogers has argued-- it's just that going into renminbi would require knowing something about the innermost decisions of the Chinese officials, which I just don't see happening. Even the won and ringgit, or the Norwegian krona, might be decent storehouses. It's all about diversification.
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