Sunday, April 06, 2008

Economic oddities

When Dave and I met over the weekend, as usual, our conversation went all over the place as two elderly sufferers of ADHD is wont to do. One of the things we were talking about was the price of oil at over $100 per barrel is not having that great of an effect in Europe because the Euro is over 50% stronger than the greenback. In essence, while we are paying the higher price, because of our devalued currency, the Europeans are paying the equivalent of $66 per barrel. Obviously, this is a tremendous benefit to them. But how long can it last?
Forbes magazine has this article which is predicting the end of the Euro within three years. The interesting thing about the article is its prescription to horde dollars because the Euro will suffer one heck of a sell off if and when Spain, Italy and France bail on it. The effect on the hording will rally the dollar, making our imports cheaper and our exports more costly.
I have a bucket with old currencies that I thought were worthless since the creation of the Euro. Maybe I should dig around and find them again. While they were often quite colorful and interesting, they could be worth something once again.

3 comments:

Max Bucks said...

Euro-currency countries may be getting a break on the price of crude oil as compared to dollar-based countries, but I seriously doubt if they are paying less for gasoline than we are. If anything, they are probably paying more for gasoline, because you forgot to figure in the green-socialist overhead per gallon.

The Viceroy's Fuguestate said...

"the green-socialist overhead per gallon."

We have that here as well don't we?
Rescinding them for awhile might not be a bad idea...

Mark T said...

I seriously doubt the Euro is going away anytime soon, Forbes' wishing be damned. In the meantime we ought to be looking at our own currency as our leaders do, with measured panic. The only thing propping us up is that the dollar is the reserve currency for oil. If that changes, given our budget and trade deficits, we're screwed.

The answer so far - rather than building domestic manufacturing and reining in budget deficits, we have seen fit to invade the one country that had switched to the Euro in trading oil. Iran is now running a bourse, and trading oil in Euros and rials and yen. It's next.