Brother Can You Spare A Euro

Brother, Can You Spare A Euro?

Summary: Since its creation in , the euro ----a Frankenstein creation that replaced the former currencies of European countries like France, Germany and Italy--- has beaten the socks off the American greenback. Back then, the euro limped out of the gate at a parity with the greenback. It quickly dropped to around cents for every dollar.

That was then. As of November , , Veterans Day here in the U.S., the euro is worth . American dollars. A single euro now buys...

Article Body: Since its creation in , the euro ----a Frankenstein creation that replaced the former currencies of European countries like France, Germany and Italy--- has beaten the socks off the American greenback. Back then, the euro limped out of the gate at a parity with the greenback. It quickly dropped to around cents for every dollar.

That was then. As of November , , Veterans Day here in the U.S., the euro is worth . American dollars. A single euro now buys % more than its American peer.

Weve scratched our heads in this column about the decline of the dollar. Whats happening now is unprecedented.

The dollar has fallen to a -year low against the British pound. It has fallen to a -year low against the Canadian dollar.

What has happened to put the dollar in a free fall / Throughout the last century, every American President and every American Treasury Secretary has repeated the mantra that a strong dollar is American policy. As recently as October , two weeks before the G- Summit, both the current President and the current Treasury Secretary recited the mantra by heart.

I feel very strongly that a strong dollar is in our nations interest, stated Treasury Secretary Henry Paulson, formerly Chairman of Goldman Sachs.

Whats missing is the and therefore. In the past, severe drops in dollar values have brought strong corrective actions, a buy back of the dollar in effect to prop up the value. No such cavalry charge is coming in the current climate. In fact, some have suggested that the current U.S. policy is a smug contentment that the decline of the dollar has boosted US exports by about %, since our exports are now cheaper for foreigners.

Which leaves all of us to wonder aloudwhat happens if the dollars free fall continues? Is there any safety net down there?

Dont bet on it. Secretary Paulson ha started adding a caveat to that ol strong-dollar mantra. and we believe that currency values should be set in a competitive marketplace based on underlying economic fundamentals.

Those underlying fundamentals are weak now in the U.S. A mortgage market meltdown, coupled with an economy strained by the $ billion cost of war have all but tapped out the U.S. economy for the time being. We are now in hock. We are the largest debtor nation on earth.

And what happens when we take out some of our retirement in the form of those weakened dollars? A hidden costs of letting the dollar sink is that the buying power of those retirement savings ---once they are converted to dollars is getting pretty pitiful. Worsening the situation is that, unlike many citizens of foreign countries, Americans who desire to keep their cash in euros find very few US banks offering that flexibility. Some German banks (Deutsche Bank) and on-line banks (everbank) have begun offering accounts to Americans denominated in other currencies.

Brother, can you spare a euro?

See The Incredible Shrinking Dollar, www.collectivewizdom.com