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As Euro Slides, Strategists Cut Forecasts
Some Investors See Single Currency Falling to Parity With U.S. Dollar

Rip up your euro forecasts.

A day after the European Central Bank unveiled its bond-buying program, the single currency still was in free fall, blowing past analysts’ expectations for how low the euro can go.

Some investors now say the euro could fall to the point where it is on equal footing with the U.S. dollar for the first time since it climbed above the buck in late 2002.

“If you would have asked me a few months ago, I would’ve said that parity could be in the cards in the years ahead. Now, we can’t rule it out anymore even by the end of this year,” said Thomas Kressin, head of European foreign exchange at Pacific Investment Management Co., or Pimco, which has $1.68 trillion under management.

Late Friday in New York, the euro fell 1.4% against the dollar, to $1.1206, on top of a 2.1% slide the day before. It is now down 7.4% against the dollar since the turn of the year and is at its lowest point in more than 11 years.
http://www.wsj.com/articles/as-euro-slides-strategists-cut-forecasts-1422045084

You know.. I honestly do not think the government does anything on purpose to cause instability and problems in the world, yet, when there are problems -- the economy does better over here.

Part of the reason is "flight to safety" and money comes over here to the US, into dollars, US bonds, in troubled times.

So, looks like the euro is headed for parity with the dollar, and who knows the dollar may climb on it thereafter. Thoughts?

The Euro was never going to be a big player in the global liquidity conduit. That has always been dominated by Sterling and the Greenback and will continue to for the duration of capitalisms life. Having said that, these so called trends are not set in stone and the Euro will bounce back as market makers take out greed.

Or, its a race to the bottom with fiat currencies. Japan is certainly in first place, the Euro is making its mad dash, which should set us up for QE 4 latter this year. World Keynesian economics and a fiat currency, bad stuff

Fishman wrote:Or, its a race to the bottom with fiat currencies. Japan is certainly in first place, the Euro is making its mad dash, which should set us up for QE 4 latter this year. World Keynesian economics and a fiat currency, bad stuff

No such thing as a fiat currency. The ramblings of the non business minded conservative types. And the Euro was never destined to be a big player. Everyone in the game who matters knew that.

Japan runs a deflationary policy being an exporter (of crap from way back when which has stuck). Same road being trodden by the Chinese.

Fishman wrote:Or, its a race to the bottom with fiat currencies. Japan is certainly in first place, the Euro is making its mad dash, which should set us up for QE 4 latter this year. World Keynesian economics and a fiat currency, bad stuff

Spot on. The real question is when everyone is holding American Dollars how easy will it be for them to make the psychological step of blaming the USA for their local money woes? The 'flight to safety' only works in our favor if we look like we are doing everything we can to help, and so far we look more like we are giddy that they are suffering and we are gaining.

Our Canadian dollar is down to around $.80. Years ago there was a move to peg it at $.75. I have seen it at $1.03 and at par. When it falls we do quite well selling goods and commodities south. And US producers start to whine and cry foul. Tourism spikes and that industry is very happy. Cross border shopping, stops...and Canadian merchants are happier. Since most of the crap we buy is from China, and cheap to begin with....that doesn't even hurt too much. Fruits and vegetables go up, but we produce our own chicken, beef, and pork...as well as summer produce. Folks buy Canadian apples instead of Wash state. The border based greenhouse industry heated with cheap nat. gas does very well selling hot house peppers and cukes to US buyers.

I just bought a new Honda motorcycle and was quite pleased at the price.

Next week I head south for a few days to visit my sister who lives below Bellingham on Camano Island. Except for taking her out to dinner on night, we will purchase absolutely nothing. We reciprocate by having her up next month and wining and dining her, here, on the old homestead.

There are advantages to a lower currency if you don't mind tourists clogging the streets.

There is about $10T in gold laying around under someone's bed - $10T depending on whose buying that is.

It's laying there, doing nothing.
Not growing a crop, not building a house, nothing.

It doesn't respond to business cycles, it just sits there while the value of everything else changes. Back when gold was the basic currency, there were long periods of deflation where every asset; productive or personal declined in value. That deflation was the very reason for the rise of the monopoly trusts back in the late 1800; the only way for the industrialists to protect their investments in the face of the gold based currency deflation was to eliminate competition.

The sure way to deflation, as exemplified by the EU, is to not wield inflation in the face of low growth.

Obviously you can go overboard or direct inflation in the wrong direction as the US has, propping the financial economy and ignoring the real economy. But a fixed currency allows no latitude for any action. There has been trillions of stimulus dollars spent to keep markets stable and actually stimulate activity to some extent. Without that latitude under a fixed currency, the same trillions and an untold more would have been taken out of each and every person's personal net worth.

Amdream, just because liberals make ridiculous statement doesn't make it so, fixed delusions on your part are still fixed delusions. "DEFINITION of 'Fiat Money' Currency that a government has declared to be legal tender, but is not backed by a physical commodity" per a dictionary, sorry if the concept is difficult for you.
Pops, I can almost, almost agree with you. A fixed currency does have significant limitations, but its the basic lack of understanding of human nature that tossing Keynesian economics with a fiat currency that leads to disaster. Tax relief, putting money back in PEOPLES hands works to stimulate an economy. Printing FIAT money, handing it to banks, only makes bankers rich, and the rest of us poorer as the value of the money is degraded, no stimulus occurs. In that scenario, only holding something of value protects you from the banker

Fishman wrote:Tax relief, putting money back in PEOPLES hands works to stimulate an economy. Printing FIAT money, handing it to banks, only makes bankers rich, and the rest of us poorer as the value of the money is degraded, no stimulus occurs. In that scenario, only holding something of value protects you from the banker

Tax relief? You are still there? The US pays the lowest taxes of an big country yet you complain.
Actually you should complain, know why? because even though you pay less tax, you pay a lot more for the things other governments provide. You pay for insurance OH&P and deductibles and fees and tuition and ...
Look at this if you are interested in that POV
But lets forget that because you won't have any of it..

I do agree on the one hand more should have been done with the debt racked up than puff up wall street (and even worse, puff up investments in China and other countries via dirt cheap interest).
But on the other hand, I'm more and more of the opinion that the belt needs tightening, that household formation needs slowing, that retail footage needs reducing, that the workforce needs trimming ...

Basically that we need to get into fighting trim! LOL

@ fishman

At this point in the game and whilst capitalism still displays all the characteristics of ongoing globalisation (despite all the nonsensical flim flam from Islam, the Russians and the Chinese revisionists), labour (specifically Chinese labour) underwrites the value of all global currencies depending on the degree of integration with that jurisdiction and China. However, when dercoupling commences across the board with governments continuing to print and credit continuing to issue, then liquidity will move to a fiat or ephemeral status.

I am Marxist who understands and makes capitalism work for me personally. I still remain ideologically objective. It is of littler value being a conservative if you are unable to tap into capitalism for failing to understand it. You might as well be the kid who stands at the window of the candy store looking in. Labels mean nothing at this point if you are suffering out of ignorance.

americandream wrote:I am Marxist who understands and makes capitalism work for me personally.

That's a distinction without a difference.

Wow, this is fun. A marxist(most clearly documented failed system of all) making capitalism work for them, who initiates "labeling", complaining about labeling.
Tax relief, pops, only as a tool for stimulus, not necessary all the time.
And not a critique of all fiat currency, just the high probability of fiat destruction under Keynesian economics. Any argument that the yen and the euro are not loosing significant value at present? More than just a little "floating"?

@ fishman

I find it amusing that folks I can run rings around in the capitalist market and who think that they are somehow more capitalistically capable than me choose to lecture me on how that market works. Standing there waffling all the while.

In life all that matters is results. For the moment, we have to live by the laws of the jungle to live with any sense of decency and thats what I do. We can do better however.

But dont presume to tell how that which I efficiently earn by daily bread from works. Not unless you have a clue.

americandream wrote:In life all that matters is results. For the moment, we have to live by the laws of the jungle to live with any sense of decency and thats what I do. We can do better however.

Cheer up, AD.

Due to ever increasing automation and ever increasing extreme levels of efficiency, not to mention AI, then in the long term the arc shall be for more socialism and eventually some kind of new communism.

Not saying I like it, it's just how it's gonna be once the last of the jobs are gone.

Fishman wrote:Tax relief, pops, only as a tool for stimulus, not necessary all the time.
And not a critique of all fiat currency, just the high probability of fiat destruction under Keynesian economics. Any argument that the yen and the euro are not loosing significant value at present? More than just a little "floating"?

Thanks, sorry for jumping to conclusions about the taxes.

Keynesian economics says governments can ease recessions by increasing spending, the EU didn't, they chose "austerity." But Japan just keeps going into debt further and further to feed the zombies ...

As time goes by and the great unwinding seems closer, the stimulus idea seems less and less effective. In fact, a hard money policy has the advantage of being austere and not coddling those that take advantage or take on too much risk and force those accounts to clear PDQ. Of course that very thing is why the great depression was so great and where Keynes came in. Up to that point government had simply said too bad, so sad to deflation, it was fairly common.

When things are growing, the accommodation route is probably good,because great efficiency improvemets and technological advance can not help but produce deflation as everything gets cheaper by the year. But when - if - things start to seriously unwind probably a return to the older policy of letting the chips fall where they may will probably be wiser.

@ Pops

Reinstatement of the tightening functions will signal the commencement of decoupling. Social conservatives havent quite cottoned onto the fact that economic liberals (economic conservatives in essence and that includes the so called social democrats) will use bourgeoisie socialism when convenient.

AD,
Enter Hillary. LOL