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The Euro - just can't replace the dollar as a reserve currency !

GoFlyKiteNow

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EURO - FAIR WEATHER CURRENCY ?
20 Jan 2010, 1706 hrs, REUTERS

The dollar rose half a percent against a basket of major currencies while the euro fell as low as $1.4168 .

Benchmark 10-year bond yield spreads between safer Germany and Greece widened to 279 basis points from 265 basis points.

Greece's ballooning debt level, estimated at more than 120 percent of gross domestic product, has prompted speculation that the country may be unable to service its obligations.

The European Union and rating agencies piled pressure on Greece on Tuesday to quickly implement budget reduction plans resisted by trade unions.

Standard & Poor's and Moody's said it was key for Greece to start immediately cutting its budget deficit, which hit 12.7 percent of gross domestic product in 2009.

"The fiscal difficulties of Greece and other euro zone countries have confirmed the view that the euro was a fair weather currency, which only works well while the economy is doing well and is not interrupted by anything more than the mini recession in 2001," Commerzbank said in a note to clients.

"The recession made the design flaws of the euro very obvious to see."
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i think the US dollar is a sabo currency....

if the dollar goes down, which it does almost everytime....

Oil prices goes up, now petrol will costs more....

if oil prices goes up, food prices will go up....
 
just kick out the fruitbasket like greeze, italy, spain and poland
 
Euro largely the creation of German and French. Even UK is not in the Euro.

The EU is a cobbled bunch of nations with different languages, economy (german vs bulgaria!) and their common thread is religion - Christianity (reason why Turkey has so much trouble getting in).

So there is no economic consensus. How can one interest rate apply to all these nations? SO difficult for EU to become reserve currency.

As I have said, you need a strong central bank, large enough economy (GDP), huge enough reserves such that you are buying so much and selling so much that your trading partners so not mind holding some of your currency. Cannot find all that in Euro.

Actually no idea why there is so much hype about dollar as reserve currency. Good talking topic to drive up hits though
 
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