The Euro at Par with the Dollar
May 31st, 2008 | By John Mauldin | Category: US Dollar & Forex TradingAbout five years ago, I said that the euro, which was trading at about $.88 at the time would rise to $1.50 and then fall back to $1 over the course of a decade or more. It would be one huge round trip.
By the way, giving credit where credit is due, that opinion was crystallized over a long dinner with bond expert Lord Alex Bridport and several companions in Geneva. The logic was compelling then and it still is now. We are halfway through that decade long trip and it remains to be seen if we get back to parity. I think we will.
Why would the euro fall? Because the currency is still an experiment in cooperation. At some point, one or more of the weaker European countries is going to need more monetary stimulation than the majority of the countries in the union, for a variety of reasons. Will they pull out to be able to issue their own fiat currency? Will the EU as a whole slow down as the US recovers?
About 4 times a year, I give myself permission to not write a letter, taking a little mental vacation. This week, Louis Gave is graciously allowing me to use a chapter from his latest book, “A Roadmap for Troubled Times” which highlights some of the problems the euro is going to face, as well as analysis on a host of topics.
Gentle reader, this is an important topic and Louis says it better than I can. I highly recommend you get the book and read it. It is only about 200 pages and is a very easy read. The chapters on China are worth the price of admission, as well as his suggested investment themes. You can order the book at Amazon.com.
Source: The Euro at Par with the Dollar
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As a recognized expert and leader on investment issues, Millennium Wave Investments president John Mauldin is primarily involved in private money management, financial services, and investments. John is a prolific author, writer and editor of the free popular Thoughts from the Frontline e-letter which goes to well over 1,000,000 readers weekly, and is posted on numerous independent websites. John is a Fort Worth, Texas businessman, and the father of seven children, ranging from ages 11 through 28, five of whom are adopted.