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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: ild who wrote (141005)1/23/2002 10:07:18 PM
From: pater tenebrarum  Read Replies (2) of 436258
 
what troubles? as far as i can tell, the transition to the Euro has been nearly flawless...what problems there were can be considered very minor imo. if the US papers paint a different picture, it may be a sign that there's a bit subconscious angst that a new contender for reserve currency status has entered the scene.
i've no near term opinion actually, due to Argentina mainly. it appears complex derivatives positions have been blowing up, necessitating dollar buying by Spanish banks - that's one very plausible explanation for the recent dollar strength as it were. the precise nature of the positions involved i'm not privy to, but i consider the information reliable.
anyway, i'm pretty sanguine regarding the Euro's longer term prospects. the potential of the EU to evolve beyond its image of a sclerotic bureaucracy is generally underestimated imo, as is the ECB's resolve to maintain the currency's value. note that the ECB mandate is the strictest CB mandate out there (no mumbo jumbo about the central bank ensuring 'full employment') as it is modelled on the ultra-conservative BuBa. with time the markets will come to appreciate this fact. also, the world's CBs are hopelessly overweight US dollars at this point, a side effect of the monstrous current account deficit. they now have opportunity and motive to change their reserve mix, a process that has already begun. the Euro will also become the de facto currency of the entire former Eastern Bloc, which is to Western Europe what South America is to the US, only more so.
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