The blessings of the €

[Maximus Zeebra]

Wow.. Two news today hit me, the dollar is on the way down again, and close to having to pay 1.50 dollars for 1 Euro, and the oil is hitting a record low 40 dollars. That actually means the oil cost around 25€. The Euro is strengthening against a basket of currencies, clearly showing that the European market is the favorite in time of crisis. The exception is the Swiss franc which have fared decently against the Euro and the Japanese yen which have actully fared stronger than the Euro the last 12 months.
All the while this is happening, and because it is happening we are having deflation in Europe, prices are now falling, I can clearly see this in stores, its only a matter of time before its official. All this means:

-consumer prices are falling
-but wages are rising at a record level(4%)
-it cost us less to import goods from everywhere except Japan
-we receive most investments from abroad(the reason the Euro is strong)
-exports arent decreasing despite rising wages and more expensive Euro for everyone except Japan.!!!

This is amazing. I just love the Euro and so does the rest of the world it seems.

 

[Infinite Chaos]

--All this means:

-it cost us less to import goods from everywhere - -

My basic 'O' level economics tells me that if the £ loses value against the Euro and the $ loses value against the Euro that goods made in Europe will be more expensive when sold abroad... and goods from Britain, China and America will be cheaper for Europeans to buy.

Similarly, it will be more attractive for Europeans to take holiday in the US or UK and more costly for them to visit Europe on holiday. I wasn't planning a Spanish (European) holiday this year but it would now cost me twice what it cost two years ago.

 

[Maximus Zeebra]

My basic 'O' level economics tells me that if the £ loses value against the Euro and the $ loses value against the Euro that goods made in Europe will be more expensive when sold abroad... and goods from Britain, China and America will be cheaper for Europeans to buy.

Similarly, it will be more attractive for Europeans to take holiday in the US or UK and more costly for them to visit Europe on holiday. I wasn't planning a Spanish (European) holiday this year but it would now cost me twice what it cost two years ago.

Exactly, but the astonishing fact here is that European exports haven't been hit yet. They still roar on. Europeans however are rich everywhere they go, and partly as a result of cheaper goods from everywhere we are seeing healthy deflation at home.
A thing I do not understand is how European goods can also be deflating like they are and how wages can rise at the same time..

Its just astonishing to me.. All these facts you can check at "eurostat" if you please.
The strength of the Euro is because the people of the world prefer to put their investments into the Eurozone and they trust the Euro, another good thing.

The amazing thing is that all these things are positive, normally one of these things offset another like a magnet, but what we are seeing now is the first time in history I believe, where offsets aren't happening.

 

[Infinite Chaos]

Exactly, but the astonishing fact here is that European exports haven't been hit yet.

The credit crunch is only really 3-4 months old

-- The strength of the Euro is because the people of the world prefer to put their investments into the Eurozone and they trust the Euro, another good thing.

Yup, it is a safe harbour at present. It would be churlish and childish to suggest anything else - even with my limited memory for economics - the other thing people are putting their money in is Gold.

 

[Maximus Zeebra]

The credit crunch is only really 3-4 months old

Nope, but the Euro has been strengthening for years against a basket of currencies most notably the dollar(our largest export market), and despite this exports have grown..

Yup, it is a safe harbour at present. It would be churlish and childish to suggest anything else - even with my limited memory for economics - the other thing people are putting their money in is Gold.

Yeah, it is actually. I found it strange also that unemployment in Europe hasnt gone up much despite the fact that it went from 8% to 14% in Spain with the financial crisis.

I bought some gold for my family because they don't know how to invest.. Currently I am trying to get hold of some Chinese ramnibi as well, you never know when the value of those might double or triple(when they put it on the free market), aside from that they can only go one way, unless the currency is replaced some time in the future(danger).