By Jack Nugent
Since the New Year began, the American dollar has increased in value dramatically, up 5.7%. Sadly, this might not be the case for much longer. This is the 5th week in a row that the dollar has depreciated in value, compared to the euro. Once almost equivalent in value, the exchange is now .87 euros for 1 dollar, and declining.
In the months of February and March, hopeful US economists were predicting the domination of the dollar for the good part of 2015. Unfortunately- the truth is- such a trend is not only unlikely, but also without any real basis. Historically, the euro has picked itself up against the dollar, and the US government’s failure to take quick initiative and stabilize this growth is seldom seen when looking at past economic policy.
While it remains true that the second-quarter rebound that the dollar and the US market usually enjoys was in no way as great as expected, the euro has a strength that the dollar will always lack: it is a truly fluid currency.
Since its conception, the Eurozone has been based off of the following principles; an economy controlled by the people, completely reliant on the actions of both other nations, and an intergovernmental organization. Europe’s roots in these ideals lead all the way back into the 60’s with the ECM (European Common Market). These founding principles are what cause the euro to fall, but ultimately lead to its success.
Now, the situation in Greece is sticky. It is a country riddled with pre-existing economic issues, now handled by a prime minister who practically embraces debt with open arms. Recently, Tsipras admitted that he would probably not be able to pay back IMF loans, which could lead to the euro’s demise. And the situation is not exclusive to Greece: in fact, Greece epitomizes the region-wide trend toward Euro-skepticism. But- like the rise of the dollar- this is a short-term trend.
Because of the fluidity of the Euro, there will be a comeback of Euro-fanatics, and a rise in the value. We may well be seeing this now. The Euro will be back, and stronger than ever.
The Euro is the representation of the modern day boom and bust. But if this is the worst the bust gets (with the exception of ’08), Europe could be experiencing some serious boom.
Now what does this mean to us in the states, especially those of you reading in DC? This means that there will undoubtedly be a conflict of interest between Euro and dollar. And with the rise of China, now might not be the best time for that. So, the US and the EU need to set aside the differences create a far more symbiotic relationship, and we, the people, will reap the benefits.
