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| Simulation of Current Euro Value |
In December, the Euro was consistently trading along the same 1.28 - 1.38 ratio with US Dollars as it has for the last 10 years. However, today's Euro is trading at a 15 year low -- the Euro has not even been in ballpark range until now.
How did this happen?
Since inception the Euro Dollar has been backed by paper exchanges, rather than physical assets, between EuroZone countries. And, in order to speed things up, a lot of those paper exchanges were in fact exaggerated numbers far from actualities.
With the international housing bubble bursting in 2008, and the aftermath of a hazy job market, the road to recovery is possibly just a metaphor in Europe. In fact, the injection of German and British capital into the Eurozone's poorer countries has only prolonged the inevitable.
The problem is that Euro Dollars have been more expensive than the average European can afford. And most European countries, like Greece and Spain, have realized that this is an unaffordable currency. However, Europe and the Eurozone can survive with a weak Greece. Europe cannot survive with a weak France, and it will absolutely fail with a weak Germany.
This is what is happening now.
France can no longer afford the Euro. They cannot afford it and keep their population satisfied at the same time. Should France fall into a situation like Spain, the ripple effect will take down Germany with her, and along that all the Eurozone countries.
A low Euro is great for American tourists, but let us be realistic. The Euro needs to fall and all debts forgiven. Pensions, insurance, and private investors that have bought securitized Euros will have to forego a major loss in order for industry and the local economies of each nation to recover. Otherwise, they can wait until the Euro Dollars become naturally worthless and see their countrymen continue to suffer.
Smart move, Switzerland
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