Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0

Little historic perspective: an interesting read of a speech by Bernanke on the failure of gold standard and the global nature of investing.

 

http://www.f.../default.htm

 

Once again relevant while watching the stock markets this week world wide stumble on the fears of US dollar sliding to ever weaker position. The softening US economy is putting pressure on lowering the US interest rates while in EU the inflation is still something the European central bank is attempting to put under control.

 

So why is this relevant? EU and US are the biggest trading partners to each other. At the same time the spread between USD and EUR continues to grow. European companies exporting to US are going to get hit by a weaker dollar. Meanwhile, ECB controlling the European inflation combined with the strong economic forecast especially in the UK and Nordics and Western Europe makes it more than likely that European central bank will raise their interest rates in 2007.

 

The spread between US Fed interest and ECB rate is going to narrow and the gap is closing towards 4% level on both sides of the Atlantic pond. This will draw especially European owned USD investments back to Euro zone and will have further negative pressure on USD.

 

Now the question is do you think the hit on EU exports towards US will offset the currency slide from US to EU?

 

PS. Thanks for fixing the paragraph issue so quickly.

 

Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.