EUROZONE SPLIT CREATES CUT-THROAT COMPETITION
'Poor euro' drifts towards US$ 1.00
It’s been just three years since the Eurozone was split into two – but today it is difficult to remember the days when one euro seemed to be enough for everyone. The only question being asked is “Why did it take so long – we should have done this in 2010!”
During the currency crisis of 2011/12, the euro began to fluctuate wildly as it became clear that the ‘poor nations’, including Portugal, Italy, Spain and Greece, would realistically never be able to repay their crippling public sector debts to the ‘rich’ of Europe.
The euro was split into ‘the euro’ and ‘the alternate euro’, names which gave much fodder to cartoonists who immediately dubbed them ‘the rich’ and ‘the poor’ euros.
The resulting write-offs caused a massive dip in the value of both euros which only seems to have stabilized during the past year.
Last night, the ‘rich euro’ reached a value of US$ 2.00 for the first time in almost a decade. The ‘poor euro’ dipped close to US$ 1.00 – just 1.09 at last night’s closing in London.
Internal competition has created a boom for the low-currency and low-wage countries and driven unemployment in France, Germany and the UK to all-time highs. Spain, Greece and Italy have become the “new China” as the exchange rate allows them to sell products to ‘rich Europe’ at cut-throat prices.
The new right-wing Italian government has expressed concern that local manufacturers are developing a love-affair with low-cost (read ‘low-quality’) products that was “not in the national interest.”
The Dollar’s plight has put the US economy between a rock and a hard place – too cheap for one part of Europe and too expensive for the rest.
Warning: Hazardous thinking at work
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