21 replies to this topic

[teej]

USD, EUR, or GBP and why? only one...

[Carmine6]

USD.  It's what my bills are due in, and I have far more knowledge of the US economy and political environment than any other country's.  Can't rely on the media to give you a full picture of the real economic situation anywhere, let alone your home country.

[The Dan Sai Kid]

GOLD!!!

[Mighty Mouse]

Grant, on 2006-02-26 21:34:56, said:

GOLD!!!

Seconded.

Gold has universal, real value, always has always will.

[TRIPxCORE]

EUR!  Many countries are taking the Euro a lot more seriously now and some are even building up their foreign reserves in Euro instead of Greenback.  Not to mention other countries pricing their oil in Euros now too.  EUR has good future upside IMO.

[ChiefBEM]

Mighty Mouse, on 2006-02-27 05:11:36, said:

Grant, on 2006-02-26 21:34:56, said:

GOLD!!!

Seconded.

Gold has universal, real value, always has always will.

For the younger and/or uninformed, up until 1953, United States paper money was backed-up by either gold or silver held in US vaults like the one at Fort Knox.

The front of the paper bills say:
(TOP)
"THIS CERTIFIES THAT THERE HAVE BEEN DEPOSITED IN THE TREASURY OF THE
UNITED STATES OF AMERICA"

(BOTTOM)
"TEN DOLLARS IN GOLD COIN"
"PAYABLE TO THE BEARER UPON DEMAND."

 10_22f.jpg   149.83K   22 downloads

Without enough gold to cover all printed money, the titles were changed to : "Federal Reserve Note"

Even today, The United States still has Trillions of dollars worth of gold in Fort Knox!

How many other countries have vaults of anything to back-up their currency?

[Gary A]

Since most of my money is in a US retirement fund, I have no choice except for it to be in dollars. It would cost a huge tax penalty to take it all out so dollars it is. If I did have a choice I think it would still be in dollars.

[markuk]

USD

[GuestHouse]

I'd hold GB Pounds and will, as long as I can, elect to be paid in GB Pounds.

Principaly because, in the event that things go to rat sh1t anywhere else I happen to be I shall return to the UK.

That's where I keep my pensions, the majority of the property I own (in value terms) and all my cash/stock investments.

Money and investments I hold outside of the UK are fractional in comparison and always will be.

Why?

Because my investments and ownership is safe in the UK, being paid in GB Pounds ensure I am always at parrity with the UK ecconomy and hence less likely to find myself stranded elsewhere, including, I might add, Thailand.

[pnustedt]

US$ - most of my investments are in US$, also most of my banking is in HK, which is pegged to US$.

[thohts]

USD. As the reserve currency of the planet earth, if it goes down it will drag other currencies with it (relatively speaking - as a depreciating dollar still has an effect on an appreciating euro, for example).

The euro is still an experimental currency, IMHO, and has next to no historical value as a functioning instrument.

[britmaveric]

USD/Sterling, Euro is rubbish!

[expatgaz]

Some very strange replies to this.
Common sense would have to say GBP followed by Euro and USD a poor third.Look at the yearly trends and anyone choosing the USD right now on this must have a screw loose.

   EPG.

[britmaveric]

Want to Save the Euro? Bring Back 12 Currencies: Matthew Lynn

Feb. 27 (Bloomberg) -- No matter how you look at it, the euro area's economy needs a lift. One solution? Try reissuing the 12 national currencies that were replaced with just one.

That might sound like it would destroy the euro. And yet it may be the only way to salvage something from an experiment that looks more like a failure with every month that passes.

At a seminar in London this month organized by the think tank Open Europe, John Gillingham, professor of history at the University of Missouri-St Louis, said it was time to look at radical options to change the way the euro area's economy is run.

``The currencies of the euroland should be reissued and any attempt to regulate the values of the currencies by an overall single monetary and fiscal straight jacket should be dropped,'' said Gillingham, who wrote the book ``Design for a New Europe.''

``That might be a bridge that could save the euro -- which is in itself a great idea.''

It might seem odd to listen to forecasts on monetary matters from a historian rather than an economist. Then again, the euro is primarily a historical achievement -- which may help explain why it has gone wrong.

The euro was created as a point along the way to closer political union, a project started after World War II to make sure the main European nations never went to war with one another again. It was a solution to a historical problem, and one that worked pretty well.

The trouble is, the economics haven't worked out quite as well as the history.

`Important Tool'

``The advantage of this proposal is that national states would resume responsibility for monetary and exchange-rate policy and thus have one important tool more in their box to steer their economies, but their citizens could still pay in euros during their holidays,'' Dirk Chlench, an economist at Essen, Germany-based Hypothekenbank in Essen AG, said in an e-mailed response to questions.

True enough. After all, this was meant to be the year the euro area recovers after tough times. Indeed, the European Central Bank already raised rates to 2.25 percent in December and is likely to do so again soon. And yet the growth rate, by global standards, remains subdued. The European Commission predicts 1.9 percent expansion this year, compared with 1.3 percent in 2005.

That is a modest pick-up, though much slower than the countries outside the euro area. The U.K. economy will grow more than 2.7 percent this year, according to the Bank of England. Comparisons with the U.S. or with Asia would show the euro area in a worse light.

European Prejudices

That is what makes Gillingham's view interesting. There were plenty of people who didn't want the euro to work and were hoping it would fail. Most Europeans bring their own prejudices to the issue. As an American, and an expert on the European project, he brings a valuable perspective.

Gillingham is right to ask how the euro can now be salvaged.

He points out the common currency's advantages. It is convenient for people traveling in Europe. And it is good for business, allowing a single unit of account, reducing foreign- exchange risks, and creating a deeper capital market.

Can those advantages be preserved, while moving back to flexible exchange rates?

The best way of doing it would be to reissue the national currencies, yet keep the euro as well. Each of them would then fluctuate against the common currency. The new Italian lira would depreciate substantially, while the new Spanish peseta and Irish punt would soar in value (along with their own interest rates).

Parallel Currency

The new euro would circulate in parallel to the national currencies. Businesses could use it. So could individuals if they felt so inclined. By itself, it should be an exceptionally hard currency, since it would be backed by the European Union. Meanwhile, the national currencies could revalue or devalue, according to their own economic needs.

Of course, the debate has been here before. (You don't need to be a professor of history to know there are very few genuinely new ideas in the world.) As far back as 1990, then British Chancellor John Major proposed a new European currency that would circulate alongside the existing national ones.

It wasn't accepted then because everyone was focused on creating a single currency that would replace the others. Now, perhaps it has more chance. Why? Because in 1990 you could still argue a single currency would deliver stronger growth. It is hard to argue that in 2006.

You can pick holes in the plan. Whether you really need to resurrect the Belgian franc from the history books is debatable. Spain and Portugal might want to get by with one currency, for example, as might Belgium, the Netherlands and Luxembourg.

Three Ways Forward

Whether this particular proposal is the right one may not matter much in the end. What is important is that people recognize that the euro hasn't worked as planned, and start talking about how to fix it.

There are only three ways forward. One is to struggle on with a permanently sluggish economy. Another is to wait for a financial crisis, or a bad-tempered exit (probably by Italy). The third is to preserve what is good about the euro, while repairing the parts that don't work.

Looked at that way, the proposal doesn't look so radical after all -- just common sense.

[~G~]

The weakness of the Euro reflects the sum total of the economies involved, plus the inability to efficiently balance between them. The problems are intrinsic to those economies and the cooperation between them - those need to be handled, switching to yet another system will do no good.

And, still, it is not THAT weak, checking the last 5 years rates. It has only weakened against the USD in the last year, and seems to be getting stronger again in the last months.

[Khun Jean]

Look at these graphs for the past five years.
Speaks for itself.
(No guarantees for the future of course)

Dollar/Euro
 dollar_euro.png   3.15K   32 downloads

Dollar/Baht
 dollar_baht.png   3K   23 downloads

Euro/Baht
 euro_baht.png   3.16K   24 downloads

[Carmine6]

~G~, on 2006-02-27 05:40:24, said:

The weakness of the Euro reflects the sum total of the economies involved, plus the inability to efficiently balance between them. The problems are intrinsic to those economies and the cooperation between them - those need to be handled, switching to yet another system will do no good.

And, still, it is not THAT weak, checking the last 5 years rates. It has only weakened against the USD in the last year, and seems to be getting stronger again in the last months.

I agree.  If the countries stopped messing around so much with the Euro and concentrated on their own economies, the Euro would do much better.  The GDP of California by itself ranks in the top 10 in the world.  That's happened in spite of whatever has gone on with the dollar.  If California businesses had worried about the exchange rate with all the other states the last 150 years, it'd still be an agricultural economy.  

Once there is a common currency, businesses can just compete without worrying about a central government saddling them with a strong or weak currency.  So the best train producer, or car producer doesn't wake up one day to find they're now more expensive across Europe due to the currency.  They just try to be better than all European competitors since the currency is the same.  If one country has a stronger economy, then their businesses and people will accumulate more Euros.  They don't need a strong currency to be able to buy more things than in weaker economies.

But, I don't count on the European governments to just open up competition in everything.  Not necessarily overtly, but through all the rules and regulations concerning international trade.

[astral]

GuestHouse, on 2006-02-27 12:40:56, said:

I'd hold GB Pounds and will, as long as I can, elect to be paid in GB Pounds.

Principaly because, in the event that things go to rat sh1t anywhere else I happen to be I shall return to the UK.

I agree with this poster,
and would add Brick and Mortar to the list of good solid investments.

[kayo]

I{d go with the Euro or the Pound Sterling..

My only reason for saying no to the Dollar, is the bloody administration.
Oh and the fact that it is boring, and only all the same colour, same size, and only pictures of presidents.... Just like Iraqs old currency had only pictures of saddam...

[xty]

teej, on 2006-02-26 15:00:47, said:

USD, EUR, or GBP and why? only one...

... the one I'm paid by currently. And the stronger than my home country's currency so after some years when I get back home I can be very rich. LOL.

BTW, Euro is sux now against Baht. Few months ago it's about 51s but now only 46s. I lost about 20K Baht monthly already.

Anyway seeing that USD is falling, two days ago I converted most of my Baht savings to USD (at 39.17), hoping that it will bounce back higher one or two points. Am I taking a good decision?

Edited by xty, 2006-03-04 02:08:58.

[tc101]

The great thing is that you DO NOT have to hold only one currency or one investment.  No one knows the future of any investment, which is why it is smart to diversify.  Buy and international stock index fund at Vanguard and be diversified into big companies all over the world at a very low price.  That way you are exposed to all the currencies that all these companies trade in.  In case the world stock market crashes, have some international bond funds.  Don't hold too much of your wealth in currency for too long, because in the long run you always do better with stocks and bonds.  

Invest in mutual funds that invest in gold mining stocks and you will do better than just holding gold.

[alexth]

And suddenly, you're all speaking about flags...