Live or Let Die
Why it is time for the Euro to decide if it is for real or a failed political experiment.
It is rare that a chart of such symmetry and beauty comes together over such a long time. Particularly, as we have also gone through quite a lot during the last 20 years. There was the internet crash, the great financial crisis, and of course whatever it is that history will make of the current global happenings. We have also had major geo-political, cultural and social changes in the last two decades. China has become an economic superpower, there was the war on terror, Brexit, and lest we forget the explosive rise in the use of social media or the progression of a new digital age more generally.
Before all of this would come to pass, on January 1, 1999, a little baby was born and it was called the Euro. For some reason, this wonderfully efficient marvel of economic integration never has received much love. Many were doubters, saying that it would never be possible to put so many sovereign nations with more than 300 million people under one medium of exchange, and all at the same time. The people were also slow to adapt and my mom used to call the new money the “Teuro”, which is a play on words in German, meaning expensive. She did have a point, as we soon found ourselves paying in Euros for things which used to cost the same in Deutsche Mark, never mind the official exchange rate of two to one.
I for one love the efficiency of travelling throughout Europe, without having to make endless currency trades along the way. It saves a lot of time, effort, and money from avoiding all those hideously mis-priced rates of exchange. The Euro also made investing much easier, for we do not have to constantly hedge one currency position against the other or move assets back and forth from dozens of different accounts, saving huge amounts in transaction costs.
So here we are, and the Euro has now come to a crossroad with the US Dollar in the form of a golden triangle. Either way, the resistance or support lines that have been a very long time in the making, will now finally be broken. The world needs to decide whether the Euro can offer a viable alternative to the Greenback, or if it is just a flawed monetary experiment of a political union. Hush little baby, don’t be sad. The choice is there, and it needs to be had. If it turns out it was just a fad, at least we will know, and that’s not all bad.