The Future Reserve Currency Is the Euro: Strategist

[Faith]

The Future Reserve Currency Is the Euro: Strategist
Stock Market News, Business News, Financial, Earnings, World Market News and Information - CNBC.com


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The euro will become the world's favorite reserve currency because Europe has a better growth strategy than the US, David Roche, global strategist at Independent Strategy told CNBC.

"We'll actually produce a much stronger fiscal balance, a much better debt-to-GDP ratio within the eurozone", Roche said.

The German economy has recorded its fastest post-war contraction, at 5 percent in 2009, with exports falling by 14.7 percent, alongside investment. But this, paradoxically, brings opportunities for private investors, according to Roche.

"It also means the government will have to shrink spending because you can't increase taxes to balance the budget in Europe, otherwise there won't be an economy," Roche said.

"They're so heavily taxed anyway. So you have to shrink spending, which opens up a whole area of the economy for entrepreneurs to enter the act."

But concerns about highly indebted countries such as Portugal, Ireland and Greece put a drag on the eurozone and investors wonder if Europe will recover as fast as the rest of the world.

A German Story

"The Germans have become more assertive about the price which has to be paid and which they have paid heavily for establishing the euro and the eurozone and they are not prepared to put up with this sort of shenanigans and straight outright mendacity which they have had to endure from the likes of Greece," Roche warned.

"So what they are doing is that they are hanging Greece out to dry. It is actually to show that within the eurozone, errant nations will be told how to behave," says David Roche.

At 12.7 percent of GDP, Greece's deficit is far above the eurozone ceiling of 3 percent. Greece is also burdened with debt amounting to 113 percent of GDP - more than double the eurozone limit of 60 percent.

The European Commission has already voiced its unwillingness to bail out the country, leaving the International Monetary Fund as the last resort for a potential lifeline. However, the country's Prime Minister said Wednesday that Greece will not quit the euro zone, nor will it resort to the IMF.

Next week, the new Greek budget is to be presented to the Greek Parliament, a statement which will be closely watched by the markets.

"The Germans are saying to everyone else: where is your exit strategy? You're going to have to have one, because we're going back to fiscal orthodoxy," said Roche.

"I believe that's the right strategy to get growth going. I don't think spending money you don't have is the right strategy. So the American strategy is totally wrong. And I think the Europeans will be right. I think it (the recovery) will be governed by Germany in a very nice democratic way," he added.

[Chris]

I think the Euro will be the preferred currency as well. Europe is going to play an important part in the end times. The AC will likely rise from there and there's already countries like Iran that have switched from the dollar to the euro. I would imagine the rest of the Islamic countries will follow suit as well eventually. With all the destruction being done to the economy by the obama administration, it's just a matter of time.

[mattfivefour]

I just read a major media article about another key strategist who argues that the Euro will NOT be the next chief reserve currency. Go figure.

I guess Will Rogers was right when he said "An economist's guess is liable to be as good as anybody else's." Or to quote a famous economist, John Kenneth Galbraith: "Economics is extremely useful as a form of employment for economists.

[Chris]

I just read a major media article about another key strategist who argues that the Euro will NOT be the next chief reserve currency. Go figure.

I guess Will Rogers was right when he said "An economist's guess is liable to be as good as anybody else's." Or to quote a famous economist, John Kenneth Galbraith: "Economics is extremely useful as a form of employment for economists.

Well, I guess the only one who knows anything in these messed up times is the Lord. None of this will surprise him. We might be confused and bewildered over what is happening on earth but none of this is a surprise for him.

[mattfivefour]

[Robert]

The Euro?

Sounds almost like a car...

Now at your dealer's showroom: the all-new 2011 Euro! With bench seats, one-speed on the floor stick shift, lawnmower engine in the passenger seat, and 20 feet to the litre of petrol!!


All for only 150,000 lbs!! Get yours today, and we'll throw in a free order of curry-flavoured fish and chips!

[bghtnpd4]

I think the Euro is the most likely choice of the world also. Although, cashless transactions seems to be gaining some steam too....

[mikalikat]

We could be cashless and still have the Euro. It would be the money-basis for trading, am I correct? Anyone?

[Robert]

REPORTED.

[Chris]

The Euro?

Sounds almost like a car...

Now at your dealer's showroom: the all-new 2011 Euro! With bench seats, one-speed on the floor stick shift, lawnmower engine in the passenger seat, and 20 feet to the litre of petrol!!


All for only 150,000 lbs!! Get yours today, and we'll throw in a free order of curry-flavoured fish and chips!

That sounds like the "Yugo"!!!