Today’s topic is: 1.0291

Posted on Jun 09 1999

To which I say: Aha! Told you so!

Financial cognoscenti will recognize this $1.0291. It’s the amount of U.S. dollars it takes to buy a Euro. When the Euro was unveiled at the beginning of this year, it traded at a level of around $1.19. Meaning, in the span of a few months, it’s lost about 14 percent of its value against the greenback.

My readers will recall that I’ve pooh poohed the Euro non-stop, and predicted a fall from its glamourous grace when it pranced around like a snotty debutante on the world’s financial stage.

It’s refreshing comic relief for us here in the Commonwealth as we struggle with our problems. Can you imagine all these countries in Europe not being satisfied with having national governments, and creating a super-national government to satisfy their need for authority? If you haven’t followed it, not only is there a European currency now, there’s a European parliament as well. This is going to be high comedy for the foreseeable future.

So the Euro, and the Euro-crats who invented it, and the Euro-weenies who wanted it, has brought more slapstick laughs to my office than a Three Stooges all day marathon.

The Euro isn’t rooted in any sound economic thinking. It’s a multinational Frankenstein that is eventually going to wreak havoc in Euro-land.

So what’s next? I suspect the Euro will soon fall below the value of the U.S. dollar. Thus far, the Euro’s slide hasn’t been headline stuff. But when it falls past that nice, even, $1.00 level, it will make a few headlines.

In the final analysis, there will be only one way for the Euro to maintain any real value. The Eruo-crats will need to create a Euro-Tax. Euro-Taxes would have to be paid in Euros. Not marks. Not francs. Only Euros. This would create a demand for Euros, since the subjects of Euro-land would have to cough up Euros to pay the tax man, or would have to go to jail.

Until that point arrives–and it will arrive–the Euro is probably going to face an identity crisis. A region with over 400 types of cheese is going to agree on a single currency? Get real. They haven’t even reached a consensus on whether or not bathing is a desirable habit. Until they decide the soap (a substance mixed with water to produce suds for washing) thing, I think the currency thing is a bit much for them to handle.

The Europeans have plenty of time to watch this matter. It’s not like they have to go to work or anything. Indeed, unemployment in the “Euro-Zone” runs at 10.4 percent. And, keep in mind, this is during relatively good economic times in much of Europe. As for the rest of us, we should keep an eye on this matter as well. It’s one of the few ways to study economics via live comedy.

Stephens is an economist with Stephens Corporation, a professional organization in the NMI. His column appears three time a week: Wednesday, Thursday and Friday. Mr. Stephens can be contacted via the following e-mail

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