One could say that the summit Big Top Twenty took the position of European countries, centered rigorous plan to reduce budget deficits. All true, but there is one "but". In the final communique of the number one priority is designated to maintain economic growth. This means that at any time Obama or Geithner can "concerned" that the fiscal tightening will undermine growth, and revitalize the incentive programs in consumer activity, or maintaining the property sector. Of course, on the side of Europe is very clear: to reduce deficits by half in three years, but if the "number one priority" - growth, then it means nothing. Keep up with the two hares does not, therefore, most likely, the EU and the U.S. will soon be chasing each for his own.
In this case, we see the following scenario. The United States will have a formal higher rate of economic growth, largely stimulated net borrowing of the Treasury. Europe might remain in the definition of news feeds less flexible from an economic point of view and with less consumer activity, not allowing companies to rely on the surge in local markets.
On the one hand, such a policy is more typical of continental Europe. On the other hand, it is simply no other choice. Neither Greece nor Portugal or Spain and even Italy is not forgiven the high budget deficit. As we have already written a few months ago: Euro 2000's was considered a counter-currency to the dollar. He seemed to have been the other pole: EU budget discipline, against the strategy of GDP growth in the U.S., production against consumption, the rate of growth in emerging markets against the traditional hegemony of the dollar and reliability. For these reasons, diversification of the euro increased its share in reserves. Now on most items euros at risk of becoming like the U.S. currency. So why do investors need a second dollar? Not for anything. And what is missing.
And as a result, the single currency is likely to be under pressure. The inability and unwillingness to finance growth through deficit at the moment will lead to a reduction in the proportion of European assets. And this long-term trend for several years until the current European policy begins to bear fruit. It is likely that the euro is slowly melted to 1.08 to the dollar in the next two years.
In this case, we see the following scenario. The United States will have a formal higher rate of economic growth, largely stimulated net borrowing of the Treasury. Europe might remain in the definition of news feeds less flexible from an economic point of view and with less consumer activity, not allowing companies to rely on the surge in local markets.
On the one hand, such a policy is more typical of continental Europe. On the other hand, it is simply no other choice. Neither Greece nor Portugal or Spain and even Italy is not forgiven the high budget deficit. As we have already written a few months ago: Euro 2000's was considered a counter-currency to the dollar. He seemed to have been the other pole: EU budget discipline, against the strategy of GDP growth in the U.S., production against consumption, the rate of growth in emerging markets against the traditional hegemony of the dollar and reliability. For these reasons, diversification of the euro increased its share in reserves. Now on most items euros at risk of becoming like the U.S. currency. So why do investors need a second dollar? Not for anything. And what is missing.
And as a result, the single currency is likely to be under pressure. The inability and unwillingness to finance growth through deficit at the moment will lead to a reduction in the proportion of European assets. And this long-term trend for several years until the current European policy begins to bear fruit. It is likely that the euro is slowly melted to 1.08 to the dollar in the next two years.
