The new Atlantic Rift: EUR vs. USD

I used to think I was sophisticated because I had better taste in beer than everyone in America. Why was I willing to pay the extra 20% for rare imports with funny looking writing on the front? I used to dream of living in Europe when I grew up. My parents took me as a child and I went as a teenager as much as I could. With the dollar index at 1.20 I didn't realize what a bargain I was getting. Staying at the Lowes Monte Carlo for $80 a night was a steal for me (a mini-suite with an ocean view no less), I couldn't book the Radisson in Iowa for less than $100. Later I discovered all my favorite bands are from Europe - mostly France. Americans all awe at German technology and european innovation, yet "all the good doctors are in the states".

When you buy dollars (OR use dollars), you buy George Bush and his policies, you buy the war in iraq, you buy the lifestyle, the mind, and the culture of the American people. But oh how America has changed in 30 years. Most of the world still remembers Bob Seger, bikers, pot smoking free loving hippies protesting the war in Vietnam and planning to stage a revolution [Easy Rider?!?!]. The world revered America like god-men. Everyone wanted to come here. It was like a gold rush only the gold was anything American. So many were caught in the fever they didn't rationalize the spirit of the moment and bought USA. They invested, immigrated, imitated; anything they could possibly do just to say "ahh, Aziz, I was educated in the United States" or "these are from the United States". I mean during the 70's I could have taken a crap in a bucket and called it trendy health technology and sold in in the east for thousands of dollars. And that's exactly what we did.

It takes time for things to happen, for people to move, for investments to fade. Taking money out of the USA for some international investors may take months or even years. It is tied up in CD's, options that need to expire, businesses that need to be sold, contracts that need to be signed. But the message is clear: get out of the US.

It all started back when.... [fill in your version of when it all started]. Then Iraq announced they would price oil in Euros. Russia said they would switch their reserve currency from USD to EUR. The ECB made hints that the EUR would be backed by a significant amount of gold. And the bad US data just wouldn't stop.

Will shops not accept the greenback? Will the Euro be the new reserve currency? On the back of the US dollar it says IN GOD WE TRUST. It says no such thing on the back of the Euro. The new islamic currency will be in gold. Australia, New Zealand, and the Pacific Rim are going to form an 'Asio' currency. Soon the yuan will float. Can anyone paint a picture here?

On the other hand, if you are a small nation with no defense, there is one sure way to make sure the US does NOT bomb our country into oblivion - USE DOLLARS! It's almost like 'protection insurance' - yeah that's what we've been reduced to. But was it ever any other way? So then you may ask, well what protection will I receive for holding Euros in my bank accounts?

As we move to a one world currency and new world order, traders must ask themselves what's behind the instruments, which may lead to a higher understanding of their price movements.

...comments from readers [send comments to info@ees.net.nz]

The really lucrative contracts are selling Marlboro on trans-atlantic flights. The passengers are overpaying twice although it says DUTY FREE and it is! 1) A carton of Marlboro is $22 at a gas station, and maybe can be found cheaper 2) They usually pay in another currency and lose on the exchange. Marlboro sales are down over 25% overseas, as are hollywood movies; practically most American products. Hell my girlfriend is french. America is no longer trendy. It's quickly turned to be the opposite; an embarrasement. When I travel I pass myself off as a Canadian educated in US universities (explains the accent)

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* This article does not express the views of Elite E Services LTD (EES). EES is not a bank, brokerage, financial advisor, or similar type of company, and is not recommending any course of investment or action.