This article in NZZ recently:
http://www.nzz.ch/finanzen/nachricht...1.9841323.html
describes the disaster that is going to hit the US at some point in the not-too-distant future.
Even Bill Gates noticed:
http://www.gatesfoundation.org/found...1-line-up.aspx
Given that, the USD may actually be over-valued.
about $2.5 in the US and around $4.80 in CH.
Japan & Switzerland whose currencies have gained immensely against the greenback and the EUR. When investors and central bankers come back to their senses, the respective currencies will be stripped of their previous gains.
2nd scenario: US economy is doing bad and so is the EU -except for DE. The US is heavily indebted yet 10 yr t-bills are still somewhat low trading at $3,40.
For doomsdayers, i say yes, the US is prone to a massive financial crisis and even going bankrupt.
You're a fool if you think that the US can go bankrupt whilst EU-CH all live happily ever after with no consequences whatsoever. A crisis in the US will trigger a global depression. US-EU banks are interconnected and all of us are somewhat tied to the mighty $.
What I think? all these indebted countries need to overhaul their systems and live within their means and shift towards industrialization again -with more realistic salaries. Services-based economies can sustain themselves forever and ever...they will collapse at some point. The question is when.
The local economy is strong and exports have been able to grow regardless the loss of competitiveness vis à vis major currencies. More, the swiss franc is correlated to gold that is staying strong.
Only if the Federal Reserve will start raising rates (second half of the year? Maybe later) the US dollar has a chance to rebound a bit. Even in that case I think the trajectory won't be straight upward: in the long-term budget + current account deficits will be a drag anyway.
Instead of betting on a rise against the dollar I think it would be worth trying to anticipate a turning point against the euro. The PIIGS countries are not out of the woods yet but if Spain and Italy won't be become another Ireland we could see levels around 1,40.
Till then, let's enjoy the stong currency to travel abroad and spend less
However, if I remember correctly, the nearest equivalent (or rather, the most popular sandwich) was less than $1.50 last time I checked...
http://news.google.com/newspapers?id...ss+franc&hl=en
(from 1941)
http://news.google.com/newspapers?id...ss+franc&hl=en
(from 1978)
Look at the price of gold
http://www.swissinfo.ch/eng/business...l?cid=30012940
In 2008, the euro was a currency that was taken very seriously by oil-producing nations, sovereign funds and central banks. It was about to overtake the dollar, something the US wanted to prevent at all costs. The world needs a safe place to offload its excess assets and everything is done to make sure Europe isn’t that place. It was precisely at that moment that speculators began attacking the sovereign debt of some European nations.
True that Europe is the largest economy in the world according to the IMF but we should not forget that almost half the members are not in the euro; granted they are mostly the smaller nations in GDP terms. & some of those members who are in the euro are having problems.
About " speculators began attacking the sovereign debt of some European nations" - they could only do that because those nations had weak economies.
My savings are in USD and I'm currently living off some of that here so I change my USD to CHF as I need it. I'm losing out bigtime the last few months.
What would you do in my shoes? Is there anything else to do but to wait it out?