My dear impertinent ones, dear impertinent ones,
The European currency fell last week to its lowest level against the dollar since 2022, at $1.02. Would parity against the greenback be good or bad news for the French economy? These are the questions from the Ecorama show on January 6, 2025, on this Monday of back to school and the new year!
So how to see things? Finally, this euro dollar parity?
In the short term, we are moving towards parity, namely the continued decline of the euro against the dollar and soon a dollar to a euro and vice versa.
It could even go lower and the euro would be worth less than a dollar.
In question?
The double decoupling of Europe and the USA.
On the one hand, a decoupling of dynamic economic growth in the United States and anemic in Europe.
On the other hand, a decoupling of interest rates. 3% in Europe and 4.25% in the United States. Better to invest your billions in dollars than in euros…
Yet despite what seems obvious, there is everything else. And all the rest is that in the United States as in Europe the debts are… monstrous.
On each side of the Atlantic, we need… low rates to enable the solvency of States and the payment of interest on debts.
Will the USA be able to support ever deeper deficits and ever higher debts… with rates at 4.25%? Nothing is less certain..; Hence the idea of Trump and Musk to downsize the mammoth…of the American state.
Is this all going to work?
Nothing is less certain and a debt crisis cannot be ruled out in the coming months.
It’s already too late, but all is not lost.
Get ready!
Charles SANNAT
“Insolentiae” means “impertinence” in Latin
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