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The Aussie, the Swiss and the Canadian | Advantage 'zyaada'

Symbol of the currency Euro, Black. Exact math...

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And how the European Dollar is not safe enough for trade

One of these three is a red herring and has been replaced by an Asian Singaporean. Being Dollars, the Canadian never had a chance for balanced trade and thus currency supremacy was out of the question. But while the Euro took a decade to build up ( German GDP is out at 0.7% and is bang on target) the debt crises there akin to US states and the Gold and Silver ETFs are more bandied about as safer investments, the Swiss and the Aussie have hung on without unnecessary surpluses skewing the domestic consumption story and sticking to the notebook definition of a currency in domestic economy being contained, self reliant and still growing.

One moves to Asia and finds that growth comes at a price for the currency as the surpluses and the consequent pressures in China and Korea so, as also the trade imbalance led discomfiture for Indian and Singaporean currencies.  While Dilma Roussef and the new Chinese leader Xi JinPing get a strong background in monetary economics with liquidity deciding day to day movements, the overarching intent of both the economies is to crowd out the others in the have beens and the to-be(s) and rule the trade winds.

Coat of Arms of Switzerland.

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That implies that despite all the surpluses and the benefits of inflation and / or state control, the next two decades are likely to be pretty fluid for Central Banks allocating the national silver or the new surplus Euro’s focus in the direction has in a way been undermined but it is firmly in second place behind the USA. However with China’s coming instability and the propensity of the Asian tigers to bet on hypercycles of instability to get themselves to the top ist is likely thatthe perfect storm will run off into a new one in parts of Asia and Latam leaving us another round with boring India, Swiss, Aussie and maybe a fourth national currency as the safe bet. If you think it unlikely,  you might like to instead concentrate on the consumption story and stock up on Palladium, Steel and other Auto and lifestyle goods commodities or in the new ‘currency’ global ETFs. Sneaking up from behind, Aussie is now the fifth largest traded currency and the Swiss still on at 6th. Trade in the Yuan will keep growing as long as flexibility in the currency remains predictable by the suppressed upside and the state control while the MERCOSUR bloc still holds relevance but is struggling to transfer the power from resources to the Services economy

There is of course a distinct difference in the Asian ethos in trading and resource rich China/Korea/Singapore and the Asian ethos in services and knowledge led India and the resource led ME or even the non commoditised UK and Germany which continue to value trade balance while international trade keeps reverting to commodity and cost led Russia, Brazil, China Even mexico and Venezuela have thence spent a decade building unlikely resource capabilities relying on graft, rent and oil to grow faster and there in lies a possible revival of the nineties instability in the growth economies yet. But now the US and the Europe would be equally vulnerable as their trading partners as they have chosen.

On the Euro as we part, no it will not destabilise much further despite Spain, Portugal and mroe to follow or the extra funding in Greece and Ireland but the Aussie or the Swiss, it is a razor sharp argument

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This entry was posted on November 23, 2010 by in Amitonomics, Banking, US.


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