News reports for weeks have been making a thing of the euro's decline. And yes, it has been swift and nervous-making.
However, it can also be seen a a reversion to the normal. From 1990 to 2006 the euro traded in or below the range of its price over May and June. At its low points in 2000 and 2001, the euro was worth less than 85¢ U.S.
The push above $1.45 in 2007 and again in 2009 was a breakout above the historic highs set in 1992.
And the swiftness of the decline is not unprecedented. Look at August through October 2008, or September 1992 through February 1993 for declines of similar magnitude.
This is not to say that the decline isn't significant. Any move of 21.5% means something. But doesn't necessarily mean the end of the world, or the capitalist economy, or Europe or the euro.
It's a return normalcy (Thank you, Warren G. Harding.) It's painful for people on the wrong side of the decline (50% of all positions), and quite nice for those on the right side (also 50% of all positions).
Oh, and no new phase switches by Person's Proprietary Signal on the 16 currency pairs that I track.
A bit more on the big picture. The dollar saw declines of a similar magnitude against the Japanese yen in 1997 and 1998. No one that recall was talking about the end of the dollar.
The British pound saw a 27.7% decline against the U.S. dollar from August 2008 to January 2009, and no one was talking about the end of cable.
So to those hyperhysterical-euroskepetics I would say, "Get a grip."
OK. The credit bubble burst. Housing, burst. Shockwaves reverberated. Markets collapsed. What lies ahead as we remerge from the wreckage.
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