Navigating Europe

Deficits are not quick fixes. So to think that the markets may get significant relief anytime soon is unlikely. But could the markets continue their correction course to a proper level that reflects the economic fundamentals of the day and then build a relatively mild amount of gains back upward from there? Certainly. I think it's time to get the "highs of 2007" out of our minds and simply focus on getting to a point of reality and stability -- and then clear, healthy and foundational economic improvement from there.

So what might that look like - how might we escape all this European drama and fear? What I'm hoping for is the Euro to fall further - to a level where European exports become very strong and very competitive with any other goods. Such action would improve European sales and help undermine economic "growth" there - or more importantly, to take the double dip recession out of the picture. Note that the increase in the value of the US dollar would hurt US exports and profitability, but not so much as to force it back into recessionary measures either. More importantly, such a move would allow Germany to become even MORE healthy (already the US of the Eurozone). This would allow Germany to increase hiring and/or wages, which would in turn help its own demand economy as well as spur further growth in exports of other Euro countries and Asia.

The consequence of course is a hit to growth in the US due to the increase in the value of the $. But would you rather have more of a correction with a then stable future or more of this existing uncertainty where anyone might go bankrupt any day and investors say on the sides both today and in the future --- looking more for a return OF their money as opposed to a return ON their money? So I say, a declining Euro is positive to help produce stability. Heck, isn't that what the US dollar did in early/mid 2009 to an extent?