Topic: Europe’s economy is moving faster than US economy - Covid-19 effect!!! (Read 557 times)

First of all, I felt glad to hear that Europe's economy is recovering fastly after all they've been true. Cheers to their Government for handling this Crisis so well.
But, on the other hand, I don't think that US dollar can be replace by Euro..maybe USA now is quite struggling because of being on top of highest positive cases in the world but I guess, they will get through this. US economy will be soon recovered because I believe that USA has unlimited resources and it will be easy for USA Government to find some ways to recover. They will remain as the king of the world despite the highest cases of covid-19 now.

Looking at the US economic sector and the US DXY index is on the red candle and currently have + 0.1% from yesterday. This is also almost the same when looking at the EXY quote although for the past few weeks the euro has gone very fast compared to $. the US economic sector is in trouble and forced to open pathways that increase their economic value but the impact is likely to be large namely the increase in co-19 impacts.

The target Fed Funds Rate is 0%-0.25%. The Fed balance sheet also just grew by $3 trillion in the past few months, headed for $10 trillion total in short order.


The context is falling confidence and value of the USD. How is owning US government debt a positive in this scenario?


First, that doesn't really address whether the JPY could become the dominant reserve currency.

Second, that was a direct result of two things:

• Specific US efforts at dollar devaluation in the early 70s, including ending the gold standard
• The signing of the Smithsonian Agreement in 1971, which fixed the USD-JPY exchange rate at ¥308 per $1

The price of JPY was kept artificially low during extreme dollar devaluation. This led to extreme imbalances in the forex market, which eventually led to a collapse of USDJPY when the currency peg was abandoned.

https://en.wikipedia.org/wiki/Japanese_yen#Undervalued_yen

That was a pretty good news for the part of Europe. Their government really did a great job of having coordination with one another to make a quick response to be able to control the situation of handling the rate of infection in their place which now enables them to open up their business establishments after quite sometime of having lockdown. This was really a great result when two parties do coordinate with one another.

On the case of US, even though there are already cases reported, it seems like they have underestimated the outcome of having a rise on the inflation rate of the spread of virus which turns out to end up like this making them to be on top of the world having the most cases of covid-19. Also, it is a challenge for the government of US to manage its people for they do also have a big population and the people and government are not well coordinated for they have complains among sides which makes it a lot more difficult to control the situation on implementing health protocols to prevent the further spread of virus.

A big country like US having most number of cases is really expected to have a struggle on their economy because of what their situation is up into now. Good thing that Europe have responded fast on the cases they have making them be able to control the situation which leads them to faster recovery of the economy. Actually at this time, it doesn't matter how fast the economy of each country recover because the important thing is that they can be able to recover once the situation is under control. It doesn't matter on which goes first and last what matters the most is the sake of the people of each country more than anybody else.

My bad. I confused the Yen and Yuan

What about now central banks increase their EUR reserves? The proportion of the dollar has been constantly dropping in the last decades. Of course it's still high, but it won't be sooner or later. While it was ~80% in the '70s it represents only ~50-60% nowadays.

Also many times Germany and Japan helped the USD to not seeing the US dollar depreciated, 30 or 40 years ago. Whitout that, maybe USD couldn't become what it is today.

That is not true. Europe had epidemic a week or two before New York. China had two months before. Epidemic in Europe started at start of March. Mid March spread over all south Europe and at end of March was everywhere.
In California and Washington state epidemic happened at same time at start of March. In New York they did not cared much what is happening at start of March then at end of March got huge headaches.  

So virus got to USA and Europe at the same time. Some parts of USA ignored it. They did not test enough or at all. That made it spread and brought huge costs and there will be more costs to tackle epidemic in the future.

Well, Europe is actually caring about their people and they are actually filling the hospitals and trying to not go outside too much and making sure that everyone who has to go outside wears a mask... like a normal response to a pandemic! Look at USA, they are actually leaving people to be, Jared Kushner literally dropped the testing numbers down just so the people in blue states could die, an unconfirmed gossip at this point but honestly I wouldn't be shocked but if you check out the number of cases in USA you can see that they have never really been great, they went from bad to recovering to horrible once again, people literally made mask thing a political thing for some reason even though in Europe right or left everyone wears it because it is not political at all.

We will see who is winning in this fight after several months after pandemic end. Too early to say something right now

United State economic have down after get pandemic issues and now they are minus more than 20% and look terrible problem in their country right now, they will try thousand way how to bring back their economic after pandemic virus. United State have good power and will control all product to make economic recovery to normal.

The situation in Japan is different from those in other countries. There are two main reasons.

1. The interest rates are extremely low (usually in the 0.00%-0.25% range). This allows the government to borrow more and more money, unlike the case in other countries.

2. Most of the Japanese national debt is being held by its citizens. The Japanese citizens are also some of the largest holders of national debt from other nations, especially the United States.

And Japanese Yen is one of the very few currencies to have increased its value against the USD. 4-5 decades ago, the exchange rate was like ~350 JPY to 1 USD. Now this is 107 JPY to 1 USD. There is no other currency in the world, which has appreciated by this much against the USD.

Yeah I have seen this news before about the Euro surging ahead of the US dollars. Coronavirus has hit the US economy badly where it hurts and they are still unable to resume a lot of Businesses due to the number of the people with the virus keeps increasing everyday and they are still trying to deal with it. Even China that brought the virus seems to have placed theirs under control as the number keeps on decreasing.

But if you’re going to be talking about Euro replacing Dollar, I don’t think that’s going to be happening, because once the US opens up their economy everything will boost back up again with higher speed than before and they will still go up to their position. Still many economic analyst are predicting about stagnant condition for USA economics incoming years due to various factors and their own policy must be one of them. It seems high man power country may move toward the position of top in terms strong economic conditions.

There is no need to look at the data either, I can understand why the US economy cannot move quickly, as the country with the highest virus spread,
certainly has a negative effect on the economy. US must immediately open quarantine in various cities, so that business and industry can run again.
And make the US economy keep pace with the fast-moving European economy.

Doctors were seeing COVID-19 cases in January in the US. They were just slow to begin testing anyone or locking down. At this point it's pretty obvious the economic toll of the epidemic is deeper and more prolonged there.


Japan has the worst debt-to-GDP ratio in the world. The Fed today is taking pages out of the Bank of Japan's book. Why would the yen become the dominant reserve currency?

I think this is a good take on the Euro question:


https://www.barrons.com/articles/why-the-euro-wont-replace-the-dollar-1536945404

Europe’s € can come back stronger but saying to replace the $ (USD) seems still too early, buddy. I am sure that the US government will do something to recover the economy. Now, probably Europe's economy is growing better than the US, but will the US give up early for this pandemic? I think as said before that they will make certain strategies after this pandemic to bring the power back. Indeed, Covid-19 brings big impacts to the US economy since there are many victims of this pandemic. Not only the health industries that get a very hard situation but also giving impacts to the economy in that country.

Actually @OP is not wrong. EURO is also a major reserve currency FYI. It's a currency used even by some microstates such as Vatican and Monaco, as well as countries that are not even Europeans such as Zimbabwe, N. Cyprus. Even in the UK there are shops accepting EURO.

If it replaced ~20 currencies and if there are a dozen currencies pegged to EUR it can replace the US dollars too. There are also countries swithching from USD to EUR for international trading (ie Russia, Syria, Cuba). 20 years ago, Iraq decided the sales of oil have to be done now in EUR (it changed back to USD only because The US invaded Irak and forced the country to change its decision) But there are more and more countries looking to avoid the US dollar. Russia owns now more EUR than USD.

Just to show that finally it's not something so difficult or impossible as you may think. It will take time but more people or countries decide to prefer EUR and lose confidence in USD more chance you will see EUR replacing UDS.

https://www.americanexpress.com/us/foreign-exchange/articles/could-dollar-be-replaced-as-world-reserve-currency/

But there is another contender, the Yen, which is also categorized as a reserve currency by IMF since5 years

The response in some of the European countries that I have heard of are pretty superb, the fact that they follow the strict regulations during the lockdown helped a lot and I also can't forget that people followed the regulations which commendable for a mass to follow their authority. Regarding the OP saying that USD will be replaced by Euro, that will be difficult and complicated because there is was a system back then that makes Dollar a reserve currency for a country, we also should consider that US has a large gold reserves that backs their currency, I do not know much about monetary policy but I think USD being replaced by Euro is still far from conception.

Timeline: europe and asia were hit hard by the virus, before any confirmed cases were announced in the united states.

Geographically they are located nearer to the epicenter of the pandemic. They were hit by it first. Which could mean their economies will naturally recover before america's does.

I see the US President tweeting now & it is strange that neither he nor his advisors seem aware of this.

https://twitter.com/realDonaldTrump/status/1289397528639791104

Most european countries have helped their businesses to recover afte lock down in sense of financing part of employee's sallary of financial support to continue the work.
Also, EU has brought its own recovery plan and special dedicated funds that each member state will participate according to certain ratio, both in special loans and grants. All that helped to the optimism and for european economy to start to recover. I don't know that US has any of similar program or support. Of course, US and EU have different approach when it comes to economy and finances but EU government has do nothing to directly help the economy and employees and that will have deep consequences and this with pandemic is very special situation that will have very deep and long term consequences.

The fast recovery of Europe after the pandemic was really great for they have fastly react and do preventive measures to be able to come back after the quarantine they have implemented for at leat 2-3 months which make them be able to control the situation before it got worst. The government and the people have coordinated very well that is why their businesses establishments have opened up to make their economy working alive towards recovery. On the part of US, what making them struggling to control the infection rate is of course the big population they have which makes it difficult for the government to track down the infected individuals which lead to the continuous spread of virus making them rise to the top of the countries with most cases up until now. That is the reason why they are still struggling to open up their economy because it is still dangerous to do such because it might just lead to worse scenario that infection will go into a massive inflation rate.

Both countries do have different approach and way of facing the crisis which must not be compared because it is a serious matter that every countries are facing right now. What the important thing is that even US are still struggling right now and have been left behind by Europe when it comes to the economic recovery, US is making its best to control the situation first for the safety of its people before getting their economic recovery to the full extent. It is a process to be done and it doesn't matter how fast they would do it what matters most is how they could surpass this first. On the other hand, salute to Europe for making the most out of it on making fast recovery after also experiencing serious problem in relation to this pandemic.

I think there is nothing to be thankful about the covid-19 pandemic that brought up to Europe's fast pace on recovering compared to US because seriously we are facing into a serious manner and how fast the economy of a country recover must not serve as a race or comparison for there are certain reasons why US up until now is still struggling to control the inflation rate of covid-19 infected individuals in their country. It just so happen that US have a big bunch of population to be taken care of which leads them to have the most number of cases up until this current time.

Europe's fast recovery was indeed impressive at the first place but this must not serve to be a celebration that at last it have surpassed US economy just because of the existing crisis brought by this pandemic. Maybe it just so happen that Europe have reacted and put up a plan that can effectively control the scenario which makes them possible to recover fast compared to US. Different countries have different tactics and approaches towards resolving the problem but the important thing is that there is an improvement not just on the management of the cases but as well as for the recovery phase of the economy even if it is fast or slow