11 december 2010, the fall and rise of the euro

The basic rule of the markets is buy low, sell high, or "when others are fearful, be greedy" as warren buffet put it. On that basis, time surely to invest in the euro, both financially and politically. Despite its difficulties, much derided in the uk in particular, countries are still queuing up to join: estonia will do so in a few weeks, and iceland is putting itself through the deeply traumatic and unpopular step of joining the eu, just for the currency (ditching the krona). Don't forget that despite its recent downward blip, the euro is up around 20% against sterling over the last 3 years; some 33% over the last 10 against the dollar - and everything points to continued and sustained dollar depreciation, which means a rising euro, especially as euro rates will go up quicker than others in 2011. For the uk, the long-term political-economic case remains as strong as ever: yes, one size will never fit all (as greece and ireland have discovered; but so for long have engineering firms in scotland), but the world's largest and most successful economy, the us, with no less variance than the eu, has made it work, and so can we. Juncker's latest contribution is a very good one whose time will come. For all the downsides, they are outweighed by the sum of the ups of not being a small dingy in choppy seas, but being part of a global cruiser. If the current turmoil shows anything it's that a currency crisis in the euro area is hugely unlikely; not so the poor pound (even if policy has skilfully avoided it for now). The world is still wandering evermore towards economic control by strong currency blocs, of which the euro is one, with sterling doomed to being buffeted by manoeuvring between giants. An independent currency is 19th century policy in a 21st century world. We will one day join the euro: so why not restart the debate now when the terms of trade for uk entry are all in our favour. That won't be the case when the uk needs it. Now's the time to buy.