What is going to happen to the euro?

It will find its place in the market based upon the market performance of the EEC. If any of us knew more than that, we wouldn’t waste time posting about it, we would be placing either long or short orders on the Euro with our brokers.

My penchant for nostalgia and the other one for schadenfreude are kinda hoping that they’ll scrap the Euro and go back to their old currencies.
Dangit, I liked the Lira!

@Nullo If that were to happen does the euros value convert to old currencies or if I had euro does it literally have no value and I would have to buy what the new currencies are? And I lose any euro I bought?

Each of the old European currencies had fixed exchange rates to the Euro before adopting it. Odds are good that they would work those backwards.
In Italy, at least, the government basically bought all of the Lira in circulation and paid in Euros.

It’ll be about a buck soon. Then it’ll be like the Canuck Buck. Then it’ll dwindle and wain, and do its crying in the rain.

When I first was using the Euro, the exchange rate was roughly $1.00 per euro. Over the past several years, the dollar has slid(slidden?) against the euro. Currencies wax and wane. I don’t think the longterm effects will be dire, but as @dpworkin says, if any of us knew for sure we wouldn’t be farting around on here.

I remember when people were saying the same things about the dollar.

The euro started its relatively young life at 1.19$. A few weeks later it dropped all the way down to 88c! Nobody wanted to support the new currency, which was hated in every single country of the Eurozone, and seen as the root of all evil, even by countries (such as Greece for example) which were saved by it (imagine where Greece would be now if it were not part of the Eurozone).

The people who designed the new currency had anticipated such a reaction by the markets, but not to that extent. They had expected the euro to drop to around $1, which would also make sense to the everyday person when calculating prices between the USA and the EU.

Recently, and due to the economic crisis which hit America first and then the rest of the world as a result, the Euro had jumped to as much as $1.50, almost at parity with the almighty Pound Sterling (I think a pound was as low as 1.20 euros around Christmas). This was an unrealistically high price, and was caused mainly due to the weak dollar and its temporary instability and less to any real power behind European economies.

The current exchange rate is much more reasonable, and I expect the Euro-Dollar rate to fluctuate around 1:1 for the next decade or so.

@Jack79 If it were not for the Euro, Greece would probably be able to spend / print its way out of its depression, much like the US did during the Great Depression. Because the Euro is used by more than just Greece, it does not have the authority to print more Euros (which would cause inflation in ALL of the countries it is used in) in order to print its way out of the recession, placing it in a difficult situation.

It all depends on how the community will handle the financial and economic crisis, including the greek fiasco. As with all currencies, the value of the Euro depends on market confidence, which is sadly lacking at the moment but which was temporarily increased by our €700 billion rescue package which also stabilised the Euro for short time. This in no minor part means improving the budgets of all EU member states, especially Greece, Spain and Portugal and the passage of stronger financial regulation. What is currently talked about for example is a tax on financial transactions (about 0.01%, I think), which we have already pitched to Obama and Canada, because financial rules need to be global to be effective. Of course, because of the Republican obstructionism, I do not expect the US to follow suit.
What will definitely not happen is a reversal to the old currencies, because that involves printing tonnes of new money, the loss of intra EU trading advantages like the lack of currency conversion, the necessity for businesses to convert their IT infrastructure back to their old currency and because consumers would fear another price increase of goods, as happened for example when we switched from DM to Euro. Prices rose because retailers did not convert their prices according to the exchange rate, but according to how they wanted. Some even just replaced the DM with the € sign.

@Nullo Cool! A $1000 coin!

@LocoLuke I don’t agree with you. That’s what Greece did in the ‘80s, with inflation up to 25%, the drachma-dollar ratio going from 40drs/$ up to 500drs/$ and the value of the drachma eventually diminished to shreds. The public’s buying power dropped so much that, even though they didn’t see it that way, they paid a lot more than if they had been heavily taxed. 1000 drachmas in 1981 could buy you a decent meal at a restaurant. By 2001 it could barely buy you a coffee.

In the meantime, the country’s debt rose 23-fold, which is what they have to pay for now. One of the good things about a common currency is that corrupt governments (which is what Greece usually has as a rule) cannot screw up their own country as easily without affecting the economies of their partners, so they’re not allowed to do as much. Which I guess is bad if you’re some Serious Swede wanting to invest for the good of your country, but not when you’re some Greedy Greek.

@LocoLuke I thought that it was World War II that cured the Depression. o_o

Media love to create additional hypes. There are problems (like in the US) but panic is not necessary. Traders love panic, because they can make a lot of money betting on a weak euro. Clear-headedness will prevail.

The euro is weaking. That’s the only signal you have. No one can predict the future, and warm & fuzzy feelings are things money doesn’t care about.

The question to ask does it have fundamental strength for a long if you are looking for a bargain. However, as Europe and the US are asking all the nations of the world to bail out their banks…this is a definitive signal.