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rency. And that implies potentially vast portfolio shifts around the world. Of course, all is based on the premise that the European Union, as a concept and an entity, will actually hang together. It's a glorious monetary experiment. |
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Neal: Do you think it will come unglued? |
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Nina: I think there is a risk that it will come unglued. I don't think it will completely shatter, though. Right now, the major markets, the European markets, the bond markets, and particularly the interest rate markets, are in the process of converging. The French, German, and Benelux markets are basically one, and they have been for some time. The countries historically at the margin, the high-yielding countries, are very close to converging as well. Anyone who has bought Italian bonds or Spanish bonos made a boatload of money because those interest rates converged. The governments of the high-yielding countries have done remarkable things to get themselves prepared to meet the criteria for inclusion in the monetary union, and the new currency, the Euro. However, it's yet to be seen whether or not those very stringent policies are going to be sustainable over time, and especially in the next cyclic downturn. Frankly, political resolve won't need to unravel. All the market needs to do is worry that the monetary union will unravel and we could see some massive swings. And the dollar is going to be the recipient of that volatility. |
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Neal: So the average person should start looking at other currencies than the dollar? |
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Neal: So "trading Chicago style" may get more involved in currencies? |
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Nina: I think it means we are going to be more international. |
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