Admit it, the Euro works great

EDITORIAL: "The Euro Decade and Its Lessons," Wall Street Journal, 2 January 2009.
The WSJ calls it "a rare economic shining star of the past decade."
The father of the Euro, Nobel laureate Robert Mundall, says the dollar's rapid rise against the euro, after a year of slow decline, may have triggered the Sept panic, but I think that overstates the causality. To me, euro-dollar dynamics merely reflect larger realities, and that that's the greatest benefit of having a connected balancer to the buck--a recursive environment, as Nicholas Taleb describes it, is created.
Recursive is good, because that means you get signals that you've gone too far. I think we've entered a whole new age of recursiveness based on the intense connectivity we've unleashed in the past couple of decades (Clinton's big achievement). That's the primary benefit of this crisis.
When the euro debuted, it constituted about 18% of the global reserve currencies and the dollar sat at about 71%. Now we're down to about 64% and the euro is up to about 27%. Inevitably, we'll face an Asian basket currency that grabs a similar share--and that will be a good thing.
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