HapiMoney

The last two weeks have been tumultuous for the stock market to say the least. Many analysts even think that this might be a “double dip” into recession. I don’t think this is likely, but the market has finally realized that we are not clear from the recession by any means – unemployment has stabalized but it’s at a rate we haven’t seen since 1982, interest rates have been kept artificially low but will likely increase dramatically for corporations to get access to capital from investors, and Europe is in a very weak state.

The last two weeks, Europe has been the talk of the town. Greece, until a $1 Trillion rescue loan, was on the verge of bankruptcy. Spain has now been downgraded, and investors are beginning to wonder how Portugal and Italy will fare with their large governmental budgets, rapidly shrinking revenues and enormous pension liabilities.

But there is good news in all of this for the US! The US Dollar has been performing incredibly well – especially against the Euro, meaning that US importers of European goods now can buy more product for the same amount of dollars (or the same amount of product for cheaper). This could mean a shrinking trade deficit (fewer dollars leaving the US), and more savings for people who buy a lot of products overseas.  As an added bonus, a strong dollar means travelling to Europe is relatively cheaper for an American Tourist (though plane flights are astronomical, which I’ll get into later).

The dollar is still the world’s currency, and foreign states such as China will likely hold on to their vast dollar reserves (in the form of US government bonds) instead of trading them out for Euro Denominated or even Yen Denominated Bonds.

Lastly, it’s possible that we’ll see overseas investors get skiddish about investing in the EU and start bringing their money over to the states (further stabalizing our stock market).

We aren’t out of the woods yet, and while Europe’s problems raise questions about the stability of the market in totality, there is positive news we can be optimistic about.