That even while you spilled coffee down your shirt while at work this morning, there’s somebody else who split his pants. Or yes, your car is in the shop and needs $1000 worth of work done to it, but at least you’re not the poor schmuck who lost $10,000 on one of the financials before the market crash last fall.
Plain and simple, it’s a coping mechanism. We don’t want bad things to happen to other people, but we don’t want to be the worst-off either. Which is why it’s some sort of a sick relief that people are once again flocking to the dollar; even though the US currency is far from healthy right now, there are other countries or regions that are worse off.
Take England and the Euro-zone for example. Both the pound and the euro fell further today against the US$ and Japanese Yen on further bad news for larger Europe, whose recession appears to be deepening.
The 16-nation euro was hit hard, falling the most it has against the dollar in the last 3-month interval. That nasty tumble just added further to speculation about what options are left open for Europe. One of the top bets is that its Central Bank will need to buy up bonds to end the continuing slump.
As for the pound, it took the dive that it did because the UK’s economy contracted more than expected during the last quarter. In fact, it was the biggest contraction since the 1980s when Margaret Thatcher was prime minister.
The thing is that people were actually expecting England to start recovering sometime soon, so the negative growth took investors especially aback, according to Derek Halpenny, European head of global currency research at Bank of Tokyo-Mitsubishi UFJ Ltd. in London.
