Euro approaching U.S. dollar parity? Euro back to 2006 levels and falling against the dollar.

The Euro doesn’t seem to be responding all that well to the $1 trillion Euro bailout.  First, you have countries like Greece that if they had their own currency, would simply devalue their currency and try to make their economies more competitive.  But with the Euro you have countries like Germany with much larger economies and balanced budgets mixed in with countries that spend like Greece yet they both share a common currency.  How do you balance this out?  The worry now is you will have other countries like Portugal or Spain following the same path.  The markets are saying that they don’t buy the idea of fixing too much debt with more debt.

The stock chart for the Euro versus the U.S. dollar is simply stunning:

This is a wickedly fast change for the Euro.  Given that the Euro is the second largest reserve currency in the world, this tells us market problems are still deep in the system.

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