It was only in early june that the euro (the European currency) was languishing and the word contagion was being thrown around to describe European deepening crisis arising out of the Greek debt troubles.

 

What a difference a couple of months have made. Some pundits and experts had even gone as far as predicting the demise of the euro. Europe has proved them wrong. Austerity measures in Greece and successful bond sales in Spain and Portugal have created a euro rally lifting the currency by nearly 10% since its early june lows.

 

The euro is now near the key $1.30 US dollars and with the stubbornly weak economic conditions in the US that target and beyond seems to be a foregone conclusion. The euro's rise is good news for the US exporters but it signals low confidence in the US economy. With scant signs of improvement in jobs and the housing in the US, that low confidence is well justified.

 

The danger is that with deteriorating conditions that low confidence could turn into lack of confidence. What the US needs is a dose of its own austerity measure, and soon.