You disagree that Europe has a huge problem with an aging population? You disagree that Europe has too much regulation and socialism? You disagree that Europe has shown no signs of decent growth? I would take our trade deficits anyday over the problems Europe is facing. I just happen to believe in this country. Call me uninformed and misguided, but my record against doom and gloomers is about 50-0 during the last 4 years.
The United States has a big problem with an aging population as well, or have you failed to notice GWB's effort to make this point the past several months?
I full agree that Europe has too much regulation and socialism but as I've outlined above I expect this to start moving in the right direction over the next several years.
Many parts of Europe are booming, particularly in the East which I suspect is better positioned than China to be the next China. ;)
Overall, I disagree with your assessment of the implications with regard to currency exchange rates, which is the topic at hand. I don't doubt that Europe has economic problems, and that they are bigger than those presently in the United States, but these are not new phenomena, and the euro has risen sharply all the same over the past several years.
Why? Well one reason is because the only factor that you listed which has a direct and crucial impact on currency exchange is the balance of trade, and the nation you yourself fingered as having problems in that regard is the United States, not Europe....
Think what you will. Currency exchange rates are one of the least ambiguous data points to keep track of. We will see where the euro/dollar exchange is one year from now, five years from now, and ten years from now.