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The whole Eurozone situation is highly fluid and therefore difficult to predict.Some very fine minds have opposed opinions which usually means nobody knows.GB is in a difficult space I reckon.Continental Europe is their biggest market and yet Cameron has taken his bat and ball and gone home.I think he may have to retrace his steps in a week or so.As you know,the UK economy is fragile.The 'wrong' result in Europe would be a disaster the UK. (suppose the EURO really did collapse --unlikely I think--and the GBP rocketed:end of UK exports etc,etc,)

If this whole show was fiction it would be a hit on ch.7,9 and 10.

l

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My opinion only, but I believe the Euro will strengthen over the coming 12 months, as a result of more stringent and complementary conditions to be imposed on Central Banks throughout Europe. Some countries may find the conditions unacceptable, as the Brits already have, and be faced with leaving the EU or toeing the line on fiscal discipline. It is this discipline which will rule the day and strengthen the Euro. As some wit mentioned, "Cameron's involvement was like someone going to a swingers party without a partner". In other words he had nothing to offer and plenty to gain. In this case, the swingers weren't interested.

 

At some point he will have to come back with something to offer, but the Brits have been reluctant to give up their wives, so they will look for a "lover" to offer up.

 

Meanwhile, the longer Sarkozy and Merkel hold the reins, and the ECB refuses to bail sovereign debt, countries will be forced to bear, and get used to, the pain of austerity measures instead of relying on a quick fix where no lessons are learned. It's a bit like taking the credit card off a spendthrift spouse and forcing him or her to live within their means.

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Some countries may find the conditions unacceptable

 

Hi Clocker, countries finding the conditions unaceptable are one thing, but when the populace refuse to accept the conditions you have turmoil, then civil unrest, followed by anarchy, which is why many observers find it so difficult to grasp why the relevant Central Banks cannot see this coming and have avoided taking remedial action--- the potential chaos that could ensue, were not talking about some despot somehere, these are civilised western cultures about to possibly erupt, the one saving grace is that the NH is in the depths of winter, which does temper peoples enthusiasm for rioting, it is a disgraceful state of affairs that current EURO politicians have sunk us into, that will no doubt affect Oz down the track.

 

Personally I blame Alan Greenspan for his decades of money printing, he and the US set the example which Europe has so disastrously mimicked---- when the world rounds on the US as they surely will--- then the potentials escalate dramatically.

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Flower

 

I agree with your final paragraph wholeheartedly, watch the movie "The Inside Job" to really get your blood boiling on this issue.

 

Not sure I agree with your sentiments about the current Euro politicians though. I think for the most part, they are caught between a rock and a hard place with no obvious solution at hand, other than inflicting pain on the general populace. The latter might be prepared to accept some pain if they saw those responsible for the GFC being crucified, but fat chance of that happening. Whether anarchy is likely to erupt as a consequence, I think it is doubtful. There will no doubt be more violent reaction, from those who want to show their dissent, when the economic malaise really sets in, but I think the majority of the people just want to see some leadership, understanding of their predicament, and some sense of direction and control over fiscal policy and management.

 

Imposing strict conditions on the way Central Banks operate and forcing banks to manage their affairs more transparently and responsibly is a good start. Tidying up the other half of the financial services sector will be more difficult. People need to be reassured they are relatively safe havens for their savings and that their practices are transparent. We have our own problems with the sector in this country.

 

As I see it, Europe has depended on the US for leadership and fiscal direction since the end of World War 2, and is floundering now because the US has disappointed on both fronts in recent decades, culminating in the GFC. Europe needs to stand on its own feet now and lead by example. Ironically, I think the Germans have been passed the baton for this role by other European countries, who now want Germany to drag them out of the mess they are in, and I think they are just the right people to do it.

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Ironically, I think the Germans have been passed the baton for this role by other European countries, who now want Germany to drag them out of the mess they are in, and I think they are just the right people to do it.

You're probably right there, Clocker;

 

But on their own, it won't be easy. One might say they're used to pull somebody else's cart out of the mud - but in the decades since 1989, those "others" were at least fellow Germans of the former "Democratic" variety. So, the "Westies" could be persuaded to carry an extra load for their "brothers and sisters on the other side of the (fallen) Wall."

It won't be that easy, when the "others" are seen - rightly or wrongly - as lazy dole bludgers, tax dodgers, and Dolce Vita playboys.

And adding insult to injury, the Brits, whose banks are seen as just as selfish as the Yanks, try and walk away from the mess they helped create, demanding "special relief" to continue profiteering from others' labour and diligence.

 

not easy at all ...

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I hope the Germans can, if the populace has to suffer then the bond holders and default swap pawners should cop a fair share of their whack (all of it in my book). During this process any Over The Counter Deriviative that cannot be traded on an open market should be outlawed. Any Bank that fails, is nationalised and its depositors secured. All Central Banks become 100% transparent.
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The ECB has offered unlimited loans to the regions banks at miserly interest rate of 1%, and 523 regional banks took up the offer and swallowed nearly half a trillion Euros. This was much higher than most experts expected. The question now is, how much of the loans will flow back to the soverign debt market, and how much will be used purely to shore up balance sheets.

 

The interesting result was the soaring improvement of the Euro.

Historically, when central banks inject liquidity into markets, the currency concerned would be expected to fall - debasement and all that.

But these are not normal times.

Mick

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Doesn't it ring a bell?

When the Fed printed USD to add liquidity, weren't those extra bucks also swallowed up to shore up the banks' balance sheets?

How much of it went into circulation to help people buy "stuff"?

Judging by the increasing strength of the USD against other currencies, not much at all. Which simply shows that demand is still outstripping supply. Same is likely to happen to the EUR. The banks can show extra capital on their balance sheet, and only a tiny fraction of it will be lent out to grease the wheels of commerce - certainly at much higher rates than the 1%.

Until a substantial amount of those business loans have been repaid, with the interest adding to the bottom line and freeing up more EUR to lend out, the situation is likely to continue. Hence many economists are guessing it'll take years for the European (and US) economies to come out of thie current mess.

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Historically, when central banks inject liquidity into markets, the currency concerned would be expected to fall - debasement and all that.

But these are not normal times

===========================

 

yeah, EURO is most shorted currency lately, is because of the market perception----euro gonna bust.

but this ECB action seems averted this perception for short term at least.

so bit of short cover that is enough to sent euro up from the key support 1.30 level. imho.

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