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Euros are in a muddle for the next decade


maxwellreid

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  • 4 weeks later...

The trend on sterling is down. Debtor countries that have have employed some form of "money printing" are having their currency debased. Are they happy with that? It appears so, better than wage reduction and/or inflation. However, it feeds into their economy as cost of imports rise. Attempts to gloss over that, might include substituting (cheaper?) horse meat for beef, watering down the whiskey etc..

 

The attitude of the UK population may be similar to the Germans of the Weimar Republic "a mark is a mark is a mark." That was followed by re-education, something they still remember.

 

The Western world is in "gloss over" mode. Let's pretend it's all now ok, and hey, maybe it will be, here's hoping.....

 

The Bernanke doctrine has been that weÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢re going to use monetary policy to deal with normal macro-economic concerns and then weÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢ll use regulatory policy to try to contain financial excess. And Jeremy SteinÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s speech said, in effect, ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¹Ãƒƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“IÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢m not sure that youÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢re always going to be able to take care of the financial excess with the regulatory policy.ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢ And in a key line, he said, ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¹Ãƒƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“Raising interest rates is a way to get into all the corners of the financial markets that you might not be able to see or you might not be able to attack with the regulatory approach.ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢

 

http://www.prudentbear.com/index.php/credi...ew?art_id=10763

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  • 5 months later...

Europe Growing Again Means Boost for Global Economy

 

With data this week predicted to show the 17-nation bloc is growing again after an unprecedented six quarters of crisis-driven contraction, economists from Barclays Plc to JPMorgan Chase & Co. say such stabilization will restore the region as a prop, if not a powerhouse, for international demand and financial markets.

 

"We're not expecting a boom in Europe, but there is a momentum shift, and you're going to feel it in markets and the world economy," said Joseh Lupton, a senior global economist at JPMorgan Chase in New York who also has worked at the Federal Reserve. "There's a change in perception from when people didn't see a way out of the crisis to now seeing growth."

 

Lupton estimates the euro area accounts for a fifth of global gross domestic product, so a one percentage point home-grown improvement in its economy this year will be enough to boost GDP growth elsewhere by 0.7 percentage point over four quarters.

 

JPMorgan Chase forecasts the euro-area economy will grow 1.3 percent in 2014 after shrinking 0.5 percent this year, with imports expanding 3.7 percent after two years of declines.

 

The impact already is apparent. Manufacturing in Poland and the Czech Republic rose in July amid increasing export orders to elsewhere in Europe. Chinese exports to the European Union increased 2.8% in July, the first gain in five months, data showed last week. Japanese shipments to the EU rose 8.6% in June, the most since February 2011.

 

Exports have grown faster than imports in recent years, leaving the euro area's trade surplus around 3 percent of GDP in the first quarter, the most since the euro began trading in 1999, according to Goldman Sachs estimates.

 

full story at http://www.bloomberg.com/news/2013-08-12/e...al-economy.html

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Mick

 

Here's why I'm not totally sold on the idea that the Europeans have the right policy mix to fix their mess or that they have the ongoing resolve to see it through...

 

A high rise building where they sort of forgot to put in an adequate lift system...

 

...The article highlights the huge blooper by the architects but what about the due diligence of the client, the bankers, the insurers, the regulators, the builders, the buyers of the units etc etc.

 

http://www.spiegel.de/international/europe...82.html#ref=rss

 

...and just to show that even those most proficient and efficient of engineers, the Germans, have trouble delivering something that works...

 

http://www.spiegel.de/international/europe...r-a-902866.html

 

Okay two swallows do not make a summertime and I'm half joking that these anecdotes accurately reflect the EU's competency but seriously the chances must be reasonably high that not everything will continue to go swimmingly for them (?).

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Howdy Triage,I have no doubt that the incidents you highlight are indeed symptomatic of a large, unwieldy bureaucratic mess.But you could say that for OZ, USA, China, U.K, etc etc. Even in difficult times, ther e are stocks that will do ok. VW may be one of them.And then of course there is the currency side of things. Contrary to many others, I don,t see either the USD or the Euro coming to a demise any time soon.However, I can see difficulties for the AUD. And before anyone jumps on me and tells me how good the Aus economy is compared to everywhere else, it's got nothing to do with economics, and all to do with sentiment. As much as we like to think otherwise, there is very little that we in OZ do do change things. We are such a small insignificant market, and If someone in the big markets decides that they want out, it will happen. How many times has the RBA tried to intervene in the currency markets and failed miserably?

Mick

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  • 1 year later...

Well, it's 3 years later and the Euro's are still muddling. That's all they seem to know. Obama and the Democrats would like peace in the markets until after the US elections, so they will try to stop a Greek exit. So, the muddling continues until just after the US elections, that's if the US can play the puppeteer role? My guess is they can, given they are coming into a power vacuum (nobody wants to take responsibility for an exit)

 

The solution imo is simply to print extra Euros for those countries that have their house in order. None for Greece. Hey, isn't that what they are doing? Greece ends up devalued, with maybe some debt forgiveness.

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  • 2 weeks later...

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