Europe: What's Next?

Discussion in 'Economics' started by achilles28, May 17, 2010.

  1. Given the rash of much-needed budget cuts across Eurozone sovereigns, I think the ECB will be forced into an aggressive program of quantitative easing reminiscent of the '09 FED initiative to prop bank balance sheets, sovereign debt and corporations who otherwise stand to get killed by the deflationary "credit-crunch" rapidly gaining traction in Europe. It's not possible to cut deficits and prop banks with sovereign debt, so the ECB really must step it up and open the floodgates, as the IMF and US FED already led the way to contain the contagion that easily threatens North American markets.

    In my opinion, Trichet and the Germans must hit the presses hard and fast to get the reflation/confidence trade back up and running. I think all this will happen within a couple weeks. I think we'll get a Euro bottom this week. Of course, they could just let the whole world go to seed, but I doubt it. It's inflate-or-die and the ball is in the ECB's court. My fear is the Germans and Trichet will gamble and prolong the crisis to extort a centralized fiscal authority for eurozone member budgets. I hope the painful lessons from their hesitation on Greece were learned. But maybe it wasn't hesitation at all? Maybe these crisis aren't nipped in the bud to foment the exact panic the ruling class need to effect sweeping changes otherwise reviled by the masses? The real crux is steep budget cuts = deflation = massive banker writedowns = bankruptcies = EU credit crunch = Depression. The ECB has to intervene and combat that via inflation or it'll spread quick.

    That said, I think we'll get a Euro bottom this week or next. 70% chance. Short-interest at record highs, quantitative easing around the corner, 1 Trillion in bailouts on the way, and a world that must avoid a deflationary contagion at all costs.
     
  2. ammo

    ammo

    there seems to be an attitude of each country worrrying seperately about their own people, not europe as a whole,much like our indifference to problems in calif,or detroit,florida,if we dont live there....the difference is we have one government,it's easier to come to a tough decision collectively...over there i don't think they have that,..they make a proposal,they each go back and work out how it would affect them regionally,and come back to the table..over and over and over..it may take a while
     
  3. ammo

    ammo

    eur monthly h and shoulders,i know you;ve seen all this those ovals are a 38 point sprd,38 from that neck is .90
     
  4. ammo

    ammo

    mar 09 low, todays high
     
  5. it's an interesting question achilles28, very interesting actually -
    'may you live in interesting times' http://en.wikipedia.org/wiki/May_you_live_in_interesting_times
    i've little to no understanding of the EU, its economics nor its politics except to say
    they appear to have fallen well short of anticipating or including a failsafe mechanism
    to cope with the situation they're now in
    i would think that matters will continue to deteriorate, and in so doing re-bound onto
    the US; some professional bond traders seem to think that the US debt problem will
    go critical within 2 years which seems like a long time away; but Europe's has already
    started and i think in many respects the world's in a 're-set' cycle although momentum
    is still providing forward motion
    what the US was doing the last 2 years with companies, banks, the EU is having to do
    with countries, and the last time i added up the numbers thought they need at least $3T
    just to keep things running, so the last $1T is well short of what's needed
    i think Spain is the equivalent of the US housing market, would Greece be Lehmans ?
    and Germany Goldman Sachs ?
    now that Greece has '[May you] come to the attention of those in authority', it appears
    that the EU - or is that Germany only - has discovered that 'May you find what you are
    looking for' - the EU is a bag of snakes


    my current price/time target is the € to the 1.16 area in the 2nd week of June, however
    that's not to say the euro can't fall below par with the $
     
  6. You have to understand, the European banking system is totally interconected as a siamese twin.

    Add to that the fact savingsrate in most of Western Europe stands between 15% and 20% and you know why banks have everyone and everything by the balls.

    Germany guarantees every single penny of it's banking accounts no limit what so ever.

    Allowing them to default will not be allowed, regardless legislation or rule breakers.

    Everyone knows this, but ofcourse it is not allowed to say this out loud.
     
  7. This is the perfect fertile field to give rise to Hitler II, maybe Nostradamus is right after all.
     
  8. didn't he say it would be called mabus.
     
  9. #10     May 18, 2010