Hey, you long EURUSD and that hurts, right? Greece is the tip of the iceberg. Do you want to make them a favor and make them leave? They will default on 300 or so Bln of bonds, French and German banks will lose about 160 Bln and the EUR will take a nose dive. Then, a few others will like it and also want to leave. So now, where to you think EUR will find strenght when Germany and France will have fewer idiots to sell their overcapacity to? That will be the end of surplus for Germany. EUR is between a rock and a hard place. All fake things end up that way. There is no substance behind the idea of the EUR. It was a mistake.
The US could save the Euro by allowing a couple of states to default. That should take some pressure of the Euro.
The Euro makes absolutely no sense. In the US you have 1 currency and 1 fiscal policy. The euro is a hodgepodge of the worst of both, 1 currency and every country is independent with its own fiscal policies. So you have Germany with a much more conservative government fiscal policy, and Greece riding on the coattails of Germany running its own loose, big spend socialist fiscal policy. So the Germans have to keep their services down to subsidize the very big services Greece gives its people. And Greeks pay no taxes but but Germans do. This Euro is not going to survive, it makes no sense.
http://business.timesonline.co.uk/tol/business/economics/article7127642.ece Euro heads for parity with dollar Single currency set for long-term slide, sparking fears for Britainâs export-led economic recovery THE euro is set to slide further and could be heading for parity with the dollar, analysts say. The single currencyâs weakness and mounting fears over Europeâs recovery prospects could hit growth in Britain. The euro fell to a 19-month low against the dollar of $1.23 on Friday night, amid fears that the austerity measures countries need to adopt to satisfy the EU authorities and the International Monetary Fund could tip them back into recession. Sterling ended the week up against the euro at â¬1.18, but down against the dollar at $1.45. Olli Rehn, Europeâs economic and monetary affairs commissioner, stoked fears about the pain ahead for Europe when he said yesterday that the â¬750 billion (£638 billion) crisis mechanism agreed last week should be made so unattractive that countries will not want to use it. âIt is essential that we prepare ourselves for the worst-case scenario. But of course there is the issue of moral hazard,â he said at the annual meeting of the European Bank for Reconstruction and Development. Related Links * Digging our way out the hard way * Speculators flee before â¬750bn euro bailout âThis mechanism must be made so unattractive that no EU leader will resort to it.â He also said that the EU should have an exit strategy from its crisis measures. The Bank of England warned last week that weakness in the eurozone was one of the main risks to Britainâs recovery. Jean-Claude Trichet, president of the European Central Bank, said in an interview with Der Spiegel, the German magazine, that âprofound changesâ were needed in the oversight of countriesâ fiscal positions within the eurozone. A report this weekend from UBS suggests that the appetite for holding euros among private sector institutions and managers of official currency reserves is fading. âThis monthâs â¬750 billion package of support for the eurozone isnât sufficient to turn the tide of the euro,â said Mansoor Mohi-uddin at UBS, the investment bank. âThat is the verdict both of private sector players, who now have record shorts, but also of reserve managers that weâve been visiting around the world. This suggests the decline in the euro will keep going.â UBS predicts that the euro will drop from its current â¬1.23 level against the dollar to â¬1.10 next year. Others fear it could drop further than that, to dollar parity or below, replicating the single currencyâs weakness in the early years after it came into being. State Street Global Advisors, in a report to clients on last weekâs euro rescue package, said: âThe package buys time, but does not fix the underlying problem. Countries may need more loans over the intermediate term. The debt arithmetic is daunting. Some kind of debt restructuring cannot be ruled out.â Commerzbank, the German bank, expects the euro to stabilise and end the year about current levels, but it warns that conditions could arise for a slide to parity with the dollar. âThere are risks: a continued loss of credibility for the ECB, difficulties in financing the stabilisation mechanism or legal risks could put additional pressure on the euro,â it said.
There is way too much negative sentiment on the Euro, classsic schadenfreude on the part of the anglo saxon world vis-a vis the European social model. Anglo saxon capitalism failed miserably in 2008. It's ironic the Euro is called the failure of the century after what amounts to a mere 25% drop from its 1.60 top. Europe has always had daunting problems and yet it keeps going and people in the end have a better quality of life than in the UK and most US states. I am no fan of the EU, actually I think it's run by mostly incompetent bureaucrats, but the euro and the monetary union are now so well accepted they will be defended at any cost by European institutions, I can't see it breaking apart. At the same time Euro/USD is at major support and same can be said of other currencies against the dollar. Clearly the Greece crisis was exarcebated to this point by the herd behavior of anglo saxon speculators . Hedge funds are just a bunch of lemmings going in the same direction and markets have gone insane. Anything can happen but still the negativity and the attention on the euro is absolutely striking , a few months ago the world wouldn't give a rat ass about what was going on in Europe, it was all about the US and emerging markets. NowGreece is said to bring about the end of the World , come on !
The only way to fix the Euro is to dissolve it. Euro is very weak in its foundations. Too much debt, to much spending. It is just a matter of time before it happens.
Whatâs funny with all this âworld (or at least euroland) coming to an endâ stuff is people forget that EURUSD parity is 1.00. The pair actually traded below parity in the strong U.S. Dollar days of the 1990s. It hasnât even fallen to the 2005 low. (I remember that selloff well; there wasnât even a real crisis going on at the time.) We can argue fundamentals all day, but the fact that the EURUSD just hit 1.2300, 1.2100 or whatever doesnât imply any kind of crisis on the charts (even if it represents a long-term trend change).
Can someone explain to me why the euro is getting hammered because of the Greece situation? It seems to me that Greek sovereign debt should bear the brunt of it, not the currency. If Greece defaults, why should that affect the euro?