MadameConcorde
Topic Author
Posts: 9201
Joined: Fri Feb 23, 2007 5:08 pm

Will The Euro Collapse?

Fri May 21, 2010 6:31 am

As far as I am concerned, I have altways thought of the Euro as an artificial currency.

“Former Bank of England policy maker says collapse of single currency unstoppable”

http://www.youtube.com/watch?v=WGeCiYBYjIs&feature=player_embedded

The currency is only being kept artificially alive by a series of bailouts off people's tax money.
Will the Euro collapse? Interesting times ahead...
There was a better way to fly it was called Concorde
 
ozglobal
Posts: 2517
Joined: Tue Nov 09, 2004 7:33 am

RE: Will The Euro Collapse?

Fri May 21, 2010 6:43 am

It seems that certain spectators of Europe's project take an unseemly pleasure in seeing it fall into difficulty. The anti-EU and anti-Euro rhetoric is non-stop from certain interests, including all Murdoch owned media and certain other spectators with an axe to grind. It's a shame that so many millions of peoples livelihood is viewed cynically and as a mere political point scoring exercise by some interests.

An genuine interest in the common good of not only Europe, but the global economy would not take delight in the prospect of the collapse of the currency of hundreds of millions of people.
When all's said and done, there'll be more said than done.
 
dxing
Posts: 5859
Joined: Wed Nov 12, 2008 5:14 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 6:49 am

Well it begs the question what will happen if it collapses?

Quoting OzGlobal (Reply 1):
It seems that certain spectators of Europe's project take an unseemly pleasure in seeing it fall into difficulty.

Just as some supporters of the Euro took great delight not too long ago in predicting that the Euro would supplant the dollar as the currency of choice. What goes around comes around.

I wonder how many people stashed Lira/Francs/Marks in a drawer for the possible someday return of their national currencies?
Warm winds blowing, heating blue skies, a road that goes forever, I'm going to Texas!
 
MadameConcorde
Topic Author
Posts: 9201
Joined: Fri Feb 23, 2007 5:08 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 6:56 am

Quoting dxing (Reply 2):
I wonder how many people stashed Lira/Francs/Marks in a drawer for the possible someday return of their national currencies?

When I spend Euros and convert them into French Francs, I see how much we have been ripped off by the European institutions and the new currency.

Simple things such as the cost of a train ticket from Monaco to Nice is telling me the true story, so does buying a fresh loaf or bread at the bakery.
There was a better way to fly it was called Concorde
 
AustrianZRH
Posts: 845
Joined: Tue Aug 07, 2007 5:55 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 7:04 am

Quoting MadameConcorde (Reply 3):
When I spend Euros and convert them into French Francs, I see how much we have been ripped off by the European institutions and the new currency.

And conveniently forget the 8 years of inflation averaging 2% per year you'd also have had in French Francs   . So please, the next time you convert Euros to Francs, divide the number you got by 1.17, will you?
WARNING! The post above should be taken with a grain of salt! Furthermore, it may be slightly biased towards A.
 
fridgmus
Posts: 1296
Joined: Thu Oct 12, 2006 7:28 am

RE: Will The Euro Collapse?

Fri May 21, 2010 7:29 am

Quoting MadameConcorde (Reply 3):
When I spend Euros and convert them into French Francs,
Quoting AustrianZRH (Reply 4):
And conveniently forget the 8 years of inflation averaging 2% per year you'd also have had in French Francs   . So please, the next time you convert Euros to Francs, divide the number you got by 1.17, will you?

Please pardon my ignorance, but I thought French Francs were no longer in circulation, that France had completely switched to the Euro?

Can someone enlighten me please?

Thanks,

F
The Lockheed Super Constellation, the REAL Queen of the Skies!
 
AustrianZRH
Posts: 845
Joined: Tue Aug 07, 2007 5:55 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 7:39 am

Quoting fridgmus (Reply 5):
Can someone enlighten me please?

You're absolutely right, Francs were changed into Euros at a fixed exchange rate (as were all other currencies in the Euro zone). Now what some people do is go to a shop, look up the price in Euro, multiply it by the fixed exchange rate used in 1999/2002 and complain about how expensive everything got...

A few examples from Austria:

end of 2001 you paid 38-42 ATS for a 0.5 l beer in a local pub. Now it's 3.20 to 3.50 EUR which would be 44 to 48 ATS ==> increase of 15%

in a local bed and breakfast, 2001 one night double room in high season was 1300 ATS, now it's 98 EUR, corresponding to 1349 ATS ==> increase of 3%

a salami in the supermarket 2001, 38 ATS, nowadays 3.20 EUR = 44 ATS ==> increase of 15%

and so on.

Then you hear things like, damn the Euro, the beer/salami price has increased 15%...
WARNING! The post above should be taken with a grain of salt! Furthermore, it may be slightly biased towards A.
 
User avatar
Tugger
Posts: 6024
Joined: Tue Apr 18, 2006 8:38 am

RE: Will The Euro Collapse?

Fri May 21, 2010 7:47 am

The key problem the Euro has is that countries are discovering that they can't control it like they could their own currency.

Now, I am not proscribing the view that the Euro will collapse or be abandoned en mass, but the Greek problem partly came about because the Greek government couldn't just inflate its problems away, it was stuck with a strong currency that it doesn't control and so must cut spending vigorously to regain its economy. This is why Britain is very happy happy to have its own currency.

Tugg
I don’t know that I am unafraid to be myself, but it is hard to be somebody else. -W. Shatner
 
idealstandard
Posts: 403
Joined: Tue Apr 21, 2009 1:00 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 7:59 am

Quoting fridgmus (Reply 5):
Please pardon my ignorance, but I thought French Francs were no longer in circulation, that France had completely switched to the Euro?

I think she means that she works it out at the conversion rate when it was dissolved - to see what todays prices are like in comparison.
 
TheCommodore
Posts: 3458
Joined: Tue Dec 25, 2007 2:14 am

RE: Will The Euro Collapse?

Fri May 21, 2010 8:13 am

Quoting dxing (Reply 2):
Just as some supporters of the Euro took great delight not too long ago in predicting that the Euro would supplant the dollar as the currency of choice. What goes around comes around.

May still happen, but it wont be the euro it will be the Yuan !

From what I've heard from relatives in Europe, the cost of living is going through the roof  
Quoting idealstandard (Reply 8):

I think she means that she works it out at the conversion rate when it was dissolved - to see what todays prices are like in comparison.

That would be a depressing exercise!
“At first, they'll only dislike what you say, but the more correct you start sounding the more they'll dislike you.”
 
MadameConcorde
Topic Author
Posts: 9201
Joined: Fri Feb 23, 2007 5:08 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 8:16 am

Quoting idealstandard (Reply 8):
I think she means that she works it out at the conversion rate when it was dissolved - to see what todays prices are like in comparison.

This is what I mean, yes.

 
There was a better way to fly it was called Concorde
 
lewis
Posts: 3576
Joined: Thu Jul 08, 1999 5:41 am

RE: Will The Euro Collapse?

Fri May 21, 2010 8:20 am

Quoting AustrianZRH (Reply 4):
And conveniently forget the 8 years of inflation averaging 2% per year you'd also have had in French Francs . So please, the next time you convert Euros to Francs, divide the number you got by 1.17, will you?

Well, if inflation by itself has raised prices more than 100% (bread, milk, other basics) in 10 years and it has nothing to do with the Euro, it means more or less that the true inflation has been close to 5-7%....

Also, some big increases in prices happened almost overnight with the introduction of the Euro here.
 
MD11Engineer
Posts: 13916
Joined: Sun Oct 26, 2003 5:25 am

RE: Will The Euro Collapse?

Fri May 21, 2010 8:34 am

Quoting idealstandard (Reply 8):
Quoting fridgmus (Reply 5):
Please pardon my ignorance, but I thought French Francs were no longer in circulation, that France had completely switched to the Euro?

I think she means that she works it out at the conversion rate when it was dissolved - to see what todays prices are like in comparison.

The problem with the Euro introduction was that it was supposed to be cost neutral, this means that prices should just be converted based on the official exchange rate ( e.g. in Germany appr. 2 Deutschmarks per Euro). In reality many retailers used the introduction of the Euro to introduce hidden price hikes (and the authorities ignored these illegal price hikes completely). By now (due to psychological reasons) most products are priced at the same figures in Euros as tthey were priced in Deutschmarks (e.g. a pint of beer, which used to cost 2.50 DM back in 2000 now cost 2.50 Euros, this means a price increase by 100%).

Jan
Je Suis Charlie et je suis Ahmet aussi
 
MadameConcorde
Topic Author
Posts: 9201
Joined: Fri Feb 23, 2007 5:08 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 8:37 am

Quoting lewis (Reply 11):
Also, some big increases in prices happened almost overnight with the introduction of the Euro here.

Not only in Greece. The French Franc zone has seen some enormous price increases after the Euro was put in place. They did not come instantly but they certainly came.

We have been fooled. It still amazes me how people don't pay anymore attention to prices and the real value of what they are buying. Many basic things are so overpriced. One Euro for a baguette or a croissant is insane!
There was a better way to fly it was called Concorde
 
AustrianZRH
Posts: 845
Joined: Tue Aug 07, 2007 5:55 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 8:46 am

Quoting lewis (Reply 11):
Well, if inflation by itself has raised prices more than 100% (bread, milk, other basics) in 10 years and it has nothing to do with the Euro, it means more or less that the true inflation has been close to 5-7%....

Also, some big increases in prices happened almost overnight with the introduction of the Euro here.

Of course, I cannot speak for Greece, but in Austria it didn't seem that way. The inflation rate of a "weekly goods basket" in the last nine years was determined as follows:

2001 3.1
2002 2.0
2003 1.9
2004 3.1
2005 4.5
2006 2.5
2007 2.8
2008 7.9
2009 -3.4

source: http://www.statistik.at/web_de/stati...2010_tabellenteil_excel_043205.xls

This yields a total increase of 26.2% over the last 9 years, or an average inflation of 2.5% per year. I do admit however, that in other EU countries this might be higher, I do not know that...

The basket includes:
bread 7.1%
pastries 6.6%
pizza, frozen 1.9%
Topfengolatsche, an Austrian pastry 3.8%
pork loin 4.7%
turkey breast 4.1%
toast ham 7.2%
milk 8.5%
yogurt 3.4%
Gouda cheese 4.1%
butter 3.5%
apples 4.2%
tomatoes 3.0%
potatoes 3.8%
chocolate 5.9%
bottled water 3.5%
orange juice 6.9%
beer 6.9%
sandwich 3.9%
daily newspaper 5.3%
coffee 2.6%

source: http://www.statistik.at/web_de/static/mikrowarenkorb_022519.pdf
WARNING! The post above should be taken with a grain of salt! Furthermore, it may be slightly biased towards A.
 
AustrianZRH
Posts: 845
Joined: Tue Aug 07, 2007 5:55 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 8:48 am

Quoting MD11Engineer (Reply 12):
By now (due to psychological reasons) most products are priced at the same figures in Euros as tthey were priced in Deutschmarks (e.g. a pint of beer, which used to cost 2.50 DM back in 2000 now cost 2.50 Euros, this means a price increase by 100%).

OK, I've grown up at the wrong place  Wow! . You could get a pint of beer for 2.50 DM???
WARNING! The post above should be taken with a grain of salt! Furthermore, it may be slightly biased towards A.
 
User avatar
sebolino
Posts: 3495
Joined: Tue May 29, 2001 11:26 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 8:49 am

Quoting MadameConcorde (Thread starter):
As far as I am concerned, I have altways thought of the Euro as an artificial currency.

“Former Bank of England policy maker says collapse of single currency unstoppable”

http://www.youtube.com/watch?v=WGeCiYBYjIs&feature=player_embedded

The currency is only being kept artificially alive by a series of bailouts off people's tax money.
Will the Euro collapse? Interesting times ahead...

Well, all currency are artificial. The Euro was worth less than 1 dollar at it lowest and has strongly grown since then. I don't see the slightest problem with a Euro at 1.2 $. It was considered way too high, it is just taking it's right place.
I really doubt there will be a split of the Euro zone. It's probably what English would like, but it doesn't mean it will happen.

Quoting MadameConcorde (Reply 13):
We have been fooled. It still amazes me how people don't pay anymore attention to prices and the real value of what they are buying. Many basic things are so overpriced. One Euro for a baguette or a croissant is insane!

Yes, but it's not the "fault" of the Euro, but of the bakers.
 
AustrianZRH
Posts: 845
Joined: Tue Aug 07, 2007 5:55 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 8:56 am

Quoting MadameConcorde (Reply 13):
We have been fooled. It still amazes me how people don't pay anymore attention to prices and the real value of what they are buying. Many basic things are so overpriced. One Euro for a baguette or a croissant is insane!

I can tell you what's really insane: 3.00 CHF (2.05 EUR) for 500 g of bread. 8.50 CHF (5.90 EUR) for a pint of beer. 62.00 CHF (42.80 EUR) for a kg of beef. 35.00 CHF (24.10 EUR) for a kg of poultry. Everything in Switzerland and guess what, we don't use the Euro here...
WARNING! The post above should be taken with a grain of salt! Furthermore, it may be slightly biased towards A.
 
eaa3
Posts: 807
Joined: Mon Sep 10, 2007 4:49 am

RE: Will The Euro Collapse?

Fri May 21, 2010 9:58 am

Quoting AustrianZRH (Reply 4):
And conveniently forget the 8 years of inflation averaging 2% per year you'd also have had in French Francs . So please, the next time you convert Euros to Francs, divide the number you got by 1.17, will you?

In reality the Euro has led to lower inflation then otherwise.
 
Kiwirob
Posts: 9966
Joined: Mon Jun 13, 2005 2:16 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 10:02 am

Quoting idealstandard (Reply 8):
I think she means that she works it out at the conversion rate when it was dissolved - to see what todays prices are like in comparison.

Her problem is that she isn't taking inflation into account so her point is well completely pointless. The prices in francs would also have risen over the same length of time.
 
Kiwirob
Posts: 9966
Joined: Mon Jun 13, 2005 2:16 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 10:11 am

Quoting AustrianZRH (Reply 17):
I can tell you what's really insane: 3.00 CHF (2.05 EUR) for 500 g of bread. 8.50 CHF (5.90 EUR) for a pint of beer. 62.00 CHF (42.80 EUR) for a kg of beef. 35.00 CHF (24.10 EUR) for a kg of poultry. Everything in Switzerland and guess what, we don't use the Euro here...

I don't know what those EuroZone folks are complaining about, prices in Switzerland appear about the same as prices in Norway, some a little more, some a little less, we are both being ripped off. In Norway high prices are what happens when a country pays incompetent farmers 20billion NOK in subsidies and slaps high tariffs on imported food, then people wonder why they pay so much for food.
 
MadameConcorde
Topic Author
Posts: 9201
Joined: Fri Feb 23, 2007 5:08 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 10:25 am

Will German Parliament vote the currency rescue package ?
How will Germany pay for this? Will they have to run the ECB's printing machines?


BERLIN — With the future of the euro in the balance, German lawmakers were expected Friday to approve the massive rescue deal to save the common currency and contain the debt crisis - a signal that the finance minister said was needed to reassure jittery markets.

http://www.signonsandiego.com/news/2...-as-lawmakers-vote-on-euro-rescue/


The German parliament is to vote on its contribution to a 750bn euro ($938bn, £651bn) rescue deal for the eurozone.
Chancellor Angela Merkel supports the rescue package, which is designed to shore up the finances of struggling eurozone countries.

http://news.bbc.co.uk/2/hi/world/europe/10136128.stm
There was a better way to fly it was called Concorde
 
fatmirjusufi
Posts: 1708
Joined: Sat Jan 03, 2009 1:28 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 10:29 am

Quoting MD11Engineer (Reply 12):
( e.g. in Germany appr. 2 Deutschmarks per Euro).

Yeah, crap! As an after-war country we used Deutsche Marks and just after Febryary 1st, 2002 when EURO took the throne, mostly or the better part of products converted their prices as they were in DMs!!! Maybe I'm wrong or it's just my imagination.
You could have a better choice with 5 DMs (coins or banknote ) rather than with 5 Euros! It's sad, indeed!



I miss Deutsche Marks!   



Fatmir
DO FLIGHTS. NOT FIGHTS.
 
aviationmaster
Posts: 2151
Joined: Thu Oct 28, 1999 3:47 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 11:01 am

Quoting KiwiRob (Reply 20):
I don't know what those EuroZone folks are complaining about, prices in Switzerland appear about the same as prices in Norway, some a little more, some a little less, we are both being ripped off. In Norway high prices are what happens when a country pays incompetent farmers 20billion NOK in subsidies and slaps high tariffs on imported food, then people wonder why they pay so much for food.

You described the situation in Switzerland perfectly. Plus, people here have been manipulated and ripped off for decades to think that everything Swiss made has a higher quality than what's foreign. Prices in Switzerland have been falling (slowly) in the past decade due to new discounters, such as Aldi and Lidl, entering the market. And despite this new competition, many Swiss buyers still refuse to go shop there, either under the pretence that they have to support the local supermarkets against this new foreign "threat" or due to the quality of goods sold there not being as high as the Swiss option.
 
MadameConcorde
Topic Author
Posts: 9201
Joined: Fri Feb 23, 2007 5:08 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 11:07 am

It looks like the Bundestag has backed the Euro zone financial rescue plan.

http://www.ft.com/home/europe

Again, who is going to foot the bill? Is this going to come out of the tax payer's pockets?      Wow!
There was a better way to fly it was called Concorde
 
TheCommodore
Posts: 3458
Joined: Tue Dec 25, 2007 2:14 am

RE: Will The Euro Collapse?

Fri May 21, 2010 11:28 am

Quoting MadameConcorde (Reply 24):
Is this going to come out of the tax payer's pockets?

That's an understatement !!   
“At first, they'll only dislike what you say, but the more correct you start sounding the more they'll dislike you.”
 
offloaded
Posts: 900
Joined: Fri Apr 17, 2009 1:56 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 11:29 am

I don't really think many people are looking at the Euro in the UK gleefully hoping it will collapse. Most sensible people know that the fallout would hit the UK too. No harm perhaps in hoping the GBP gets a bit stronger, so the old tourist £ goes a bit further than it currently is.

However, when you have a single currency in use by countries with widely varying incomes and taxation rates, and very different attitiudes towards fiscal policy, you are bound to have problems sooner or later. The irony is that countries like Greece can't actually afford to LEAVE the Euro, whereas Germany could. Of course that wouldn't do the EU project any favours.
To no one will we sell, or deny, or delay, right or justice - Magna Carta, 1215
 
idealstandard
Posts: 403
Joined: Tue Apr 21, 2009 1:00 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 11:32 am

Quoting MD11Engineer (Reply 12):

Yes, and no matter what any government official says, inflation is not the culprit. last time i checked, inflation of 100% in ten years is generally reserved for the poorest of nations who carry their money around in wheelbarrows.
 
ozglobal
Posts: 2517
Joined: Tue Nov 09, 2004 7:33 am

RE: Will The Euro Collapse?

Fri May 21, 2010 11:48 am

Quoting dxing (Reply 2):
Quoting OzGlobal (Reply 1):
It seems that certain spectators of Europe's project take an unseemly pleasure in seeing it fall into difficulty.

Just as some supporters of the Euro took great delight not too long ago in predicting that the Euro would supplant the dollar as the currency of choice. What goes around comes around.

MadameConcorde has made well known her dislike for the EU and the Euro at each opportunity. Therefore, the title of this thread sounds more like a wish than a genuine question.

So too, Murdoch and his UK minions push his anti-EU / Euro propaganda unremittingly. Unseemly and often dishonest.

All of this is quite another story from the market commentators in the US and elsewhere speculating last year that the Euro may replace the USD as "the currency of choice". I was in the US several times at the depths of the crisis and heard of lot more of this speculation IN THE US than I did in Europe. I don't recall any widespread gloating in Europe over the USD's 'demise', as most people were smart enough to understand there would be no winners in such a scenario (Hence there wasn't anything to "go around" and "come around"). So too there are no winners in a failed Euro. This fact of shared misery is not enough, however, to stop some who think of themselves as pure spectators from chearleading a potential demise of the Euro.

I agree with the view that the Euro has been overvalued as a temporary 'safe harbour' currency and is returning to a more realistic value. This does not deny the huge challenges ahead in terms of putting in place the financial governance to maintain long term stability, but it does correct the views of some commentators for whom following the Euro has become something of a 'bloodsport'.
When all's said and done, there'll be more said than done.
 
connies4ever
Posts: 3393
Joined: Sat Feb 25, 2006 10:54 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 12:58 pm

Quoting Tugger (Reply 7):
The key problem the Euro has is that countries are discovering that they can't control it like they could their own currency.

Now, I am not proscribing the view that the Euro will collapse or be abandoned en mass, but the Greek problem partly came about because the Greek government couldn't just inflate its problems away, it was stuck with a strong currency that it doesn't control and so must cut spending vigorously to regain its economy. This is why Britain is very happy happy to have its own currency.

Yes and no.

Yes, national governments no longer control their monetary policies, the European Central Bank does. But the national governments make financial commitments on their own, usually for political expediency, and only too late discover they can't afford these policies, which leads to larger deficit spending, which leads to more loans at higher rates to cover the deficit. --> see Greece.

No, the real issue is not whether the Euro will survive, I believe it will. The real issue is whether or not certain national governments (PIIGS comes to mind) have the backbone to tell their citizens that if they want the social services at the level of, say, Germany, they have to have an economy that can support it. You can't in the long run not work but spend lots. Otherwise, you have to reduce spending to the level your economy can sustain, and that means, for sure for Greece, deep cuts to government services, pensions, etc.

That said, this applies also to the United States. America has been living so far beyond its' means more or less since Reagan hoodwinked the nation, that their day of reckoning is approaching (some of the Clinton years were in surplus, to be fair). A currency crisis around the Ameribuck would make the Euro crisis seem pale.
Nostalgia isn't what it used to be.
 
slz396
Posts: 1883
Joined: Tue Oct 02, 2001 7:01 am

RE: Will The Euro Collapse?

Fri May 21, 2010 1:21 pm

People really should do some reading and study the technicalities before posting here...
In fact journalists should probably do the same, since I haven't read as much BS in a while as when English or US financial media are reporting on the Euro.

Quoting MadameConcorde (Thread starter):
Will the Euro collapse?

No, but what is theoretically possible, is that a country which is member of the euro-zone (e.g. Greece), is forced out of that zone, after which it could then re-introduce its own currency. However, since that would happen right in the middle of a financial crisis far worse than what we have seen recently, the exchange rate of that re-introduced national currency against the Euro would be so unfavourable compared to the entry rate of about a decade ago, that it would basically bankrupt that country on the spot, since obviously all of its obligations from the Euro-era were and will remain in Euro, as well as all those dating from before which have been converted into Eurobonds! That is why in practice it is no option to step out of the Euro and re-introduce a national currency as it's cripling for the country trying to do it.

There's only one solution to the problem in Greece really and that is to have credible budgets with limited budget deficits. In fact, the Euro now for the first time forces them to do what is good in the long term, rather than do what is easiest in the short term, like they've always done before.

In the mean time, while they sort the mess out and regain confidence, they will have to be provided with bridge loans from other Euro-zone members so they do not have to seek money on the free markets at far more unfavourable rates.

This loan providing mechanism of solidarity will indeed put some pressure on the value of the Euro as it is seen as a less solid currency as a whole (by spreading out the risk Greece poses, amongst all of its members), but then the value reduction, although spectacular, isn't a big deal really, in fact it is a good thing even as:
it makes European export goods cheaper
it gives domestically produced goods a sales boost within Europe
inflation was so low (in fact there was even a risk of deflation), that the risk of importing inflation through increasing energy prices is neglectible
It is largely unfelt for its citizens as long as they remain within the eurozone

in fact the spectacular reduction in the value of the Euro is a far bigger problem for the economies that have to compete against it, than for the Euro-economies itself, which is why Obama is on the phone almost daily with EU leaders and the ECB president...
 
MadameConcorde
Topic Author
Posts: 9201
Joined: Fri Feb 23, 2007 5:08 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 1:25 pm

Quoting OzGlobal (Reply 28):
MadameConcorde has made well known her dislike for the EU and the Euro at each opportunity.


not without valid reasons. First reason is that I don't blindly believe what our Euro-poltiicians are telling us, be it Sarkozy, Merkel, Berlusconi, or others.

Second fact, the currency should be the expression of a healthy economy testifying to the legitimacy of the government it represents. Instead, a synthetic European super-state is showing its non-viability and moribundity i.e. toxic debt, ECB.

The ECB’s president Jean-Claude Trichet confided to Der Spiegel on Monday that Europe economy is in its most difficult situation since World War II or perhaps even since World War 1.

.One wonders at what length the unelected authoritarian Brussels Junta will go to in order to stave off total disintegration.

From the beginning, the Euro was a utopia. It would have worked if it had taken in only those countries serious about abiding to the rules and ready to pay the relevant price and if there had been from day one a credible mechanism meant to *kick out* those who do not abide by the rules.

This has not happened. Also it is clear that merely pumping good countries’ money to cover the holes left by the bad ones is not going to work.
There was a better way to fly it was called Concorde
 
slz396
Posts: 1883
Joined: Tue Oct 02, 2001 7:01 am

RE: Will The Euro Collapse?

Fri May 21, 2010 1:27 pm

Quoting connies4ever (Reply 29):
That said, this applies also to the United States. America has been living so far beyond its' means more or less since Reagan hoodwinked the nation, that their day of reckoning is approaching (some of the Clinton years were in surplus, to be fair). A currency crisis around the Ameribuck would make the Euro crisis seem pale

That is correct indeed.

One may not forget that the raw data which started the Greek tragedy are still more favourable than those of the USA.
Greece has a smaller percentage budget deficit and a smaller overal dept compared to its GDP than the US or Japan for instance.
The only difference is the markets still believe the US and Japan will one day re-emburse all that money, whereas they thought Greece woudn't and the reason for that what that the previous right-wing government was caught falsifying the statistics. Once you loose confidence, it's hard to win it back for sure....

Now, the day the markets don't believe the US will be able to repay their loans, hell will brake loose in America indeed, and what is very worrying is that that day can be called any day really: it is the day the People's Republic of China stops buying US bonds. America is litterally living on borrowed money from the Chinese and they can decide to cut the life line any time they want. That's why it is so important for any nation to get its budget under control, not just for Greece, but equally so for the USA and why the Euro stability pact calls for a budget deficit of no more than 3% and a dept to GDP ratio of no more than 60%. Whereas some countries within the Euro-zone have drifted off way too much indeed and will now be forced back in line by the recent events, it is a fact neither the USA nor Japan for instance are anywhere near these figures either, yet they aren't just plucked out of the skies really, they have a solid basis... It is a given those countries will have to face the consequences of their lax attitude too one day (soon).

[Edited 2010-05-21 06:35:52]
 
ozglobal
Posts: 2517
Joined: Tue Nov 09, 2004 7:33 am

RE: Will The Euro Collapse?

Fri May 21, 2010 1:39 pm

Quoting MadameConcorde (Reply 31):
From the beginning, the Euro was a utopia. It would have worked if it had taken in only those countries serious about abiding to the rules and ready to pay the relevant price and if there had been from day one a credible mechanism meant to *kick out* those who do not abide by the rules.

I fully agree with you there. The rules should have been and must be enforced, and if countries like Greece need to be kicked-out of the Euro (not the EU necessarily) so be it.

My ambition though is to see the Eurozone take these hard decisions and become strong, not to see it die in order to score ideological points. It is that Murdochian attitude that I despise in some commentators.
When all's said and done, there'll be more said than done.
 
MadameConcorde
Topic Author
Posts: 9201
Joined: Fri Feb 23, 2007 5:08 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 1:48 pm

Quoting OzGlobal (Reply 33):
My ambition though is to see the Eurozone take these hard decisions and become strong,

Total utopia. Big illusion.

This is just what the Eurocrat politicians liars want you to believe.

They did not abide to the criteria until now. It will not happen.
There was a better way to fly it was called Concorde
 
slz396
Posts: 1883
Joined: Tue Oct 02, 2001 7:01 am

RE: Will The Euro Collapse?

Fri May 21, 2010 1:52 pm

Quoting OzGlobal (Reply 33):
if countries like Greece need to be kicked-out of the Euro (not the EU necessarily) so be it.

As I have explained, that is not possible in practice as it will virtually bankrupt the country stepping out.
After all, all of its depth is and will remain in Euro, whereas that country should then re-introduce a much weakened national currency? No way they can ever repay all those loans, meaning they will have to go bust and restructure...
Not going to happen, unless you want to see another round of collapsing banks in Europe and the rest of the world???

Quoting OzGlobal (Reply 33):
My ambition though is to see the Eurozone take these hard decisions and become strong, not to see it die in order to score ideological points

In fact, the irony is that the European economy, although not governed by a single goverment, is the only economy which has clear fiscal and budgetairy rules to provide enduring stability. All that is needed is a strict mechanism to enforce them...Rest assured the Germans as well as the northern European countries are going to see to it.
As I have pointed out before, the USA for instance are virtually bankrupted and living on borrowed money for years, yet there isn't anything in the law blocking the US government from continuing the borrowing as they have done in the past... it's a road straight to hell really.

Quoting OzGlobal (Reply 33):
It is that Murdochian attitude that I despise in some commentators.

Those who oppose progress just because they like to live with the symbols of the past, are always going to loose out.

[Edited 2010-05-21 06:54:12]
 
User avatar
AirPacific747
Posts: 9274
Joined: Mon May 19, 2008 9:52 am

RE: Will The Euro Collapse?

Fri May 21, 2010 1:54 pm

Quoting MadameConcorde (Reply 13):
One Euro for a baguette or a croissant is insane!

It's a bargin compared to the prices here! We still have the krone, however at a fixed rate compared to the Euro.
 
eaa3
Posts: 807
Joined: Mon Sep 10, 2007 4:49 am

RE: Will The Euro Collapse?

Fri May 21, 2010 1:54 pm

The biggest problem with the Euro is that the countries can't print money. The reality is that in the US, UK, Japan and so forth they print money when the market won't refinance their debt. This means that they can never default. However with the Euro countries are not allowed to print money. BUT that doesn't mean that the Eurozone can't print money. If they want to they can and for that reason they can always save Eurozone countries and the Eurozone will not collapse unless the countries in it decide to have that happen. Keep in mind that money is not a law of nature. Man created it and man can adjust the rules as they want. There needs to be a mechanism that insures that Eurozone countries can always refinance their debt. A mechanism that can print money and buy government bonds (which is btw. what the ECB does anyway) but in exchange for get to have more of a say in government budgets and government debt levels.

And all this talk about these bailouts costing the taxpayers is really misguided. Ultimately these bond purchases or guarantees are not financed with the budget. They are financed with money that is borrowed from the ECB, printed money. If that money is lost then the budget will be hit but if that doesn't happen then not a penny will leave the lending governemnts budget to the borrowing governments budget. As a matter of fact most of these loans to Greece are lent at a higher interest rate then the cost of financing so that the lender (Germany for example) makes money from lending Greece.

Besides everyday the ECB gives banks huge amounts of liquidity in exchange for government bond securities. So the ECB has been buying huge amounts of Eurozone government bonds for a long time (100's of billions or trillions) and taking the risk of their default. Holding them in the exact same way as I proposed above.
 
Acheron
Posts: 1832
Joined: Mon Sep 05, 2005 1:14 am

RE: Will The Euro Collapse?

Fri May 21, 2010 1:57 pm

Quoting MadameConcorde (Reply 31):
Second fact, the currency should be the expression of a healthy economy testifying to the legitimacy of the government it represents.

It has been a really long time since currencies represented anything anywhere, so you are being quite naive.
 
474218
Posts: 4510
Joined: Mon Oct 10, 2005 12:27 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 2:06 pm

I predict the Euro will survive. But each European country will have it own version with its own value. The French will have a Euro-Franc, the Germans will have a Euro-Mark, the Italians will have a Euro-Lira, etc.
 
slz396
Posts: 1883
Joined: Tue Oct 02, 2001 7:01 am

RE: Will The Euro Collapse?

Fri May 21, 2010 2:08 pm

Quoting eaa3 (Reply 37):
The biggest problem with the Euro is that the countries can't print money. The reality is that in the US, UK, Japan and so forth they print money when the market won't refinance their debt. This means that they can never default. However with the Euro countries are not allowed to print money. BUT that doesn't mean that the Eurozone can't print money. If they want to they can and for that reason they can always save Eurozone countries and the Eurozone will not collapse unless the countries in it decide to have that happen

That is correct indeed: only the ECB can decide to print extra money, and the ECB is an autonomous European institute so nobody can force them to do so.

However, there is a good reason why the ECB is so against printing more money....

It is because contrary to the USA, the ECB's main task is not to help finance the huge public depth by printing money (mickey mouse money actually if you think about it, since that money isn't representing anything), but rather keep inflation low. Printing money is doing exactly the opposite, hence it being disliked by the ECB.

Quoting MadameConcorde (Reply 31):
the currency should be the expression of a healthy economy testifying to the legitimacy of the government it represents. Instead, a synthetic European super-state is showing its non-viability and moribundity i.e. toxic debt, ECB.

In view of the above facts, your comment is extremely ridiculous, proving you have absolutely no understanding of economics whatsoever. May I suggest you stop reading the Murdock newspapers and their emotional appeals and start reading some academic works on public finances? You'd be in for a shocker, because that synthetic European currency you so dislike is actually based on far more solid grounds than those currencies of allegedly healthy economies from legitimate nations....
 
aviationmaster
Posts: 2151
Joined: Thu Oct 28, 1999 3:47 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 2:22 pm

Quoting 474218 (Reply 39):
I predict the Euro will survive. But each European country will have it own version with its own value. The French will have a Euro-Franc, the Germans will have a Euro-Mark, the Italians will have a Euro-Lira, etc.

In this case, wouldn't they be better of by bringing back their old currency?
 
NAV20
Posts: 8453
Joined: Thu Nov 27, 2003 3:25 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 2:22 pm

Quoting MadameConcorde (Reply 13):
We have been fooled. It still amazes me how people don't pay anymore attention to prices and the real value of what they are buying. Many basic things are so overpriced. One Euro for a baguette or a croissant is insane!

Many thanks, MadameConcorde - Just in a few sentences, you've shown me (us?) what sort of problems the people of Europe are facing.

Last time I visited France, even in Paris, a baguette AND an excellent coffee would have been one franc or less......  

What it boils down to is that the value of the currency is 'internationally-determined.' There is no 'central bank' that is able to buy or sell it to 'stabilise' the value.

So anything COULD happen - the situation is 'out of control.' But - speaking as an economist - I think the most likely outcome is that the Euro will 'collapse,' and most European countries will, at the least, 'retreat' into re-establishing their own currencies......

If problems (particularly uncontrollable inflation) continue, this could prove to be the end of the EU......

[Edited 2010-05-21 07:35:52]
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
Newark777
Posts: 8284
Joined: Thu Dec 02, 2004 6:23 am

RE: Will The Euro Collapse?

Fri May 21, 2010 2:23 pm

Quoting slz396 (Reply 40):
It is because contrary to the USA, the ECB's main task is not to help finance the huge public depth by printing money (mickey mouse money actually if you think about it, since that money isn't representing anything), but rather keep inflation low. Printing money is doing exactly the opposite, hence it being disliked by the ECB.

Contrary to what? The Fed's job is to control inflation and gain the maximum employment possible.

Quoting slz396 (Reply 30):
People really should do some reading and study the technicalities before posting here...
Why grab a Heine when you can grab a Busch?
 
ajd1992
Posts: 2390
Joined: Mon Jul 24, 2006 7:11 am

RE: Will The Euro Collapse?

Fri May 21, 2010 2:24 pm

Quoting dxing (Reply 2):
Well it begs the question what will happen if it collapses?

Then the Eurozone is truely up shit creek without a paddle. I'm glad we still use GBP for this reason alone.

Quoting 474218 (Reply 39):
I predict the Euro will survive. But each European country will have it own version with its own value. The French will have a Euro-Franc, the Germans will have a Euro-Mark, the Italians will have a Euro-Lira, etc.

Isn't that basically just having their own currency back then?  
 
Newark777
Posts: 8284
Joined: Thu Dec 02, 2004 6:23 am

RE: Will The Euro Collapse?

Fri May 21, 2010 2:26 pm

Quoting aviationmaster (Reply 41):
In this case, wouldn't they be better of by bringing back their old currency?
Quoting ajd1992 (Reply 44):
Isn't that basically just having their own currency back then?

It would also cause a mess, since the weak countries would quickly have their currencies devalued, while their debts would still be denominated in Euros.
Why grab a Heine when you can grab a Busch?
 
eaa3
Posts: 807
Joined: Mon Sep 10, 2007 4:49 am

RE: Will The Euro Collapse?

Fri May 21, 2010 2:30 pm

Quoting slz396 (Reply 40):
It is because contrary to the USA, the ECB's main task is not to help finance the huge public depth by printing money (mickey mouse money actually if you think about it, since that money isn't representing anything), but rather keep inflation low. Printing money is doing exactly the opposite, hence it being disliked by the ECB.

It's naive on their part, and the EU as a whole, to think that they can simply change the nature of how governments finance themselves. Like it or not the fact that governments can print money is an important factor in maintaining stability in the world economy. It's the reason everyone trusts the US treasury, they can always pay you back in dollars if they want to. I mean just a couple of months ago the FED bought 1.5 trillion dollars worth of treasury bills.

But this thing about maintaining low inflation is kind of contrary to their actions. The ECB provides unlimited liquidity to banks and other financial institutions. This means that they print money all day and lend it to banks, in exchange for governement bonds as collateral. This means that the only difference, if the ECB were to start buying bonds directly, is that the banks would stop being intermediaries and meanwhile not printing any more money then they otherwise would.

Today banks can buy a Greek government bond at a high rate of interest (maybe 6%) and immediately sell it to the ECB at 1.75%. If you believe the EU will always save Greece then that is pretty good arbitrage and this is off course the reason why so many French and German banks own Greek bonds. They are in the position of being able to essentailly force their governments to save Greece in any circumstances and meanwhile they make a huge profit from the arbitrage I described earlier.

Quoting NAV20 (Reply 42):
What it boils down to is that the vsalue of the currency is 'internationally-determined.' There is no 'central bank' that is able to buy or sell it to 'stabilise' the value.

So anything COULD happen - the situation is 'out of control.' But - speaking as an economist - I think the most likely outcome is that the Euro will 'collapse,' and most European countries will, at the least, 'retreat' into re-establishing their own currencies......



I wouldn't be so doubtful of governments. They are larger then any speculator. A speculator does not have a printing machine at their disposal. You shouldn't go against goverments at their own game.

I don't know why you think the Euro will collapse. I mean ultimately if it were to collapse then that would because the governments decided to do that. Not for any other reason.



[Edited 2010-05-21 07:39:24]
 
baroque
Posts: 12302
Joined: Thu Apr 27, 2006 2:15 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 2:33 pm

Quoting slz396 (Reply 40):
May I suggest you stop reading the Murdock newspapers and their emotional appeals and start reading some academic works on public finances?

Yep, join a long established Australian club, the "anti reading Murdoch club". This was founded in the days before and after 11 November 1975 when Murdoch did a good job of appearing to advocate and assist in the dismissal of an elected government. Some of us still refuse to buy The Australian newspaper for that reason. Yes I did mean 1975, when we have a grievance we like to nurse it!!!

As to the Euro, I bloody well hope it survives, otherwise we are down a toilet of a depth we cannot even begin to imagine, just as we would be if any of the major currencies bit the dust, be it USD or Yen or Yuan.

Anyone watching the Aus dollar this week, would conclude that the financial engineers have been busy busy busy this week making money out of crises as they always try to do. Good on you Angie for trying to clip one of their wings. What they were doing was borrowing in low interest rate countries such as the Yen, to make investments in high interest Australia and now with a bit of a crisis they have closed out their positions causing the $A to go from just over 90cents to the USD to just over 80 cents to the USD in less than a week. And we have nothing much to do with the Greeks or come to that the Euro zone.
 
NAV20
Posts: 8453
Joined: Thu Nov 27, 2003 3:25 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 2:43 pm

Quoting Baroque (Reply 47):
Anyone watching the Aus dollar this week, would conclude that the financial engineers have been busy busy busy this week making money out of crises as they always try to do.

I happen to have known, and worked with, some of those 'engineers,' Baroque. Their sole professional priority, as far as I know, was to 'protect their clients from harm.'

Are you seriously saying that they should be advising their clients to buy Euros (or Aussie dollars, for that matter) at this moment?

If not, WHY not?  

[Edited 2010-05-21 07:45:41]
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
MadameConcorde
Topic Author
Posts: 9201
Joined: Fri Feb 23, 2007 5:08 pm

RE: Will The Euro Collapse?

Fri May 21, 2010 2:44 pm

Quoting OzGlobal (Reply 33):
if countries like Greece need to be kicked-out of the Euro (not the EU necessarily) so be it.

Such an arrogant assessment! Who are you to judge/decide?
There was a better way to fly it was called Concorde

Who is online

Users browsing this forum: Baidu [Spider], rfields5421, seb146 and 22 guests