Is Euro done?

http://www.forecast-chart.com/exchange-euro.html

It's toast. These are countries that have been at war for the better part of 2000 years, and now they are suppose to help each other out with low interest rate loans, bail out packages and signs of solidarity???

may not be done, but definitely headed lower...more trouble coming out of germany today..deutschland not havin payin the bills for thier neighbors.

i want the euro to be what it used to be .80 cents. i can then continue my european travels. it should at least be pegged 1 to 1.

Yes. Short @ 1.41

Ok, I know the superficial story of Greeks rioting because they don't want to accept austerity. I want to know what the big deal going on this weekend is? It seems to me that if the EU offers a huge rescue package for greek debt, the problem should be contained, no? Why is everyone so freaked out about this if a rescue seems to be at hand? Is there something deeper here? And why are our markets freaking out about this?

Euro has rallied in current trading and is now at 1.2948.

NYCROBOT,

The big deal is that many respected observors don't think the bailout is going to work, and there is a significant "web of debt" that means a Greek default, could lead to many other defaults.

Check out the following NY Times article, especially the multimedia piece on "Europe's Web of Debt."

http://www.nytimes.com/2010/05/02/weekinreview/02schwartz.html

In a nutshell, this will foster more deleveraging in the European, and consequently, the global economy.

Its a real problem. If Greece were on their own they could have devalued the drachma. The man on the street in Greece is thinking they are suffering to protect the French Banks. The man on the street in Germany is thinking nearly the same thing.

There's a lot of stress in the system. We had Dubai & Greece. Spain & Portugal are hurting, California is a basket case and we forgot about Iceland. I think the powers that be will keep attempting to patch the system until the holes become too big and as Marc Faber put it the system will have to hit reset like a computer that needs to reboot.

it's lehman logs greater... flmao. If anyone thinks 16 finance ministers have the authority to print unlimited amounts of Euros/Debt.... God help you.... bet the mkt calls the EU bluff...

The system is broken. The assumption is that market participants including the regulators think they have perfect information, not realizing that their economic constructs and actions are part of the problem.

Anyways, ths euro will remain volatile. You can play the waves, but as a long term currency it will not survive.

The problem is that more debt does not solve a debt problem. No modern economy has ever recovered from the debt levels relative to GDP that Greece currently has. The only options as far as I can tell are to:

a) take the "bailout", which comes with severe austerity strings attached, This will perhaps solve the problem in the short-term but the austerity measures are so draconian, they can only result in a severe recession or depression in Greece while they sit and observe business as usual in the rest of Europe - unlikely.

b) default, which will wreak havoc on European banks and other European nations to which the debt is owed. This option sets off a chain reaction not unlike the Bear/Lehman collapse where no one really understands what the counter-party risks are.

c) The EU bites the bullet and attempts to print their way out of the problem like the US. This is probably their best option but it is only buying more time and comes with its own set of problems. There is nowhere near the demand for European debt as there is for US Treasuries so it is unclear if and for how long they would be able to keep interest rates low enough to keep kicking the can down the road.

d) Greece pulls out of the Euro and goes back to the Drachma - and deflates the #%@! out of it. This would allow them to effectively hide the austerity measures from the general population because they are now receiving all of their wages and "benefits" in a worthless currency. The debt itself is in Euros though so I'm not sure exactly how this would work anyway.

Any others?

It will be interesting if Euros printing in Greece are not considered as good as those printed in Germany....(I've heard this before, but was never able to corroborate)

http://ironiestoo.blogspot.com/2010/04/euro-notes-you-may-not-want.html

Euro notes you may not want.
The supposed common currency of the eurozone within the European Union carries identifying letters of the country of issue. As collapse of the currency approaches and funds flee Greece there are clearly certain large denomination notes that savvy folk will presently avoid.

Ordinary folk might also wish to avoid being left with worthless paper, the following table taken from Wikipedia, linked here, might help you to select the country of issue for your holiday spending money.... particularly if headed for Greece, Portugal, Spain and even perhaps Italy.

Quote

Country codes are alphabetised according to the countries' names in the official language of each country, but reversed:
National identification codes Code Country Checksum(1)
in English in official language(s)
Z Belgium België/Belgique/Belgien 9
Y Greece Ελλάδα [Ellada] 1
X Germany Deutschland 2
(W) (Denmark) Danmark (3)
V Spain España 4
U France France 5
T Ireland Éire/Ireland 6
S Italy Italia 7
(R) (Luxembourg) Luxembourg/Luxemburg/Lëtzebuerg (8)
(Q) Not used
P Netherlands Nederland 1
(O) Not used
N Austria Österreich 3
M Portugal Portugal 4
L Finland Suomi/Finland 5
(K) (Sweden) Sverige (6)
(J) (United Kingdom) United Kingdom (7)
(I) Not used
H Slovenia Slovenija 9
G Cyprus Κύπρος [Kypros]/Kıbrıs 1
F Malta Malta 2
E Slovakia Slovensko 3

(1) checksum of the 11 digits without the letter

* The positions of Denmark and Greece have been swapped in the list of letters starting the serial numbers, presumably because Υ (upsilon) is a letter of the Greek alphabet, while W is not.

This whole problem could be solved if the price of olive oil went up. Seems almost every European country having a problem with the Euro is an olive oil consumer/producing country...

Sounds like they are going with option C

Very unlikely, about as unlikely as the US truly tackling illegal immigration. So not completely impossible, but just one tiny step from it.

Well, what ever happens this will take months to play out.

not yet

http://www.nytimes.com/2010/05/10/business/global/10drachma.html?ref=global-home

US buyers of Euros when it was first created have made money. European buyers of US dollars when the Euro was first created have lost money.

Silly question: with the $700 billion loan package set up tonight, who is going to pay for all this? Will they sell bonds to raise the money? If so, who's gonna buy them? Will it be direct cash injections fromt eh various governments? If so, who has that kind of money lying around?

Looks like the European markets and the Euro are rallying on the political marketing. My guess is the Euro will continue its rally in the short term as details are released, but careful here. Like the US, structural issues are still there, but unlike the US, they don't have reserve currency status and some of these countries will not be able to export their way out. And sure Japan is heavily indebted and it's currency is strong, but they don't have the high savings rate the Japanese have. I just hope Gold goes down enough to pick up on the cheap.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7702335/Europe-prepares-nuclear-response-to-save-monetary-union.html

Nor is this rescue fund any more than chemotherapy for the cancer eating away at the foundations of monetary union. It is not a cure. The rot set it when the South joined EMU before it was ready to cope with ultra-low interest rates or match German wage-bargaining. The ECB made matters worse by gunning M3 at an 11pc rate during the bubble. Club Med lurched from credit boom to bust. It is now trapped in debt deflation at an over-valued exchange rate, like Argentina with its dollar peg in 2001 until air force helicopters rescued President De La Rua from the roof of the Rosada.

The answer to this -- if the objective is to save EMU -- is for Germany to boost its growth and tolerate higher `relative' inflation. This would allow the South to close the gap without tipping into a 1930s Fisherite death spiral. Yet Europe will have none of it. The weekend deal demands yet more belt-tightening from the South. Portugal is to shelve its public works projects. Spain has pledged further cuts. As for Germany, it is preparing fiscal tightening to comply with the new balanced budget amendment in its Grundgesetz.

While each component makes sense in its own narrow terms, the EU policy as a whole is madness for a currency union. Stephen Lewis from Monument Securities says Europe's leaders have forgotten the lesson of the "Gold Bloc" in the second phase of the Great Depression, when a reactionary and over-proud Continent ground itself into slump by clinging to deflationary totemism long after the circumstances had rendered this policy suicidal. We all know how it ended

right the Euro was 89 cents when formed in 1999.

They started the process in '95 (the european currency unit was the original name), and there were no euro bills or coins until 2002.

Originally it was pegged to be above $1, it just fell.

The European union does not have a central treasury, tax system or budgetary authority. What ever they do short of this is a band-aid that is sure to come off. The policies that make sense for Germany do not make sense for Portugal.

band-aid is already off

Europe just pissed off their German bankers.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7707775/ECB-risks-its-reputation-and-a-German-backlash-over-mass-bond-purchases.html

Axel Weber, ultra-hawkish head of the Bundesbank, told Boersen-Zeitung that the emergency move over the weekend had been a mistake. "The purchase of government bonds poses significant stability risks and that's why I'm critical of this part of the ECB's council's decision, even in this extraordinary situation," he said. The rebuke is devastating. The ECB draws it authority from the legacy and aura of the Bundesbank.

The European Commission made matters worse by announcing the decision in the small hours of Monday morning before the ECB had spoken, fuelling suspicions that monetary policy is being dictated by the political authorities. French President Nicolas Sarkozy further enraged Berlin by claiming that 95pc of the $1 trillion "shock and awe" rescue package was based on French proposals.

"Germans are watching this in horror," said Hans Redecker, currency chief at BNP Paribas. "If this ends up in full-blown quantitative easing, people are going to be up in arms."

Europe is learning why it can't be a life-style super-power. Pelosi should be very grateful Greece blew up now and not at the during the Health Care debate. We're seeing the fallacy of Keynsian economics and huge deficits.

Goldman Sachs has admitted that it is under investigation for helping Greece to hide its vast debts.

The controversial Wall Street bank - nicknamed the Vampire Squid because its tentacles stretch far and wide - is accused of having profiteered out of a complex currency deal that helped Greece massage its finances.

In a regulatory filing in the U.S., Goldman disclosed that is 'subject to a number of investigations and reviews by various governmental and regulatory authorities' in connection with its financial transactions with Greece.

Read more: http://www.dailymail.co.uk/news/worldnews/article-1277038/Goldman-Sachs-probed-financial-transactions-Greece.html#ixzz0nckbdyVn

Stop the inanity. In case you haven't been paying attention, Europe is actually composed of different countries with varied cultures and economic systems.

Agreed, and the reasons why the Euro is unravelling.

It's not unraveling. You are deafened by the echo chamber.
If only you used your reasoning skills, instead of being an empty vessel for whatever floats about the Internet.

"Europe is actually composed of different countries with varied cultures and economic systems. "

couldnt agree more. the eurozone concept takes away each country's national identity and culture. the eurozone implements certain rules for new countries that enter and the new country has to consult with the eurozone on certain types of purchases... ranging from how cheese is processed to how long food can be kept (goulash storage rules), to what light bulbs can be used, etc..tons of little things that to the locals, make no sense.

sounds stupid Im sure, but if your a local in one of these countries that now enters the eurozone and subject to these rules, the old school culture and identity will be forced to change. Once in the union, you cant leave even after the country realizes it was better off on its own. Its a marriage without the option of divorce..imagine that folks!

The leders of the EU, just threw everything they had at the market, and the euro is now lower against the dollar than when the news of thier rescue package came out. thats very bad

I'm certain the United States of America will be happy to bail out california when the time comes.

no cultural differences between nebraska, california, new york, iowa at all.

Prices went up considerably in countries like Spain & Italy after joining the Euro. In addition Spanish & Portugese exports are more sensitive to currency rates than German exports(the countries export products are not on the same place in the food chain). German companies like Siemens don't compete on a currency basis the same way as a Porguese shoe manufacturer.

Difference is, we had over 300 years to at least iron some of them out....

If you want to use that parallel, where there be a civil war in Europe in 50 years?

And we were founded with those differences. We share the same fundamentals - the constitution and the bill of rights. There were no countries before our union.

And we already have a huge federal tax.... so bailing cities / towns out... much easier.

Noah, the Euro has very little to do with food rules and processing. The EU started as Franco-German cooperation after WWII, to encourage political and cultural cooperation and exchanges. Over the next 50 years, it grew to 6 then 10 then 22 countries, in an attempt to foster political resolution of disputes (rather than wars), cultural exchanges (schools and universities trade students), and achieve unified market and border rules. That last bit is the most contentious, as there isn't any consensus even within each EU member about goals, let alone at the supra-national level.
A common currency is the latest enhancement of the Union. Not every country has adopted the EU, and yet their industry is still regulated by European rules.
The reason why I don't believe the "euro is in trouble" noise, is that like like all market-expanding tool, there are winners and losers. If you are a Polish manufacturer of widgets, you win. If you are an unionized German worker in a widget factory, you lose. Note that people with money, education get more opportunities while high-school dropouts who work unskilled jobs lose. It's not all that different from what the US is facing. Would you bet against expanded trade here?
As to the homogenization of culture, it's not new. It's really a by-product of improved transportation. My grandfather rarely ventured more than 35 miles from his birthplace. He spoke French and a local dialect (which has now disappeared.) His grandfather probably didn't speak French at all, as he was born before public schools were established and made French the national language.

The Fatal flaw in the Euro is the lack of a central treasury, tax system or budgetary authority. Ultimately this is where they must go if they want the Euro to survive.

Agreed. A strong, central government is usually the best way to go.

@ Malthus: I think you just made his brain explode. Lol

Malthus. Nice nice nice.