Euro could be under pressure this week

[Kitty]

The Herald Tribune today reports that the euro could be under pressure this week because a number of European banks are going to be reporting their profits/losses and these are not expected to be good.

Let's wait and see...

[AnOther]

You mean let's wait and hope [:'(]

[:D]

 

[mint]

She means let's wait but let's not expect too much [6]

[Pierre ZFP]

I'll hope but I'll be hoping that the Euro doesn't come under pressure!

[NickP]

You can bet your life the Euro will come under pressure eventually. Because when the financial gangsters of the stock exchange etc. have finished with the Pound and the Dollar they will start on the Euro. I find it amazing, that the regulating bodies for the financial services  allow them to do things to the economy that if you or I did we would be locked up for. Remember these bandits profit wether the rates go up or down, in fact they manipulate them for their own benifit.

NickP

[Renaud]

I don't see the euro surviving as it is now much longer. I think that by Christmas the weaker currencies will split into a mark 2 version and a stronger euro (representing the founder common market countries) will soar against the other currencies.

[baypond]

[quote user="NickP"]

You can bet your life the Euro will come under pressure eventually. Because when the financial gangsters of the stock exchange etc. have finished with the Pound and the Dollar they will start on the Euro. I find it amazing, that the regulating bodies for the financial services  allow them to do things to the economy that if you or I did we would be locked up for. Remember these bandits profit wether the rates go up or down, in fact they manipulate them for their own benifit.

NickP

[/quote]

Nick, the Euro has fallen against the dollar. The Pound has fallen against both. If the Euro falls this week, it is partly because of the realisation that European banks and the economy are in almost as much trouble as British. Additionally, the European Central Bank has kept rates higher and for longer than those in other parts of the world.

Your point about 'I find it amazing, that the regulating bodies for the financial

services  allow them to do things to the economy that if you or I did

we would be locked up for' is actually correct, albeit not in the way you meant, because it is the regulatory framework (set out by Government) that encouraged poor lending practises (100% mortgages, multiples of earnings, self cetification etc). Government is the cause, the banks are the effect.

just my opinion

[NickP]

Baypond,

You are probably correct in your assessment. But my comments are a result of frustration at a system that would not give me a mortgage unless I took out an endowment, then proceeded to pay me 30% less than they promised, and when I applied for compensation I was told I took out my policy two years too early. My pension was with the same company( who I no longer count as one of my FRIENDS). When I went to cash it in they didn't want to know, and offered such a derisory annuity I was forced to go elsewhere, lucky that I could. Now as a pensioner I live on my pension and my interest from my assets. I have never had hire purchase and paid on the nose for everything. Along comes a system that lends not 100% but 120% mortgages, and when they get into trouble they drop the interest rates so the poor little darlings can cope. Excuse me if I am feeling a little bitter.                                                           As to your defence of the banks, although I understand what you say, they couldn't get their noses in the trough quick enough. Now I am not only getting small returns on my savings, I am subsidising the money grabbers. I would be better of spending what I have and going on the social, unfortunately my generation were brought up differently and taught to look after ourselves. I shudder to think of the state of the country in about thirty years time. As nobody will bother to save and live responsibly who will pay the bills?   Rant over,                                I still think the Euro will fall back against the Pound.

[Dog]

• I am angry too!I am angry too!I am angry too!I am angry too!I am angry too!I am angry too!I am angry too!
• My pension has been drunk away by the people that were meant to look after it.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[mint]

NickP & Dog, you have voiced the very sentiments that I have been feeling for months now.

I couldn't have put it more clearly or succinctly.  I just feel such despair that I couldn't be bothered saying anything.

It's sort of a numbness when you stop banging your head against the wall.....

[woolybanana]

That is the result of drink[6]

[AnOther]

[quote user="sweet 17"]

NickP & Dog, you have voiced the very sentiments that I have been feeling for months now.

I couldn't have put it more clearly or succinctly.  I just feel such despair that I couldn't be bothered saying anything.

It's sort of a numbness when you stop banging your head against the wall.....

[/quote]I concur sweets, there really is not a thing to be said which will make one iota of difference  - except to make you feel worse - so we sit and fume in silence, grrrrrrrrrrrrrrrrrrrrr [:@]

 

[mint]

Drink?  Chance would be a fine thing. 

Especially nowadays when I do all the driving.  Driving = NO alcohol, whatever the occasion [:'(]

[JMB]

Instead of banging your heads on something hard and getting angry, why not be a bit more positive and go out and make some dosh.

[dragonrouge]

To finalise a few things I have contacted a FX company to move some of the last of the funds across.  I had thought to do so in April but 'he' said 'leave it until say mid year for the euros is next on our hit list' His words not mine and I do not believe now anything that anyone with a financial axe to grind tells me.  Just posted it here fww.

[Quillan]

Banks have been giving 100% mortgages for years before all this happened. Yes it was the government that allowed them to give 100% mortgages but it didn't mean say they should lend money to people who can't afford to pay it back, that was the banks choice. Personally I believe the banks should pay and at least one should be allowed to 'go to the wall' if only to teach the others that they can't expect the government to keep bailing the out. Easy for me to say as I don't have a UK bank account.

My pension pot has shrunk a lot since New Labour got in to power. I think they have raided it three times now tax wise. In 2008 it seems I have been paying them to actually loose me money. I would be better off taking it out and putting it in building society, 0.5% is better than loosing money or more to the point paying somebody to loose it for me. It reminds me of Robert Maxwell and I am now thinking that what he did with his companies pension funds are nothing compared to the current government, perhaps they used him as a model. The only thing I can do is sit tight and hope that in the next 5 years or so it will come right but I am not holding my breath.

I said a long time ago hitting on the savers by lowering the interest rates is not the way to go. With the Euro rates higher than the UK rates people who can are moving their savings to the Euro. That's less money in for the UK banks. I think I am being proved right on this and the reason why is quite simple.

When you go to the 'hole in the wall' to get some money out there has to be money in the machine in the first place. Hopefully when you are taking some out somebody else is putting some money in via their savings account. This in turn is put in the machine so you can draw on it. Don't forget I am talking about physical money, folding stuff. Is it really that simple, well not quite because the money goes away to be counted etc and probably ends up in a different machine but the principle is correct.

Now as I understand it there is a shortage of physical money in circulation (its under my bed if anyone asks [;-)]) so the government are buying bad debts from the banks and paying them in cash which they can stuff in the 'hole in the wall' machines and a few other places. This is a way of indirectly printing money to avoid devaluing the pound. The guy on TV refutes this and says its a way of clearing out the banks so they can make a fresh start, yeah right, who's money is it, public money i.e. tax payers money and when that's gone they borrow from other countries and from banks! Talk about round and round the wheel goes. Since the current government have got in power they have gone from a position of credit (about £19 billion was it, I can't remember the exact figure) to just over a trillion in debt and they are still spending money. Most of it is going in to bailing banks out. It seems to me and I am no expert that something is not quite right here.

Now GB has said he wants 100% mortgages to go, that's not a bad thing on face value but it could turn round and bite him on the bum. House prices are falling because there is no 'new money' coming in to the system via first time buyers. They now will have to find between 10 and 20% deposits to buy their first house. Now it seems to me that now is not a good time to save money. It would seem to me that you have deposits when the system is running well and drop down to 100% mortgages when its not to keep the flow of first time buyers. So GB said he wanted to kick start to house buying, well as far as I can see he has definitely kicked it alright. Those that are higher up the chain will have to continue dropping their prices to move on which will also be extenuated by the fact that those on the first rung of the ladder won't have anyone to buy their house so the chain will move very slowly if at all.

Mind you if you want to go back to the UK it couldn't be a better time. More stirling for your Euro and you can pick up some nice houses at bargain prices. But then would you really want to go back?

[AnOther]

[quote user="JMB"]Instead of banging your heads on something hard and getting angry, why not be a bit more positive and go out and make some dosh.[/quote]Thank you for that very helpful comment JMB [:'(]

Whilst I speak for myself I'm sure many others will agree that it's not necessarily a lack of cash driving my frustration and anger but the way I have been (and continue to be) royally shafted, sh1t upon, and penalised for my thrift. The sheer impotenecy and helplessness is what galls me the most. Right now I'd be happy if I could just take my (decimated) pension pot in hard cash and be left alone to look after my own affairs thank you. I could hardly do worse than the so called professionals now could I [:-))]

 

[Gluestick]

Actually, the core problem with the British economy is far simpler than has yet (except Peston) been expounded.

By 2003, when the Office for National Statistics reported its annual survey on "Great Britain's Wealth", residential house value represented circa 2/3rds of total wealth!

The meausre includes roads, railways, docks, airports, all industrial buildings, commercial buildings, government buildings (at all levels: i.e. local, county, regional and central) factories; everything.

Brown's "Economic Miracle of prudence" was based on two main planks: an insane meteoric rise in house prices - and all the fevered activity which surrounded this: financial services; legal, estate agency; removers etc -  and at the same time, a massive rise in importing mainly low quality junk from Asia (mainly) and elsehwere; such as carpets and laminated flooring from Belgium and the USA;  kitchens from such as Hungary (MFI) etc. Mainly purchased on credit.

For most of NuLab's term Balance of Trade was deeply in deficit: which has to be paid.

Consumer borrowing (both Secured and Unsecured) reached epidemic levels.

In order to finance this vast increase in credit and since the core UK economy such as manufacturing was not throwing off real wealth increases, massive amounts of capital had to be imported: simply put, Britain was overtrading. The state's finances were identical to a large corporation who have full order ooks but no capital to fill the orders.

Now, the global capital market (Mainly Interbank market) is shut, to the UK institutions.

Additionally, Government's tax take zoomed in all areas relating to a boomed up economy: VAT; Car Tax; Fuel Duty; Corporation Tax; Income Tax; etc

Now this has reversed: rapidly: and is currently trending negative and is forecast to do for perhaps two years.

The Bank of England's MPC (Monetary Policy Committee) also created much of the problem, by lowering and lowering base Rate of Interest to near 50 year record lows. Knowing full well this act would in all probability end in disaster.

http://www.independent.co.uk/news/business/news/exgovernor-george-says-bank-deliberately-fuelled-consumer-boom-441160.html

Meanwhile, mortgage lenders behaved irrationally and insanely, by lending up to 115% LTVs; tenors (term) up to 38 years: and income multiples of up to 8.5 times.

The result was a house price boom, where prices far outstripped gross income (Wages/salaries) in growth: the textbook economic standard is that a house ought to be valued at roughgly 3-5 times gross income: thus the average house should be 3.5 times the average national wage.

The Eurozone (as I have written here before) has its own share of fiscal and economic woes. Like all major economies (Including Japan for the first time in a very long time) manufacturing exporting states (Germany- the most significant- France, Italy et al) are plunging evermore rapidly into negative economic growth.

The ECB, however (which is mainly driven by the Bundesbank) is resistant to cutting interest rates (There are four main ECB rates), despite the need to do so.

This is mainly since the Bundesbank and Germany enjoy a paranoia over inflation leading to hyper-inflation from the German experience of monetary meltdown over the collapse of the Weimar republic in the 1920s.

With the collapse of the US dollar and increasing doubt over forward stability and value, many global investors and sovereign risk funds (State owned investment funds) as well as Central Banks moved from the US dollar into the Euro, during the past five years. This falsely inflated the Euro's value, above the Eurozone's economic probability.

Additionally, as is now emerging, many Eurozone banks are sitting on far greater toxic assets than first admitted.

The Euro's inflated value has crippled Eurozone manufacturing exporters and will continue to do so: until the ECB are shortly, compelled to take action and lower the currency's value on global Forex markets; probably by dropping base rates significantly and some form of Quantative Easing (Printing skads of notes!). As well, they will probably sell Euros for other currencies (Including sterling) to take the steam out of an overpriced currency.

If they fail to do this, then the Euro and the Eurozone are dead in the water.

Expect correction between Sterling-Euro by probably June-July this year.

 

[woolybanana]

The ECB usually makes its interest rate decisions round the 5th -7th of each month. If they finally cut rates to their sensible point, that may be the turning point for the €, no?

[Gluestick]

The most significant coming event will be the G20 Summit in April.

With floating currencies, serious revaluing is now a co-ordinated affair between central banks, steered by IMF.

 

 

[Quillan]

So, unless I have misunderstood in a nut shell that Euro Zone must lower its interest rates keeping in line with the countries that have failed and reduced theirs. I thought the Euro being strong and having a higher interest rate attracts investment from other countries i.e. they move their money to the Euro Zone. This must be true as Gluestick said "With the collapse of the US dollar and increasing doubt over forward stability and value, many global investors and sovereign risk funds (State owned investment funds) as well as Central Banks moved from the US dollar into the Euro, during the past five years.". He then went on to say "This falsely inflated the Euro's value, above the Euro zone's economic probability." which I don't understand because I believe they moved their money because it was a safer bet.

I don't understand why they Euro is being picked on by those countries that are failing because it is high. Interest rates have come down a bit but nowhere as much as the UK and US and neither should they. Why should the Euro Zone be dragged down to the same level as the rest just because those in the UK and US think it should be in the same sh1t as them.

I'm not saying that the Euro Zone does not have its own problems, it does, but not at present to the same levels as the other countries.

France, because I live here and understand it more than other EU countries but I am still not an expert, does not have the same problem with house purchases and personal loans as the UK because it has this unique (?) law about limiting your monthly repayments to no more that 33% of your monthly income. Also the interest rate of house loans is fixed for the duration regardless of the market rate when it varies.

It seems to me that the Euros Zone has been prudent when the likes of GB have not and its doing better so why knock it.

[Gluestick]

[quote user="Quillan"]

So, unless I have misunderstood in a nut shell that Euro Zone must lower its interest rates keeping in line with the countries that have failed and reduced theirs. I thought the Euro being strong and having a higher interest rate attracts investment from other countries i.e. they move their money to the Euro Zone. This must be true as Gluestick said "With the collapse of the US dollar and increasing doubt over forward stability and value, many global investors and sovereign risk funds (State owned investment funds) as well as Central Banks moved from the US dollar into the Euro, during the past five years.". He then went on to say "This falsely inflated the Euro's value, above the Euro zone's economic probability." which I don't understand because I believe they moved their money because it was a safer bet.

I don't understand why they Euro is being picked on by those countries that are failing because it is high. Interest rates have come down a bit but nowhere as much as the UK and US and neither should they. Why should the Euro Zone be dragged down to the same level as the rest just because those in the UK and US think it should be in the same sh1t as them.

I'm not saying that the Euro Zone does not have its own problems, it does, but not at present to the same levels as the other countries.

France, because I live here and understand it more than other EU countries but I am still not an expert, does not have the same problem with house purchases and personal loans as the UK because it has this unique (?) law about limiting your monthly repayments to no more that 33% of your monthly income. Also the interest rate of house loans is fixed for the duration regardless of the market rate when it varies.

It seems to me that the Euros Zone has been prudent when the likes of GB have not and its doing better so why knock it.

[/quote]

Let's take this bit first

[quote]which I don't understand because I believe they moved their money because it was a safer bet.[/quote]

Forex markets and investors are horribly fickle!

They saw collapsing capital value in US dollars (Exchange Risk Exposure) so a so-called flight took place from the dollar.

However, this rapidly overheated the exchnage rate of the Euro to other major global currencies, and crippled manufacturing exporters. For example, Airbus Industrie who had soundly and roundly beaten Boeing, are now being beaten by Boeing: on cost grounds.

Same with Germany: the largest manufacturing exporter in Eurozone and one of the top five globally. (Back in the late 80s on OECD stats, West Germany were beating Japan on export values achieved!).

When a similar thing happened in the late 1970s (A flight to value and stability against erosion of capital value) billions fled to Switzerland and Swiss Francs.

To protect their economy and currency the Swiss introduced Negative Interest: a non-Swiss citizen must pay to keep money on deposit in Switzerland in Swiss Francs.

The Eurozone, is a wholly synthetic fiscal and monetary creation: the Euro is in essence what is called a Currency Mechanism.

The core problem is the disparate position of each member: whilst Germany, France and Luxembourg enjoy basically the most stable economies, the rest can be divided perhaps into "Suspect" and "Worrying"!

A "One Size Fits All" approach to setting interest rates cannot meet the widely different exigancies of economic, fiscal and monetary realities in say, Malta and Slovenia: and simultaneously, France, Belgium and Germany.

Thus ECB Monetary Policy has to be a sort of expedient stab in the dark!

The value of a fiat currency (i.e. one based on the economic forwards expectancy only with zero real value backing such as gold bullion) is set by global markets on the realities of the underlying "Real Economy": and this for the Eurozone is negative growth and serious recession.

Thus if a currency value rockets because skads of punters seek a safe haven, then the value of this currency is suddenly not based on sheer economic performance but supply and demand; which is economically completely the wrong way to set currency values.

And as the increase in negative metrics emerges, then the Euro will self-correct: downwards.

 

 

[NormanH]

There is an article (in English) from a German perspective in Spiegel:

What is noticeable is the idea that countries with difficulties in the euro (such as Ireland) might be bailed out by others.

Obviously the UK doesn't come in here.

[Quillan]

But surely is not one of the advantages of the EU is that countries trade within themselves and help each other out. I can understand the Airbus (Planes are always bought in Dollars) and German car companies suffering with sales outside the EU ( although the sale of high end prestige cars like Porshe etc have not changed much - if you have that sort of money to spend on a car a little extra won't hurt you so much) but their other commodities such as food are traded inside the EU. Is this not why the UK are seeing an increase in food food prices, because its not in the Euro and it has to pay for a lot of its imported food in Euros. Something I said before Christmas would happen, not expertise on my behalf just common sense and putting two and two together.

The Euros has not changed else there would be big rises in prices here (in France), it has stayed the same. What happened was the other currencies went down because the other countries badly managed their money and now, in effect, they want to Euro to devalue it's self to help them out. Its a bit of a cheek I think.

Its not all bad news for the Euro because imported goods cost less, look at the price reductions of flat TV's in the supermarkets at the moment as an example.

Anyway for all the pundits and what they said the Euro didn't change last week as they predicted. I don't think people listen too much to them now because they keep getting it wrong and we are not talking small things. It seems to me they are trying to talk their way out of the problem they got themselves in to in the first place at our expense, literary. It also smells of that great British management answer of "Don't blame me guv it was the other fella".

[Gluestick]

All very interesting.

However the core problem is simply that if Germany or a consortium of wealthier (nominally!) member states bail out the others, then this impacts directly on those state's economic metrics and still colours the downtrend of the Euro, overall.

Quantative Easing by another name in fact.

As Godron and Darling will discover when they try and float their planned new issues of Gilts this year, I fear.