Will the euro crash in 2011

[Quillan]

China downgraded US credit rating some time back (to A+, November 2010) and has downgraded it again a few days ago (to A), they also started buying big time in to the Euro, now we hear from The Gardian....

"China, the world's largest holder of US debt, condemned the "short-sighted" political wrangling in the US and said the world needed a new and stable global reserve currency.

In a comment article the official Xinhua news agency said China had "every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets. International supervision over the issue of US dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country."

In June this year on a visit to Europe China's premier said "there is nothing to be worried about. The euro will not fall apart".

I wonder what currency they would like to see as a "new, stable and secured global reserve currency "?

Sources.:

http://www.guardian.co.uk/business/2011/aug/06/us-credit-rating-downgrade-china

http://www.thisismoney.co.uk/money/news/article-2008290/The-euro-fall-apart-China-pledges-support-single-currency-bring-Greek-crisis-control.html

[The Riff-Raff Element]

[quote user="Quillan"]

I wonder what currency they would like to see as a "new, stable and secured global reserve currency "?

[/quote]

The Yuan has to be a front runner in the event of the dollar fading away, but I don't believe that the dollar has had its day just yet. And China has a vested interest in supporting the currencies of the nations that provide so much market for their slave-wage made plastic tat.

I hear that some of the big boys and girls have been taking advantage of the gold bandwagon over the past couple of months to shift funds out of that and into some of the more valued industrial metals (copper to an extent, and also a couple of the Platinum group that are seen as undervalued and the Rare Earths). Partly this is because they see industrial growth continuing apace outside of the US and Europe and partly because gold (a metal with little intrinsic value from an industrial standpoint) is seen as overvalued and there's nothing like high prices to cure high prices.

In particular they are concerned that the US might choose to monitise some of their gold reserve to support the dollar. A too-weak dollar is not good news to the US which is highly dependent on oil imports priced in dollars but valued increasingly by producers in other currencies. I would suppose that with the US now being downgraded, this scenario looks more rather than less likely.

It doesn't take many brains to imagine the effect of  the US dumping 30 millon ounces or so on the price of gold.

[pachapapa]

What a spiffing idea, take big bars from Fort Knox and[IMG]http://www.monitisegroup.com/images/header_logo_monitise.png[/IMG]them.

Melt them down and recast into little kilo bars  and solve the current shortage of kilo bars.

I want,I want ... cheaper kilo bars.

[mik]

[quote user="sweet 17"]

Nick, I LOVE the pun on "prophet".....made me giggle.....[:D]

[/quote]

Many years ago, in the days of telex, we received a communication as a response to some poor translation of contract documents. It said to make sure that on this project, when translating into Arabic, you used the word profit with an "f" in it.

The reply was sent back " There is no f in profit in this job"

[mint]

[quote user="mik"][quote user="sweet 17"]

Nick, I LOVE the pun on "prophet".....made me giggle.....[:D]

[/quote]

Many years ago, in the days of telex, we received a communication as a response to some poor translation of contract documents. It said to make sure that on this project, when translating into Arabic, you used the word profit with an "f" in it.

The reply was sent back " There is no f in profit in this job"


[/quote]

Thank you, mik, I laughed fit to burst.....!

[pachapapa]

As a one off the bourse in Tel Aviv opened today Sunday, it fell 7%.

Hang on to your ticker tape on Monday.[Www]

[mint]

Pacha, I didn't know there was a bourse in Tel Aviv.....

Anyway, I have given up worrying about such things. 

En plus, the pound has managed to finish the week, LOWER than at the beginning.....

[Salty Sam]

[quote user="pachapapa"]

As a one off the bourse in Tel Aviv opened today Sunday, it fell 7%.

Hang on to your ticker tape on Monday.[Www][/quote]

Not unduly surprised really.

The state of Israel is very dependent upon the good ole US of A for its overly genenerous financial and materialistic contributions.

 

[Quillan]

I see that perhaps France may also have it's credit rating lowered.

http://www.guardian.co.uk/business/2011/aug/10/debt-crisis-shares-slump-france

http://www.lefigaro.fr/conjoncture/2011/08/10/04016-20110810ARTFIG00483-difficile-equation-a-resoudre-pour-contrer-la-speculation.php

Mind you the pound is still loosing against the Euro.

[NickP]

[quote user="Quillan"]

I see that perhaps France may also have it's credit rating lowered.

http://www.guardian.co.uk/business/2011/aug/10/debt-crisis-shares-slump-france

http://www.lefigaro.fr/conjoncture/2011/08/10/04016-20110810ARTFIG00483-difficile-equation-a-resoudre-pour-contrer-la-speculation.php

Mind you the pound is still loosing against the Euro.

[/quote]

Q, you forgot to inform us on Monday when it went up, this is not good enough as I missed the opportunity to earn a few centimes, mind you a tight pound is not good is it?  still as your busy this time of the year we understand. [:D]

[Quillan]

Ah but I mentioned it on Saturday if you look back. Barclays Bank is a good bet if your looking for a bit of action but your have to wait a couple of months to sell.

[Devon]

So what was unthinkable only a couple of months back is now being openly discussed: http://uk.reuters.com/article/2011/09/08/uk-eurozone-greece-exit-idUKTRE78754420110908

My gut feeling is if the Euro zone does start fallng apart it will happen very quickly and be very messy. I expect Greece already has vaults full of 'New Drachma' just in case.

[Quillan]

Well according to the Hu Jintao, the Chinese President, when he visited Europe back in May the Euro will not fail and he thinks it should be the new world trading currency so I wouldn't get too excited. By the way as far as my predictions go, so far, so good.

[Devon]

Things have moved on since May and not for the better. Italy seems to be in trouble now and Germany seems to be going off the idea of giving their money to southern European countries.

[woolybanana]

Given that the Chinese are buying Greece, loch, island and barrel...

[pachapapa]

[quote user="Quillan"]Well according to the Hu Jintao, the Chinese President, when he visited Europe back in May the Euro will not fail and he thinks it should be the new world trading currency so I wouldn't get too excited. By the way as far as my predictions go, so far, so good.[/quote]

That puts you in bed with Jean Claude Tricheur then;

http://www.bloomberg.com/news/2011-09-08/trichet-loses-his-cool-at-prospect-of-deutsche-mark-s-revival-in-germany.html

But then Greek CDSs dont look so good today.

[Quillan]

Try Googling "Chinese President's comments on the Euro" to see Jintao comments. Basically he believes that the Euro will not fail and would 'support' the Euro. Some believe that this would mean China pumping more money in to Europe because it sees it as a better bet than the US with regards to getting a return. The EU is the biggest trading group in the world taking some 42% of the world trade, the US ranks second.

The thing is that people have been picking holes in the Euro for ages, nearly four years now I would guess and they have all said it will fail in anything between six weeks and six months but it hasn't. Some say the proof is the strength of Sterling against the Euro, well Sterling has gone up but only a few cents and it has yet to reach the heights it once reached. As I said before it will be lucky if it ever gets above 1.16 this year and it really needs to get back in to the mid one Euro forties before anyone should start to worry.

What needs to happen is Greece should be thrown out the Euro (but not the EU). It should receive help to turn it's economy round, not in monitory terms but in guidance by EU specialists and banks. Once it's economy is back on track then it can re-apply for the Euro and this time much stricter tests should be carried out so they can't lie like last time for a lot of the Euro/Greece problem lays in the fact that they lied to join and the ECB knew they were lying but let them join anyway.

[just john]

 Germany-pushes-Greece-to-the-brink-

to paraphrase some of the comments to this article that strike a chord . . .

You cannot write off debt (Jarvis's Second Axiom) Any debtor must either repay or not, in which case the creditors and their dependents repay the debt.
The worst possible response of all is the Brown/Balls Reflex, where the debtor borrows yet more money to pay off the debt.
Politicians are incapable of understanding the situation and its causes (a classical symptom of the serious mental  illness - Socialism) 
As sure as God made little apples, the Eurozone is going to go bust and take the rest of us with it.

Greek one year bond is now, I believe, a whopping 97%  - any takers? - China isn't interested in this area of the Euro, nor Italy, perhaps when they say support they mean only one area . . .

[Quillan]

This is really all smoke and mirrors to deflect people away from what is happening in the US. People seem to forget that so far only the US has come to within hours of defaulting on it's debts.

The EU predominantly trades within it's self, yes of course it exports to countries outside the EU but there is enough trade within it to survive. A US campaign has been carried out for sometime now to 'nibble' away at the weaker EU countries with the sole intent of undermining the EU economy and predominantly the Euro as a currency. The US would not like, in fact it does not like, the fact that some countries already see the Euros as a world trading currency (if you do a bit of research it's interesting just how many there are especially in the Middle East). If these people succeed in undermining the Euro and causing its downfall we will all be at the mercy of the dollar. Competition is good but greed is so much better, the US prefers greed to competition.

[Devon]

[quote user="Quillan"]

This is really all smoke and mirrors to deflect people away from what is happening in the US. People seem to forget that so far only the US has come to within hours of defaulting on it's debts.

The EU predominantly trades within it's self, yes of course it exports to countries outside the EU but there is enough trade within it to survive. A US campaign has been carried out for sometime now to 'nibble' away at the weaker EU countries with the sole intent of undermining the EU economy and predominantly the Euro as a currency. The US would not like, in fact it does not like, the fact that some countries already see the Euros as a world trading currency (if you do a bit of research it's interesting just how many there are especially in the Middle East). If these people succeed in undermining the Euro and causing its downfall we will all be at the mercy of the dollar. Competition is good but greed is so much better, the US prefers greed to competition.

[/quote]

 

The phrase 'none so blind as those who will not see' springs to mind. [:)]

[Quillan]

We shall see Devon. On GMT today the business section along with the 'Experts' were saying that GDP in the UK will go negative by the end of the year or early next year. Obama's new 'get back to work' scheme has not impressed either with the stock markets still dropping. Japans GDP is already negative and now they are saying more negative than they thought yet the Yen is riding high which does not help them.

The real issue is that the world is in recession so everyone goes round saying either "don't worry about us because Euroland is up to it's armpits in trouble" or "It's not our fault, it's the other fella".

[breizh]

The Euro won't crash, it will be around until the politicians say otherwise. However, the dynamics have changed, specifically the CDS rates on sovereign debt, and commercial bank debt, over the last 2-3 months.

UK sovereign debt is now cheaper to insure than German bunds. French sovereign debt is 3.3%, UK sovereign debt 1.9%. These are market rates, decided by hardnosed credit insurers. Nothing to do with politicians, and certainly not swayed by political motives, or credit ratings. Even US debt is now cheaper than German debt to insurer. That bothers the Germans.

These figures have a knock on, into the banking sector. You only have to look at the stock market hammering the likes of BNP, SocGen, Deutsche, etc have taken over the last few months. We've been doing a sweepstake on how long CA and Commerzbank will last before nationalisation. I've got last week of Sept for CA, and I'm well happy. Might get a little payout!

Personally, I think the UK will be under enormous pressure to join the Euro from all angles in Europe. Dispite what the Brit press keeps telling you, the country is highly solvent, well capitalised, liquid and is highly rated by the CDS markets. I reckon Cameron could write his own entrance criteria, and get whatever he wants for the UK.It's not going to happen though, mores the pity.

The Eurozone Finance Ministers meeting at the end of Sept is now critical. If they blow it, it will be a global recession.

They always say the most powerful person in the Eurozone, in fact in Europe, is the editor of Bild, Kai Diekmann. He makes the Murdoch press look impotent. He chooses what to tell the German people. They tell Merkel what to do. At the moment, he is dreaming up ways to punish insolvent countries. A bit rich coming from the country which is responsible for the 3 biggest ever sovereign insolvencies, but that's never stopped Kai. He is also pushing for the return of the Deutsche Mar. Truly scary.

[just john]

Don't ignore the effect Stark seems to have had already, €1.162 since resignation

 bbc. news business  [blink]

[breizh]

Yes. After Weber going, for the same reason, the Hausfrau must be getting very worried.

Scares the living daylights out of me that the Hausfrau and the Dwarf aren't going to do anything, whatsoever, as the are both up for election next year.

[Gardian]

1.162 just now.  It was 1.135 0n Weds.