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Will the euro crash in 2011


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[quote user="just john "]

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

 bbc. news business  [blink]

[/quote]

It seems that there were rumours afoot yesterday that Stark's resignation was in response to increasing political pressure for a touch of quantative easing, something he is firmly against. Basically printing Euros to use to buy up debt so inflating the Eurozone out of trouble. His going shifts the balance of power in the ECB more in favour of doing this, hence the fall relative to Sterling.

I expect someone will announce on Monday that this not going to happen and we'll be back up to 1,18 again.

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Quite right Quillian, but good on you for putting your money where your mouth was! I thought the 'Greece won't default' bit of the bet was the most risky, but as you say, nobody was bold enough to take you on. Personally I still think there is a comfort zone for the £/euro exchange at between 1.10-1.20 for all governments concerned and I wouldn't bet against it trading in that range for the forseeable future.
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[quote user="The Riff-Raff Element"] Basically printing Euros to use to buy up debt so inflating the Eurozone out of trouble. His going shifts the balance of power in the ECB more in favour of doing this, hence the fall relative to Sterling [/quote]

No, the ECB still has not done QE and will not do QE unlike the BoE and the FED.

Every single cent the ECB uses to buy bonds is mopped up somewhere else, it is a zero sum game: No money printing.

There will be no threat of out-of-control inflation unlike the UK.

Markets just overreact, like always.

UK debt-to-gdp=148% according to august ONS figures, obviously not the figure that the government uses (they exclude bank bailouts) and deficit=9%. These figures prove the UK=Greece, the markets just fail to recognise that (yet)

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Highly interesting Jako that you think you are party to financial data that the markets either do not know of or are unable to interpret??  Not so long ago you were IIRC suggesting that the euro would = £2 in the near future.  Your faith in the euro is astonishing, but IMHO the extremity of that faith just isn't credible, sorry.
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Still not finally convinced whether the ECB buying grecian sovereign debt at face value when at best it has a venal value of 50% nominal value is a  form of desecuritisation designed to remove worthless paper assets heldby PIIGS and magick them into real money with a consequent appreciation of the €uro in terms of a traditional transfer price paradigm; on the other hand it may just be rank stupidity on the part of the outgoing director.
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[quote user="Daft Doctor"]Highly interesting Jako that you think you are party to financial data that the markets either do not know of or are unable to interpret??  Not so long ago you were IIRC suggesting that the euro would = £2 in the near future.  Your faith in the euro is astonishing, but IMHO the extremity of that faith just isn't credible, sorry.[/quote]

Sorry to disappoint you, but my prediction of the Euro at £2 was a long term prediction, say 5-10 years. 10 years when inflation and social unrest remain controllable, 5 years when things get tough (Scottish independence...). I assume you have read that Danske bank published a report stating  UK gilts should be dowgraded by at least 4 notches to single A+ ?

The fact that the UK government backs the City helps a lot, the City is

currently simply unwilling to interpret the data the way they should .

UK banks buy money at 0.5% and then sell it to the UK taxpayer at 2%-free money, cool, lets keep that rolling as long as possible.

UK pension funds get this 2% , but with inflation at 5% everybody  is loosing 3% pension per year.-cool, keep that up as long as possible.

With the highest total debt (public+private+corporate) as a % of GDP of all modern economies (including Japan) at 540% the UK is doomed. Trying to inflate the debt away is not the answer, it will only undermine confidence in the pound.

Of the three big economies: Eurozone, US and Japan, it is the Eurozone has the lowest debt, the lowest deficit and a perfect growth potential (eastern Europe, former Soviet states) All the rumbling is due to the politicians, but in the end the underlying facts kick in. That is why I trust the value of the Euro and not the Pound. Whatever happens with Greece is completely negligible.

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[quote user="cooperlola"][quote user="just john "]

@ €1.625 I think I might buy some[:)]

[/quote]We tried to get some cash out this afternoon and all the coms links seemed to be down.  I guess everybody had the same idea.[I][:)]

[/quote]

Not such a good result, at the time I placed the transfer FT showed €1.638, it is now showing €1.597; after the transfer (Nationwide) my account shows a rate of €1.1399, not happy bunny, how does that work[:@]

 

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[quote user="just john "]

Not such a good result, at the time I placed the transfer FT showed €1.638, it is now showing €1.597; after the transfer (Nationwide) my account shows a rate of €1.1399, not happy bunny, how does that work[:@]

 

[/quote]

I think Judith from this Forum has advised in the past about NOT using Nationwide.  For a start, Nationwide is not a clearing bank and thus dependent on a bank to do the business and, I suppose, NW also wants its share of the money.

Personally, I don't transfer on Mondays as, if the exchange rate ends the week on a high for the pound, then you have people selling to take a profit and, if the rate is low, you can hope that maybe, it will go up in the course of the week.

Don't know if that's good logic but, being a woman, I am not expected to use logic much so that's OK then, isn't it?[;-)]

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Just John wrote:

Not such a good result, at the time I placed the transfer FT showed €1.638, it is now showing €1.597; after the transfer (Nationwide) my account shows a rate of €1.1399, not happy bunny, how does that work

Ever so sorry to ask but could you explain these figures to me ? I don't understand what they equate to, or the time frame.

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[quote user="LEO"][quote user="pachapapa"]

A midnight pop on to Bloomberg helps me sleep.

http://www.bloomberg.com/news/2011-09-12/greece-s-risk-of-default-increases-to-98-as-european-debt-crisis-deepens.html

[/quote]
A midnight pop onto bloomberg would keep me awake !
[/quote]

But by being awake one would avoid grammatical errors.[:)]

Into is one word; on to is two words.

Strange really as the best english is reputedly spoken in Inverness, thanks to good teachers sent by Prince William, Duke of Cumberland, after the battle of Culloden.

 

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[quote user="breizh"]

Good to see Mr Peston keeping up at the back. Only about 2 weeks out of date.

http://www.bbc.co.uk/news/business-14896685

 

[/quote]

Not a bad summary, though. And there's so many points in there that deserve repeating...

... though he doesn't seem to mention the considerable exposure that these banks have to potential bad debt from communes within France itself. I believe €40 billion has been mentioned.

And with the UK cheerfully inflating its way out of debt, the Eurozone looks even more of a dog.

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[quote user="sweet 17"]ER....Riff-Raff, would that be a good dog or a bad one?[:P][/quote]

Sort of brownish-coloured mongrel with only three good legs and a squint, I'd say.

The debt owed by the communes definately has a subprime whiff about it. An awful lot of loans have been taken out to pay off other loans (you know - "consolidating all your debts into one, easily-managed, monthly payment, leaving YOU with cash to spare!") because there was no real prospect of paying them off otherwise. Almost dafaulting, but not quite, in other words.

Also, many communes (ours included) took out loans with repayments calculated based on some weird and wonderful things: the price of gold, £/€ rate, CHF/€ rate, the price of oil, etc, etc rather than on base plus x or similar. This sounds as though someone has been writing exotic derivatives, and we know where that can lead  [8-|].

There are small towns out there paying 18% on several million because some snake-oil salesman convinced them that linking to the CHF/€ was a bright idea.

Happily a lot of this is being kept out of the wider market because the information is all in French. [:)]

But, hey, as long as the Germans stay the course, the Euro will hold value.

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