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Will the euro crash in 2011


Devon
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Pacha, I have a longstanding aversion to all numbers, figures, graphs, charts (fibonacci or otherwise).  But I have been poised all afternoon to change some money and am paralysed by uncertainty as to whether should I or not and, if the former, how much?

Not a good time to do anything but, equally, not a good time to sit on one's hands.....[:-))] 

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[quote user="Quillan"]

Also, if this sort of comment is correct why did France and Germany have really good gains on their stock markets yesterday rather than everything collapsing around their ears and why has the Euro not collapsed aganst the Dollar and the Pound, I mean if these people are correct then you would be getting around 2 Euros for every pound and about three for every Dollar. [/quote]

 

Well the the Eurozone banking liquidity system has collapsed. No one will lend to DE/FR banks. There has been a complete collapse in confidence in the solvency of Eurozone banks by UK/US/Asia, hence liquidity disappears. FR/DE banks are, always have been, almost 100% reliant of US for their liquidity (short term funding), and reliant on UK for bonds. The answer why all of a sudden things looks rosy, is that the ECB promised to print EUR 2Trillion to leverage the ESFS that they can take first hit on sovereign debt default. Effectively the French banks will sell their Greek/Irish/Portugese/Spanish/Italian sovereign debt at face value to the ESFS. Eurotaxpayers pick up the bill in higher taxes, inflation and lower growth. Very clever move. Should be interesting when the Bundestag vote on it on Thursday. The Hausfrau has a majority of 20. 12 of her own party have already said they will vote against, so she still up, but watch this space! The rats seem to be deserting her sinking ship.

Interestingly, this "bad bank" is exactly what Gordon Brown and Alaister Darling did back in 2008, for which they were so heavily critised, and lost an election. Take all the c*ap out of the banking system, stick into a taxpayer funded scheme and kickstart bank liquidity. UK Tarp cost GBP 50billion. EU Tarp will cost EUR 2 Trillion. Wish I was a UK taxpayer, it will cost EU a fortune in 2-3 years time. However, The Dwarf and The Hausfrau have only got to get through next year, and their respective elections. After that, who cares!

Vis-a-vis Forex rates. There is no logic, the connection with interest rates, balance of payments, economic growth, disappeared years ago. Try PPP's method[8-)]

Edit for wrong smiley[;-)][;-)]

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[quote user="breizh"]There has been a complete collapse in confidence in the solvency of Eurozone banks by UK/US/Asia, hence liquidity disappears. FR/DE banks are, always have been, almost 100% reliant of US for their liquidity (short term funding), and reliant on UK for bonds. [/quote]

When you say Asia who exactly do you mean?

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Missus is out, and I logged on. Primarily interbank lending is short term, overnight, days, and is done though Singapore and Tokyo in Asia.

The China investments are politically driven.

They will buy sovereign debt to drive up currency, to maintain their competative advantage, ie buy Eurozone bonds to stop EUR falling against REM.

(Personally, I think Peking will step in and start bottom fishing for prime EU corporate assets when they think they can get away with it.)

China simply cashpools all their state industries, the figures the media love to quote are also required to finance industry as their banking system does not function in the same way as in the rest of the world. It should also be bourne in mind that the media constantly talks about the currency reserves they have. They never mention the sovereign debt, which is the world's 3rd highest, as you would expect in a country as this stage in it's economic development. Huge sums are borrowed in order to create that development. See also Brasil, SA, Russia, India.

Haven't got time to quote the sources, but FT Deutschland, The Economist, PWC, HSBC Corp and Sumitomo Matsui are always good for this sort of stuff. The free stuff is always miles out of date, and so shallow as to be onnly any use to misinform. Sorry, bedtime. Bon soir.
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Quillan, The USA has a bit more time to work things out because it's debt is in it's own currency IE it probably wont default because it just prints more dollars, and more importantly, the difference between the USA and EU is that there is one fiscal policy for the USA, but in Europe each country has it's own individual fiscal policy. There is no leadership because there are too many different sovereign interests within Europe, and no one wants to foot the bill.

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[quote user="sweet 17"]

Pacha, I have a longstanding aversion to all numbers, figures, graphs, charts (fibonacci or otherwise).  But I have been poised all afternoon to change some money and am paralysed by uncertainty as to whether should I or not and, if the former, how much?

Not a good time to do anything but, equally, not a good time to sit on one's hands.....[:-))] 

[/quote]

Secular Bear Market so Beware!

Change your money into widgets.[:D]

http://www.youtube.com/watch?v=KF8lg-m1jHY

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[quote user="baypond"]Quillan, The USA has a bit more time to work things out because it's debt is in it's own currency IE it probably wont default because it just prints more dollars, and more importantly, the difference between the USA and EU is that there is one fiscal policy for the USA, but in Europe each country has it's own individual fiscal policy. There is no leadership because there are too many different sovereign interests within Europe, and no one wants to foot the bill. \[/quote]

No leadership is very true but I think this will change as will it's (EU) fiscal policy.

As you are no doubt aware by my current profession I get to meet people from all over Europe and all this debt and Euro business is always coming up as a topic over dinner and not I may add instigated by me.

A common theme that has run through the conversations with all EU nationals, apart from the Brits I might add, is that it is about time the EU did have a common fiscal policy and that the place to start is with harmonising tax. Most seem to think the same way, this is not an 'attack' on the member states sovereignty but there has to be a standard union tax rate both personal and VAT/TVA or whatever you call it in each country. Sitting below this would be a member state tax, call it a state tax if you like. Sounds familiar, well it's not so much different to what happens in the USA, federal and state tax.

Lets not forget that this is how the USA started with individual states who joined the union, they have done it so why can't the EU. In practice there is not much difference between the EU and the USA when it comes to member states and the European Union.

The other thing people have said is there is a need to have an elected president of the EU. Some have suggested that each country or state puts up a candidate and voting is carried out much as in the USA.

Both these issues need to be dealt with and I think that the current world wide recession will be the driving force in making this happen and that the initial moves will be made within the next five years.

Most people, apart it seems from politicians, in each country seem to have gotten over this sovereignty thing, well apart from the UK that is, and people seem quite keen, for various reasons for this to happen.

Just my observations you understand and I would be the first to agree that my guests may, or may not, reflect what the rest of their fellow county people think although it has to be said that you get the same sort of comments from people of the same country even though they may live at totally different ends of that country geographically.

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And that's the elephant in the room: the euro is in trouble and held together with smoke and mirrors but the 'financial sector' 'markets', whatever you wish to call it, is the real problem because it has evolved into the  biggest fraud ever in the history of the world. 

On the surface a country like Greece wants to borrow some money: it goes to the 'banks' and the clever bankers, metorphorically, put billions of euros into into the backs of artic lorries, drive it from the bank to Greece and unload it to the Greek government and banks with forklift trucks, then they return home and pay themselves £millions in pay and bonuses for being so clever.

But the trouble is the financial sector has no money to lend at all: it just prints cyber funny money via its computer keyboards, gives the cyber funny money false credability by insuring the loan with things like the shadowy banking system and then waits for ordinary people to create real money through work and making stuff to give back to the banks. It's just a giant ponzi. The problem now is the ponzi, like all ponzis, has come to the end and no one knows what to do. Trillions of £s, $ and euros have been printed to keep the scam going but its just made the ponzi even bigger and that means the collapse will be even worse.

The truth is no one is bailing out Greece etc, we are bailing out a corrupt greedy financial sector run by crooks who have the political pygmies of the West in their pockets.

What needs to happen is for bankrupt Countries to default and start again, the bankrupt banks can be allowed to fail and the less corrupt banks be nationalised. Then regulation and rules could be made to stop fraud and punish any greedy, corrupt bankers and politicians.

 

Interesting times [:(]

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[quote user="Devon"]

What needs to happen is for bankrupt Countries to default and start again, the bankrupt banks can be allowed to fail and the less corrupt banks be nationalised. Then regulation and rules could be made to stop fraud and punish any greedy, corrupt bankers and politicians.

 

Interesting times [:(]

[/quote]The problem is that the pain caused to ordinary people if some of the banks were allowed to fail would be greater than the pain of propping them up. There was a an interesting discussion last night  on BBC Radio 4 about the moral aspects of this. It seems that attractive as letting banks fail may be it  would be akin to cutting of one's nose to spite one's face.
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I agree Rabbie.  It was the Americans letting just one bank fail (Lemans) that caused the whole messy consequences that were 2008/9.  Wnat has followed as consequences all stem (with wonderful hindsight) from that one decision.

 

Let just one major bank fail and a lot of good (or at least better) banks will follow

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[quote user="Rabbie"][quote user="Devon"]

What needs to happen is for bankrupt Countries to default and start again, the bankrupt banks can be allowed to fail and the less corrupt banks be nationalised. Then regulation and rules could be made to stop fraud and punish any greedy, corrupt bankers and politicians.

 

Interesting times [:(]

[/quote]The problem is that the pain caused to ordinary people if some of the banks were allowed to fail would be greater than the pain of propping them up. There was a an interesting discussion last night  on BBC Radio 4 about the moral aspects of this. It seems that attractive as letting banks fail may be it  would be akin to cutting of one's nose to spite one's face.[/quote]

 

Propping up the ponzi is only less painful in the short term but the banks' corruption and greed has to be addressed at some point in the future and then the pain will be greater then it is now. Austerity, cutting back and balancing the books are the order of the day but not just in bankrupt Countries like Greece but where it is more urgently required: the bankrupt, bloated, corrupt and greedy financial system.

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Much of this stems from the US as way back as 1944 when 'allied' countries were summoned to the US to sign up to the Bretton Woods system. Not only did this ensure (hopefully but has now proved to be a failure) 'monetary stability' after the end of the war but it created the American controlled IMF and the International Bank for Reconstruction and Development, the latter went on to become part of what we know today as the World Bank Group. This ensured that the international trading currency would become the US Dollar which was pretty handy as the US played a large part in lending money for the reconstruction of Europe after the war. This turned out to be a nice little earner for the US, borrowing money from one member at 1% interest or below then lending to another member at around 6%. Its also partly how the credit rating system came in to existence because the IBRD would issue bonds which it claimed were AAA quality (now read level of creditworthiness) except it was again using other countries to act a security. A nice little wheeze, issue a bit of paper for the value of X and it it all goes tits up you don't have to pick up the tab some other poor schmuck does.

The problem for the US is Europe and in particular the EU and the Euro. Here you have another currency that does the same thing as the Dollar. It's traded around the world and of course in Europe we all used to use the Dollar as a trading currency but not anymore since the Euro arrived. Might not be a big problem if it were not for the fact that the EU is the biggest ( and that excludes inter EU state trade, if you included inter state trade it would be double the exports of the US) exporter in the world with the US coming in second and China, contrary to what we would all like to believe, coming in a very poor third only exporting a tenth of what the EU exports.

So the Euro is a major problem for the US and it's Dollar. The US does not care about the UK who seems to think the US is its best mate, it does not care about anyone, it created the phrase "Greed is Good" (OK it was George Soros) at the expense of others and he who owns the world trading currency owns the world. This is why the US would have a mega party if the Euro failed. It's been chipping away round the edges for ages using it's credit rating companies and the IMF which it controls. Greece being the weakest is it's main target.

Domestically this 'war' (for that is what it really is) against the Euro takes peoples eye of whats happening in the US. Illinois for example owes more money than Greece, Italy, Spain and Portugal put together. California and New York State are not that far behind either

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Crossed posts a bit here Devon but did you listen to Milliband and his 'attack' on business and the banks because some of your comments seem to be in line with his?

Firstly, you can't just blame the banks, you have to blame governments for not controlling them better. Don't say it was the Tories that deregulated the banks which is why it happened because Labour were also in power for a long time before the recession and had plenty of opportunity to change things. Then there is the ordinary people who didn't want to wait 5 years to buy a new car or house, they wanted it now and gave little thought to how they were going to pay the money back. The people who took the loans lied to get them. The banks knew they were lying but sold them the loans anyway and the government let it all happen. They all have to accept some of the blame. Trouble is the decent folk who worked hard and saved their money were the ones that had to pay for it.

Traditionally socialist governments in the UK and other countries (Greece is another classic example) have created jobs within the public sector to reduce unemployment which may not offer the best salaries but the conditions are pretty good, early retirement and a good pension. Now the problem is (and I admit this figures are not realistic but it keeps the calculation simplistic) that for every public sector you have earning 10,000 a year he/she pays lets say 20% tax and ends up with 8,000 in his/her pocket requires four private sector workers earning the same money paying the same tax to pay their wages. So immediately you can see that the maximum percentage of the workforce in the public sector can be no greater than 25% else you have to borrow money from somewhere to pay them. Now add in to the equation the need to build and maintain the infrastructure, new roads, hospitals, schools and of course pensions for the public sector workers we get down at anywhere between a ratio of 12 to 16 private sector workers to every one public sector worker or to put it another way you can only have around 8% of the work force working in the public sector. Now current out of a UK workforce of 29M around 6M work in the public sector, that's around 20% and it's just not sustainable which is why it needs to be cut because the UK has to keep borrowing billions every year just to pay them. You can't then say well hang on lets tax the private sector more because they won't then make any money so will either leave the UK or worse still, go bust. Just to put Greece in to the mix they have 40% of their workforce (actually the figure varies either way by about 3% depending what you read) in the public sector and that's how they have got in this mess then they lied to join the Euro, the EU knew they were lying but let them join anyway, bit like the UK banks making dodgy loans to people who can't afford to pay them back.

Non of this is exactly rocket science, it's pretty basic but of course those financial 'experts' (remember them, the ones that help shafted us all in the first place) would have you believe it's all rather complicated and best left to them to sort out. That's why in some ways part of what you have said is true all be it for the wrong reasons (in my humble opinion).

 

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That is assuming there is no other tax income. So, we'll ignore TVA/Duty/Corp/etc.

In your scheme, how does France maintain 40% of workers in the public sector? Or, are they going bust twice as fast as, paying twice as much tax as, or better at accounting than, your favored example? Maybe state workers get half the private sector average salary? I doubt that, as I know how much I get paid(private), and my wife(state) gets paid. She gets more compared to average salary, than a UK teacher. So genuine question.

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[quote user="pachapapa"]

Hey Q!

Time to get your question in now before the friday rush.

http://www.facebook.com/alessiorastani?sk=app_7146470109

 

[/quote]

Be looking out for your devilishly difficult question on friday.

But till that auspicious occasion I shall have to sit mesmerized by the Japanese Candle Stick Patterns on the S&P 21 day moving average.[I]

http://www.youtube.com/watch?feature=player_embedded&v=nG4WtnuhX5c

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[quote user="Devon"][quote user="Rabbie"][quote user="Devon"]

What needs to happen is for bankrupt Countries to default and start again, the bankrupt banks can be allowed to fail and the less corrupt banks be nationalised. Then regulation and rules could be made to stop fraud and punish any greedy, corrupt bankers and politicians.

 

Interesting times [:(]

[/quote]The problem is that the pain caused to ordinary people if some of the banks were allowed to fail would be greater than the pain of propping them up. There was a an interesting discussion last night  on BBC Radio 4 about the moral aspects of this. It seems that attractive as letting banks fail may be it  would be akin to cutting of one's nose to spite one's face.[/quote]

 

Propping up the ponzi is only less painful in the short term but the banks' corruption and greed has to be addressed at some point in the future and then the pain will be greater then it is now. Austerity, cutting back and balancing the books are the order of the day but not just in bankrupt Countries like Greece but where it is more urgently required: the bankrupt, bloated, corrupt and greedy financial system.

[/quote]That would be the courageous solution but would mean pain now. Politicians in general can only see as far as the next election so tend to go for the solution that postpones pain. They seem to have a Micawber like belief that something will turn up so long as they put off making the hard decisions
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[quote user="Rabbie"][quote user="Devon"][quote user="Rabbie"][quote user="Devon"]

What needs to happen is for bankrupt Countries to default and start again, the bankrupt banks can be allowed to fail and the less corrupt banks be nationalised. Then regulation and rules could be made to stop fraud and punish any greedy, corrupt bankers and politicians.

 

Interesting times [:(]

[/quote]The problem is that the pain caused to ordinary people if some of the banks were allowed to fail would be greater than the pain of propping them up. There was a an interesting discussion last night  on BBC Radio 4 about the moral aspects of this. It seems that attractive as letting banks fail may be it  would be akin to cutting of one's nose to spite one's face.[/quote]

 

Propping up the ponzi is only less painful in the short term but the banks' corruption and greed has to be addressed at some point in the future and then the pain will be greater then it is now. Austerity, cutting back and balancing the books are the order of the day but not just in bankrupt Countries like Greece but where it is more urgently required: the bankrupt, bloated, corrupt and greedy financial system.

[/quote]That would be the courageous solution but would mean pain now. Politicians in general can only see as far as the next election so tend to go for the solution that postpones pain. They seem to have a Micawber like belief that something will turn up so long as they put off making the hard decisions[/quote]

But it will be a source of amusement to onlookers in South East Asia, China, etc.

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

Hey Q!

Time to get your question in now before the friday rush.

http://www.facebook.com/alessiorastani?sk=app_7146470109

 

[/quote]

Be looking out for your devilishly difficult question on friday.

But till that auspicious occasion I shall have to sit mesmerized by the Japanese Candle Stick Patterns on the S&P 21 day moving average.[I]

http://www.youtube.com/watch?feature=player_embedded&v=nG4WtnuhX5c

[/quote]

CNN clip reveals that Alessio is writing a book.

For John Wiley!

[:D][:D][:D]

Well that wont get to the bedside table of our Kindle Readers, will it![6]

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

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

Hey Q!

Time to get your question in now before the friday rush.

http://www.facebook.com/alessiorastani?sk=app_7146470109

 

[/quote]

Be looking out for your devilishly difficult question on friday.

But till that auspicious occasion I shall have to sit mesmerized by the Japanese Candle Stick Patterns on the S&P 21 day moving average.[I]

http://www.youtube.com/watch?feature=player_embedded&v=nG4WtnuhX5c

[/quote]

CNN clip reveals that Alessio is writing a book.

For John Wiley!

[:D][:D][:D]

Well that wont get to the bedside table of our Kindle Readers, will it![6]

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

[/quote]

Alessio gets a sympathetic clip on Russian Television News today.

http://www.youtube.com/user/RussiaToday#p/search/1/7VTdUWk9DLM

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