The European Debt Crisis and the Euro - Page 45

On September 06 2011 23:01 Gaga wrote:
This can end pretty bad for the Swiss....

let's see if the SNB will really buy unlimited Euro... and even if, what happens when the euro goes down... Swiss is fucked as well then.

On September 07 2011 00:03 Szordrin wrote:
The swiss currency was abused as sort of a safe haven, similar to the gold. The problem here is, that a real economy with real people is behind and suffering from this. Earlier Euro to franc was 1:1.60 (more or less), last month it went to almost parity. Switzerland exports are around 50% from gdp (slightly more i think) and a vast majority of these exports go to the EU.
The currently overvalued Swiss Franc threatens the swiss export economy massively. Experts estimate the purchase power parity to be around 1:1.40, which means the inflational risks of keeping the euro not lower than at 1.20 francs isn't too high.

theoretically a national bank can buy unlimited amounts of foreign currency, no? (causing inflation at home, but since we have the opposite problem it doesn't matter too much for now...)

correct me if im wrong

On September 12 2011 16:00 lOvOlUNiMEDiA wrote:
More troubling financial news in Europe.

Intrade lists a 75% chance that at least one country currently using the Euro will drop it by Dec. 31, 2014.

The economic situation in Europe seems like a downward spiral. Anyone got some optimistic articles?

(Reuters) - Standard and Poor's cut its unsolicited ratings on Italy by one notch on Monday, warning of a deteriorating growth outlook and damaging political uncertainty, in a move that took markets by surprise and added to pressure on the debt-stressed euro zone.

S&P's downgraded its unsolicited ratings on Italy to A/A-1 from A+/A-1+ and kept its outlook on negative, sending the euro more than half a cent lower against the dollar.

The agency, which put Italy on review for downgrade in May, said that the outlook for growth was worsening and there was little sign that Prime Minister Silvio Berlusconi's fractious center-right government could respond effectively.

Under mounting pressure to cut its 1.9 trillion euro debt pile, the government pushed a 59.8 billion euro austerity plan through parliament last week, pledging to balance the budget by 2013.

But there has been little confidence that the much-revised package of tax hikes and spending cuts, agreed only after repeated chopping and changing, will do anything to address Italy's underlying problem of persistent stagnant growth.

"We believe the reduced pace of Italy's economic activity to date will make the government's revised fiscal targets difficult to achieve," S&P's said in a statement.

"Furthermore, what we view as the Italian government's tentative policy response to recent market pressures suggests continuing future political uncertainty about the means of addressing Italy's economic challenges," it said.

Berlusconi's coalition has been plagued by infighting and policy disagreements and the prime minister himself has been battling a widening prostitution scandal which has distracted the government and badly damaged his personal credibility.

On Monday, Italian sources said the government was preparing to cut its growth forecast to 0.7 percent in 2011 from a previous forecast of 1.1 percent and cut the 2012 forecast to "1 percent or below."

On September 20 2011 14:15 lOvOlUNiMEDiA wrote:
Article titled: "Short the euro, and make some money"

Some people have mentioned that markets significantly operate like self-fulfilling prophecies. That seems true to me. But there's also reality and this article lays out the EURO-zone's troubles clearly.

On September 21 2011 05:52 domovoi wrote:
Part of it is self-fulfilling, no doubt. But it's more than just that. It's not like people suddenly woke up and decided Italy was in danger of defaulting. Given the inaction of the ECB and its catering to the core Eurozone countries, it makes sense that people have grown more pessimistic about Euro debt.

That's the key point from Krugman's piece. If these countries had currency independence, or an ECB willing to keep the Eurozone intact instead of just sucking up to Germany all the time, then none of this would be happening.

On September 06 2011 19:33 lOvOlUNiMEDiA wrote:
A United States of Europe?

The financial problems in europe continue. Some global financial leaders are massaging the idea of a central financial authority with broader control that would allow quicker, more decisive action. This is supposed to restore market confidence. Interesting, and kind of alarming, stuff.