[zdo]

Here is my ‘SafeHaven.com’* article of the week

On the third try, Germany finally conquered Europe. The EUD = the DM.

But instead of ‘pillaging’ as is the historical norm, guilt ridden socialist Germ,Inc. is being inundated with ‘reparation’ and welfare demands from the vanquished states that did not (could not?) keep their financial houses in order during the ‘war’. If Germ,Inc. does not at least partially accommodate these demands, then resistance to being a member of the new empire rise to unacceptable levels as the far edge states threaten to opt out…

Although the US is doing the very best it can, it is not a sure bet that it will win the ‘race to the bottom’…

I love to see the EUD soar! Gives a chance to short that trash again…

Thoughts?


(*poking fun at myself not SafeHaven.com)

[MadMarketScientist]

100% agree ... the Euro is doomed ... the Germans are fed up and are not going to continue paying for the Greeks and all the other bankrupt countries. Best thing to do is to kick the Greeks out and let them default and start over.

MMS

[Mysticforex]

Ditto...

[BlowFish]

So buy Yuan? The dollar might pop in the medium term and I would hesitate to go so far as to say its doomed but it's not something I would want a longer term punt on.

[rforexdad]

Today the ADP report for Jobs showed very low growth rate in USA
also manufacturing was reported to be low

does the USA jobs news have any co-relation with the GBP/USD and EUR/USD ?

any explanations ?

[MadMarketScientist]

Yesterday, German Chancellor Angela Merkel noted, "We don't have a euro problem in Europe. We have more of a debt problem. Financial markets doubt whether some EU states can manage their debt in the long-term." I have a third culprit for Europe's problems: economically ignorant and/or deceptive leaders.

The eurozone's debt is directly linked to the value of the euro. If Greece or any of the other PIIGS default, the euro will suffer as a whole.

Furthermore, Greece's problems and the bailouts are a direct result of the euro's existence. If Greece had its own currency, there would be no bailout from the European Union. Instead, the country would print a ton of its own currency. With inflation, Greece would likely monetize part of its debt. In the process, Greek citizens and bond holders would suffer the largest cost of the inflation. With the euro, Greece can't print its way out of debt - hence the rest of the European Union must bail them out. Instead of Greece suffering the most for its poor decisions, other countries must foot the bill. And in instead of Greece inflating its own currency, the burden is placed on the euro.

This isn't Greece's only connection to the euro. Since inflation is currently above the European Central Bank's target, the ECB must raise rates. However, if it raises rates, the cost of borrowing becomes more expensive across the board from Greece to Portugal. Due to its connection with the euro, the ECB must consider Greece when making a decision about German and French inflation. This is true for no other reason than the shared euro currency.

Of course, Merkel should know better. If her statements didn't come from ignorance, they certainly came with the intent to deceive. Greece's problems and the euro are inseparable at this point. And if Merkel's intent is deception, the problem could be worse than imagined.

MMS

[rforexdad]

well..
maybe China and Middle East are pushing up the Euro anytime it comes down !!
or this maybe a bubble like the Housing Bubble in USA
and the Oil bubble which went to $150 per barrel and then popped !!

[SIUYA]

Or maybe its just a result of the euro being the only major currency to invest in because the USD is so shot and the debt problem is not just a result of the Europeans having too much debt, but the US politicians having the same problem?

otherwise, when do you ever believe a politician and think they really have a grip on economic forces?