Current EuroZone Problems and Future ? - Ferrari Life
 
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post #1 of 7 Old 05-19-2010, 03:05 AM Thread Starter
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Current EuroZone Problems and Future ?

Yes, I am aware of the PIGS debt problems, but what on earth is happening over there in Europe ??? The value of Euro has been falling like a brick ! Only few years ago, I recall Euro was at an all time high and it appeared as if Euro was the rising star to become alternative world currency standard. I do not profess to be an expert on Euro system, but as an observer from the outside, it was hard for me to visualize a creation of one EuroZone made up of so many cultures and differences in economic food chain. What is going on is downright scary and I have serious doubts and lack of faith in the current leaders to prevent a catastrophe (meltdown, if you will). Just for reference, I believe against the Yen, the all time high of Euro was something like 169 yen/euro. Today, it was below 112/euro. I think that level is lower than the initial inception of Euro as a currency, way back when. Expert Europeans, shed me some light.
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post #2 of 7 Old 05-19-2010, 01:05 PM
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212Export is probably the most qualified to answer.
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post #3 of 7 Old 05-19-2010, 01:10 PM Thread Starter
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Quote:
Originally Posted by Boxer View Post
212Export is probably the most qualified to answer.
Thanx, Boxer. I am sure 212Export is too busy at work now. Poor soul. w/ smiles Jimmy
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post #4 of 7 Old 05-19-2010, 07:26 PM
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Quote:
Originally Posted by Jimmy Chen Shiba DDS View Post
Thanx, Boxer. I am sure 212Export is too busy at work now. Poor soul. w/ smiles Jimmy
You got it right Jimmy. Its 5am here and I'm working since 3:30 am. What can I say.....

O.K. facts: When the Euro started trading you had tp pay 80 cents (USD) to buy a Euro in '00/'01. In 2008 at the Euro's peak, you had to pay double the initial USD amount to buy 1 Euro..that was 1.60 ! Now the Euro is trading roughly at 1.20 - 1.25 to the Dollar. Therefore....the Euro trades within the middle of the big range against the USD. So actually no big story if you look at it longterm. Of course, as the USD was generally a very weak currency against all other major currencies during the last 10 years, the todays relative weakness of the Euro looks much more evident against the Yen.

I would roughly assume that the Euro could hit 1 to 1 or even lower against the US Dollar as currency markets always tend to under/overshoot.

Europe is a great place to be but a terribly expensive place to live. Personally I like to travel in Italy and France, but when I see how expensive i.e. good hotels and good Restaurants are in these countries (plus 20%VAT!) then I have no doubt that the Euro and the whole economies and prices in most of Europe need a strong rebalancing to the better. Greece is really just the bad, leveraged show off what in reality (on a lower level) is existent is most European countries as well: inflated governement, huge governement debt (the result of a 2 decade long socialism, celebrated even by so called "conservative" politicians) , huge private debt, burst of previously inflated asset prices and so on. That happened in history before only this time I see nowhere any sound political answers to these problems. Printing money and regulating "short-sale" banning can't be the answer. Sad but Fact
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post #5 of 7 Old 05-19-2010, 07:36 PM
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Jimmy, as a little funny add-on to my comment above:
A link to a "open letter to Angela Merkel" from a financial markets trader perspective.
To refresh Angela Merkel thinks that the "speculator devils" are the root of the turmoil in financial markets so we have to ban "short selling" and take other measures to "stop the speculators".

Hope that link works.

http://www.zerohedge.com/article/fir...ll-speculators
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post #6 of 7 Old 05-19-2010, 09:35 PM
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Fully agree. The only part in the whole PIGS mess that I find surprising is that the markets have reacted as if the current situation is new news and a sudden surprise. With the exception of Spain, the finances in PIG have been a horrible unsustainable mess for a very long time.
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post #7 of 7 Old 05-19-2010, 10:20 PM
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There is a lot of talk that these countries are in problems now due to the financial crisis. That's like saying it was flu that killed the 105 year-old.


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