EURO ZONE in house fighting continues........

inspector_monkfish

....... there could be trouble ahead.......:whistle:



14:08 24Nov10 - EU Distances Itself From German Euro Remarks


BRUSSELS (AFP)--The European Commission distanced itself Wednesday from remarks by Germany's finance minister that the Irish debt crisis threatened the euro zone.

A spokesman for European Union economic and monetary affairs commissioner Olli Rehn insisted that the euro was a stable currency and that its continued existence wasn't endangered by euro zone debt or banking crises.

German Finance Minister Wolfgang Schaeuble told the German parliament Tuesday that the future of the euro, a currency that Germany was instrumental in creating, was "at stake" in the Irish crisis.

Chancellor Angela Merkel later said Europe was in an "extraordinarily serious situation" but Rehn's spokesman Amadeu Altafaj reiterated his boss's position that "this is not about the future of the euro."

The spokesman said: "The euro is a stable and solid currency [even if]...there is, indeed, a challenge facing us in terms of financial stability across the euro zone and the European Union in general.

"That's why these decisions are taken," he said in reference to bailouts for Ireland and Greece, along with efforts to toughen up sanctions for those EU countries whose budget deficits and debts get out of hand.

lemonjelly

Germany look like they'd be fine, if it weren't for outside influences.

Confidence is up:
http://www.bbc.co.uk/news/business-11828571

I reckon it is only a matter of time before they seriously go it alone.

michaels

But what exchange rate would the Deutshe-Euro be trading at if it wasn't dragged down by the rest of the Euro zone...oh yes, at a level which would unwind some of the imbalances (including Germany's savings and trade surpluses which are just the mirror image of other countries deficits.

Do they really not get that they are part of the problem, that not all countries can copy their model and that in the end they will end up writing off the money they have saved and lent so in effect others are gong to enjoy the fruits of all their hard work. :rotfl:

lemonjelly wrote: »

Germany look like they'd be fine, if it weren't for outside influences.

Confidence is up:
http://www.bbc.co.uk/news/business-11828571

I reckon it is only a matter of time before they seriously go it alone.

lemonjelly

michaels wrote: »

But what exchange rate would the Deutshe-Euro be trading at if it wasn't dragged down by the rest of the Euro zone...oh yes, at a level which would unwind some of the imbalances (including Germany's savings and trade surpluses which are just the mirror image of other countries deficits.

Do they really not get that they are part of the problem, that not all countries can copy their model and that in the end they will end up writing off the money they have saved and lent so in effect others are gong to enjoy the fruits of all their hard work. :rotfl:

I have no idea. Posters (including yourself) are wiser than I, & are more likely to be able to answer that.

But Merkel isn't sounding very positive, or very co-operative. I am merely wondering at what point the populace start saying to their politicians "screw them, we're alright jack. Whay are we bailing everyone else out?"

Their economy appears to be doing quite well. So I just feel they could get a little insular. I appreciate that might not be the best option, I just think it is plausible.

michaels

What I was trying to say is that for years Germany has been consuming less than it produces, exporting the surplus and saving the difference between income and expenditure. The surplus exports are being bought by the Greeks etc paid for using money borrowed from the Germans savings.

If the Germans now decide that they would rather not finance the Greeks to consume more than they produce and ask for the loans back then the Greeks will have no option but to default - and thus the Germans will lose for good those savings made when they earned more than they spent.

The only way the problem can unwind and the Germans get their money back is if they switch to spending more than they earn and the Greeks start to earn more than they spend. The Germans want it both ways - they want to continue earning more than they spend and they also want everyone else to do the same but worldwide of course that is not possible.

What would normally happen is that the currency of the country that earns more than it spends would increase thus making the BMWs and Mercs that it produces comparatively more expensive than locally produced vehicles and the imbalance would unwind. With the Euro Germany and Greece share the same currency which sits somewhere between the level suitable for Germany and Greece, too low for Germany thus not causing to to rebalance its earning and spending and too high for Greece.

Wookster

Angela Merkel has nearly single handedly managed to bring about the current market jitters. It maybe entirely reasonable to expect bond holders to share in the pain of their reckless lending but one doesn't go around pushing this idea through when every other country in the Eurozone's public finances are in a perilous financial state.

She really didn't think that one through.

I believe the expression in Germany for such action is "schiesse".

Malcolm.

Bondholders have been onto a sure thing, by investing in institutions which are considered too big to fail. Whether this be banks, governments or some other organisation. Ironically, asking bond holders to share in the losses when an organisation is bailed out, will lead to an increase in debt yield for the likes of Ireland and Greece, thus making probability of default greater.

The eurozone economies are not singing to the same hymn sheet, it's difficult to see the membership continuing in it's current form.

halight

Malcolm. wrote: »

Bondholders have been onto a sure thing, by investing in institutions which are considered too big to fail. Whether this be banks, governments or some other organisation. Ironically, asking bond holders to share in the losses when an organisation is bailed out, will lead to an increase in debt yield for the likes of Ireland and Greece, thus making probability of default greater.

The eurozone economies are not singing to the same hymn sheet, it's difficult to see the membership continuing in it's current form.

So any ideas on a way forward? A brake up of the EU/euro ? Or maybe two euro blocks on diffrent IRs ?

I think that Germany and franch will fight tooth and nail to keep it all together. But that dont mean it will stay togethetr.

i dont know what will happen. If anything.
I dont know what will be the best thing to do break up the EU,scrap the euro.

We live in very intresting times

Malcolm.

halight wrote: »

So any ideas on a way forward? A brake up of the EU/euro ? Or maybe two euro blocks on diffrent IRs ?

I think that Germany and franch will fight tooth and nail to keep it all together. But that dont mean it will stay togethetr.

i dont know what will happen. If anything.
I dont know what will be the best thing to do break up the EU,scrap the euro.

We live in very intresting times

Like you, I'm not certain what will happen. The political pressures within the poorer eurozone countries is likely to become intense (not being able to use currency fluctuations to devalue the debt they've accumulated). However, there's no precedent for exiting.

My (complete finger in the air) guess is a core set of countries continue with the euro, and some weaker peripheral countries exit.

ChiefGrasscutter

I think there was some sort of Scandavian single currency union of some sorts in late 1800's.
I'm told it went pear shaped and significantly the strongest left first.
I'm sure there are others on here who would know more of the history of the event.

Currently the idea in Euroland seems to be to the equivalent of "kicking the can down the road" - thereby storing up even greater problems from the future. I can only imagine they hope that the 'future' is indeed after they have retired.

Masomnia

Wookster wrote: »

I believe the expression in Germany for such action is "schiesse".

'To shoot'... as in to shoot onesself in the foot?:p