Is the end nigh for the Euro? [vol. 2]

[Mermaid]

Fed expects rates to stay at exceptionally low rates till the end of 2014.

[Art0ir]

HundredthIdiot said:

It would be if it continues in that direction, but it's a bit hard to extrapolate accurately from two data points. Unless you're in the Chinese Ministry Of Economic Truths.

I think it's fairly clear China is unravelling, just how much hasn't been revealed it. Employment took it's biggest hit in 40 months, PMI worst in 8 months, industry showing some poor signs too along with inflation (which China needs) slowing down too.

[LongQ]

Art0ir said:

Sorry to go off topic but oh my I hadn't seen Australias yet, that's horrendous.

Does that co-incide with all their new taxes related to carbon and other stuff? Remember they have a Welsh female running the show at the moment. I'm surprised that as yet they have not handed control of their mineral resources to Beijing. Maybe they have?

[Steffan]

fesuvious said:

Andy Zarse said:

I don't think anyone here is suggesting the UK is in an econimically great position. AFAIUI, we're fked you're fked, they're fked, everybody is fking fked.

Brilliant - that sentence brightened up my day no end - thank you.

Thing is, it is true - ish. The UK isn't fked, but Eurozone is. The US will just print whatever they need to to stave off any short term problems. In fact, the US is probably already taking the view that the problems being borne through QE fiscal policy will not ultimate be the problem of anyone alive today anyway - so who cares?

Eurozone is different. We are no longer looking for a solution, we are looking for a fudge. The delay is merely that they can't find one yet. ECB cannot print because zee Germans are st scared of inflation, and zee Germans have their fingers covering the 'on' switch for the presses, so that can't happen yet.......

or can it.....

Ever wondered if the rest of Eurozone is actually dragging this out for as long as is needed for the German economy to go downhill? Maybe they all realise that they need to sit back and wait for the economic st/reality to hit home in the form of recession in Germany. If so, in the face of recession Ms Merkal may not be so keen to hold back.

Moreover, if this were the case then given the reported skeptiscm in Germany already, this could only get worse.

Just maybe political vanity will ultimately give way to economic reality when it bites in the supposed 'well off' Eurozone countries. France are yet to go properly downhill, but I fail to see they'll avoid it.

The currency may not be doomed (mores the pity) but it could be split in two 'Euro North' and 'Euro South'.

Able to give the monstrous benefit of huge devaluation to Spain/Portugal/Italy/Ireland etc whilst allowing only mild devaluation for 'Euro North'.

Sure, huge problems as huge debts become worth less, but, if it 'rescues' the Eurozone and allows economic reality to be staved off - why not? German Politicians could still say 'we are getting all our money back' as it would technically be true - even if that sum is not a fat lot by the time the devaluations play out.

Six months ago I said Euro would be 1.60 to £ within 27months. I still think this'll happen.

I personally cannot see another way out. We all know the silly sums being banded about a) don't exist anyway, and b) could never actually be paid back.

So what does it matter?

There are elements in this that I agree with and elements that I do not. But it is` certainly an interesting appreciation of the reality of the EU position.

The lines " We are no longer looking for a solution, we are looking for a fudge. The delay is merely that they can't find one yet. ECB cannot print because zee Germans are st scared of inflation, and zee Germans have their fingers covering the 'on' switch for the presses, so that can't happen yet.......", referring to the EU, is absolutely correct.

The EU are not even trying to deal with the problem they just want to fudge the problem and hide it. But this is impossible.

The delay is caused by the ECB and Draghi have realising that without fundamental changes to the ECB remit, they cannot actually address the problem. And Germany will not budge.

In consequence the EU is stalled in its efforts to "solve" or in reality fudge the problem. I await the developments with interest. What is certain is that there is no permanence in any of this EU fiddling. We are well past the point of constructive solutions coming out of the EU.

[Steffan]

Article from the Beeb in that very point " Can Draghi do 'Whatever it takes' to save the Euro?"

see: http://www.bbc.co.uk/news/business-19077140

We should know tomorrow, apparently?

[Art0ir]

LongQ said:

Does that co-incide with all their new taxes related to carbon and other stuff? Remember they have a Welsh female running the show at the moment. I'm surprised that as yet they have not handed control of their mineral resources to Beijing. Maybe they have?

Good point I didn't realise that came into effect this month. Cap and Trade of CO2, another bubble to inflate and pop. Interesting how Goldman have taken a huge interest in this since it was first proposed.

[Mermaid]

Steffan said:

Article from the Beeb in that very point " Can Draghi do 'Whatever it takes' to save the Euro?"

see: http://www.bbc.co.uk/news/business-19077140

We should know tomorrow, apparently?

Can the Eurozone afford for him not to deliver after all the bluster?

[Andy Zarse]

Driller said:

Andy Zarse said:

Ozzie Osmond said:

Yes, you are absolutely right. Collapse of the euro is imminent - in fact it can't possibly survive past tomorrow. Time is right for the economic miracle of the Blair/Brown years to place UK back on the international stage as a dominant world power, rivalling USA and China on a stand-alone basis. France and Germany will fade into obscurity with the rest of Johnny Foreigner. Rule Britannia!

Don't hold your breath.....

I don't think anyone here is suggesting the UK is in an econimically great position. AFAIUI, we're fked you're fked, they're fked, everybody is fking fked.

I could launch off as to why the policy of QE in this country is an abject failure, or about the disaster of high inflation combined with low wage growth leading us into our own lost decade, a la Japan. Or why I think Mervyn King should be executed, or at least have the index linking removed from his pension.

However, even ignoring the fact this thread is about the problems of Euro and the contemporaneous madness surounding it, just because the UK/US/China are all shagged too does not detract from the validity of the original premise; the Euro as currently constructed is sooner or later doomed.

No it isn't

"Look, if I argue with you, I must take up a contrary position..." etc.

Andy Zarse said:

And we still await someone here to explain a mechanism by which it might be saved...

Don't hold your breath either...

Look, it's all very well you asking for the mechanism by which it's going to be saved but your mechanism of failure doesn't exactly seem to be very reliable does it?

The Euro is alive and well, it's up to you to prove that it's going to fail not others to prove it's going to continue as is.

Nice to see you are also a fan of the Turpsichorian muse. In which case you'll know that whilst arguing indeed involves taking up a contrary position, it is not just saying "no it isn't". Arguement is an intellectual process. Contradiction is just the automatic gainsaying of anything the other person says. (It is NOT!)

You have a very Pythonesque definition of "alive and well". We are expected to agree currency union with bond spreads ranging from negative in Germany to around 40% in Greece, and a completely failed money transmission (Target 2) is both alive and well; I would agree but only insofar as the Norwegian Blue was alive and well. You bleedin' nailed 'im there.

[Steffan]

Mermaid said:

Steffan said:

Article from the Beeb in that very point " Can Draghi do 'Whatever it takes' to save the Euro?"

see: http://www.bbc.co.uk/news/business-19077140

We should know tomorrow, apparently?

Can the Eurozone afford for him not to deliver after all the bluster?

That is a very good question Mermaid. It must be a challenge to the EU if they cannot deliver on the rhetoric. I do think this is why there is a delay in the proceedings.

I think the real problem is the sheer size of the bailout needed and the need to make the markets feel that the Euro crisis is solved at least in the short term. To achieve that the ECB needs to print big money regularly. Without Germany agreeing to that it cannot be done.

Of course, this will not solve any problems at all. The EU are not looking for solutions. Just a way to put this off for a bit. In the end there is bound to be a huge crash.

Unbelievably the EU leaders are that cynical and shallow. They are gambling with Billions and Billions of other peoples Euro's knowing that the whole lot will be thrown away. Just to try and buy time. Knowing that nothing is being done to address the real problems and that the HBAT's cannot recover whilst locked into the Euro.

[GBB]

Art0ir said:

GBB said:

What Bazooka?

Granting the ECB a license to print unlimited money out of thin air.

This is my view as per Steffan's

The lines " We are no longer looking for a solution, we are looking for a fudge. The delay is merely that they can't find one yet. ECB cannot print because zee Germans are st scared of inflation, and zee Germans have their fingers covering the 'on' switch for the presses, so that can't happen yet.......", referring to the EU, is absolutely correct.

[Steffan]

coyft said:

Steffan said:

To achieve that the ECB needs to print big money regularly. Without Germany agreeing to that it cannot be done.

You sure?

Draghi said last week "If Govt borrowing premia hurt Monetary policy transmission, they are in our mandate"

He seems to think that it's within the ECB mandate to reduce the yield on Spanish bonds. Will be interesting to see how Germany react if he follows through.

What I am absolutely certain of is that the current approach of the EU and ECB cannot stabilise the HBAT's position. There is no cure in any of this for the fundamental insolvency of the sovereign states concerned.

The EU and ECB are constantly looking for financial sticking plasters which cannot address any of the underlying fiscal and economic weaknesses that are the underlying causes of the insolvency of the HBAT's, but can extend the length of the crisis. At huge cost to the EU taxpayers. The EU are not looking for solutions at all.

In consequence there can be no permanence in any of these "solutions" because all the HBAT's are getting weaker economically all of the time. The EU and ECB know this full well and are trying smoke and mirrors, as a permanent solution. Which must end in failure.

Despite AndyZarse and others, including myself, repeatedly challenging all of the pro EU supporters on PH to suggest any actions of the EU, EFSF, ECB or any of the member states, that could actually address the economic weaknesses of the HBAT's there has not been one response.

That is because not one of the measures, proposed or taken by the EU or the rest of the players in this has actually been aimed at creating any changes to the underlying weaknesses of the HBAT's. This has been compounded by effects of the worst recession in the western world in 100 years.

I do not want to see the end of the EU, or economic catastrophe across southern Europe, nor do any of the other posters on here recognising the economic reality of this situation.

But 150 million people cannot permanently live at a standard way beyond the level their economies can actually support. That is the reality of this problem and that is why the EU cannot address the underlying causes.

[Mst007]

I, for one, would welcome the end of the Euro and the EU. To be clear, I of course mean the European "Parliament" - all 3 of them (with a 4th building on the way) - which of course is as far from a democratic parliament as the HBAT`s are from having no structural deficit. UNLESS of course the peoples of Europe vote truly & democratically for it to continue without it taking 2-3 referendums per country until the "right" answer is given, should they ever be given the choice. How on earth Europe got to this position where political mission creep allowed unelected technocrats/bureaucrats/puppets to wield so much power, be parachuted in to take over key Govts, be so continually inept, profligate, fraudulent, and deceitful, I`ll never quite understand. History books written 100 years from now will certainly be a fascinating read.

[Gargamel]

Andy Zarse said:

I don't think anyone here is suggesting the UK is in an econimically great position. AFAIUI, we're fked you're fked, they're fked, everybody is fking fked.

The magnificent gifted literally verse that flows from Gus O'Donnell

One of my favourites from the New Labour Years

[HundredthIdiot]

coyft said:

You sure?

Draghi said last week "If Govt borrowing premia hurt Monetary policy transmission, they are in our mandate"

He seems to think that it's within the ECB mandate to reduce the yield on Spanish bonds. Will be interesting to see how Germany react if he follows through.

I'm guessing the short-term fudge will be massive leveraging through subordinated bond purchases (if that's the right terminology) of the remaining 180bn or whatever in the ESM, following in the medium term by massive leveraging of the 500bn from the EFSF.

In this way 680bn will become 3tn of "firepower" and the Eurozone will be "saved".

[Mermaid]

HundredthIdiot said:

I'm guessing the short-term fudge will be massive leveraging through subordinated bond purchases (if that's the right terminology) of the remaining 180bn or whatever in the ESM, following in the medium term by massive leveraging of the 500bn from the EFSF.

In this way 680bn will become 3tn of "firepower" and the Eurozone will be "saved".

The "The 2012 Draghi Plan" will save or sink the Eurozone (Europe) - I suppose that is what worldwide markets & investors are expecting.

[Digga]

Mermaid said:

HundredthIdiot said:

I'm guessing the short-term fudge will be massive leveraging through subordinated bond purchases (if that's the right terminology) of the remaining 180bn or whatever in the ESM, following in the medium term by massive leveraging of the 500bn from the EFSF.

In this way 680bn will become 3tn of "firepower" and the Eurozone will be "saved".

The "The 2012 Draghi Plan" will save or sink the Eurozone (Europe) - I suppose that is what worldwide markets & investors are expecting.

We'll find out on Sept 14th when the German courts decide the legality, or not, of the plan. My guess is both the German government and Buba will say "nein".

[Blib]

Steffan said:

But 150 million people cannot permanently live at a standard way beyond the level their economies can actually support. That is the reality of this problem and that is why the EU cannot address the underlying causes.

This, this and thrice this.

[Driller]

Andy Zarse said:

Nice to see you are also a fan of the Turpsichorian muse. In which case you'll know that whilst arguing indeed involves taking up a contrary position, it is not just saying "no it isn't". Arguement is an intellectual process. Contradiction is just the automatic gainsaying of anything the other person says. (It is NOT!)

You have a very Pythonesque definition of "alive and well". We are expected to agree currency union with bond spreads ranging from negative in Germany to around 40% in Greece, and a completely failed money transmission (Target 2) is both alive and well; I would agree but only insofar as the Norwegian Blue was alive and well. You bleedin' nailed 'im there.

Interesting, could the entire Euro situation be summarised by the following and could the thread end here?

"There! It moved!"

"No it didn't, that was you pushin' the cage!"

[loafer123]

coyft said:

Forget what the Germans say, when push comes to shove, the ECB will act in the same way as The Fed and BofE.

It can't unless the Germans agree, and that decision is very much in the balance legally and politically, so I don't agree with your assertion of certainty.

[RichardD]

Blib said:

Steffan said:

But 150 million people cannot permanently live at a standard way beyond the level their economies can actually support. That is the reality of this problem and that is why the EU cannot address the underlying causes.

This, this and thrice this.

Comparing this very good summary by Steffan by the thinking this morning of Coyft it is worth summarising the situation as being :-

"a battle for sound money".

Steffan can only see one outcome (which at least today is back to being "HBAT" rather than "defaulters" ) because of his logical accounting background. He is in the German camp which believes substance generates wealth (money) which should be protected.

But there is a paradox, surely a sizable portion of German future wealth is now not existant since previous customers have been shown not to have anything to give in return, so if they don't have any money/worth ze Germans can't export their shiny things to them?

The alternative way (UK, US, Japan etc, the QE gang) is the thinking that the value of money is because it is in a growing system, "investing", even if much of that investing is only in consumption. It is perverse for the consumer to be an equal partner to the manufacturer. But how can the manufacturer have profits if there is a lack of consumers. Or more precisely the issue of consumers who once could afford something but now/in the future cannot...

Imho the Germans would prefer a drop in their production rather than being part of a globalsociocommunist pyramid scheme of consumption.