Is the Euro heading for disintegration?
Discussion
Just been reading a research report by a strategist at SocGen, the chap who predicted the Asian currency crisis no less, so not a junior or obscure commentator.
Basically he's saying that withing 2-4 years the Euro zone with fragment with the PIGS and Southern Europe breaking away, or being deserted by Germany/France and Holland.
If the Euro falls apart the damage to the progress of the whole European single state project would be massive, as a single currency is seen as a prerequisite of real political union.
It would also to say the very least lead to some rather interesting movements in the foreign exchange and bond markets.
Euro currently diving southwards at 1.35 to the $, it was 1.50 a few weeks back.
Basically he's saying that withing 2-4 years the Euro zone with fragment with the PIGS and Southern Europe breaking away, or being deserted by Germany/France and Holland.
If the Euro falls apart the damage to the progress of the whole European single state project would be massive, as a single currency is seen as a prerequisite of real political union.
It would also to say the very least lead to some rather interesting movements in the foreign exchange and bond markets.
Euro currently diving southwards at 1.35 to the $, it was 1.50 a few weeks back.
Lost soul said:
Timmy35 said:
Euro currently diving southwards at 1.35 to the $, it was 1.50 a few weeks back.
Euro is stable against the GBP DKK (DKK where i live) , i think its more to do with the $$$ climbing than the Euro dropping As for the Euro having a few local difficulties....substitute Greece for Bear Sterns, Spain for Lehmans, and the Euro Zone for the banking system and you'll get a rough picture of how things may develop.
Timmy35 said:
Lost soul said:
Timmy35 said:
Euro currently diving southwards at 1.35 to the $, it was 1.50 a few weeks back.
Euro is stable against the GBP DKK (DKK where i live) , i think its more to do with the $$$ climbing than the Euro dropping As for the Euro having a few local difficulties....substitute Greece for Bear Sterns, Spain for Lehmans, and the Euro Zone for the banking system and you'll get a rough picture of how things may develop.
Euro disintegration, whilst not impossible, is still unlikely. We are not talking about some tinpot third world currency here - it is the most traded thing in fx against the dollar.
Whilst short term moves are always exciting it is important to keep some perspective. it is back where it was in Sep against GBP. We may well see some change of the consituent members of the Eurozone but I reckon the Euro will be here for some time.
So the thread title wasn't a question?
Euro disintegration, whilst not impossible, is still unlikely. We are not talking about some tinpot third world currency here - it is the most traded thing in fx against the dollar.
Whilst short term moves are always exciting it is important to keep some perspective. it is back where it was in Sep against GBP. We may well see some change of the consituent members of the Eurozone but I reckon the Euro will be here for some time.
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I agree. The political will to keep the Euro in place is massive. Currently traders have the greatest ever amount of short positions on the Euro, so it's going to be rocky, but that doesn't mean that member states will suddenly pull out and revert to marks, francs, lira etc.
I also see little gains for Stirling either whilst our interest rates remain so very low. It might not be pretty, but talk of Euro disintegration is greatly exaggerated
Jeff Randall in the Telegraph said:
The euro was not a currency, as such, in 1998, but the website x-rates.com calculates that against a basket of currencies forming the euro, sterling has shed about 27 per cent of its value over the past 12 years. In that time, even the enfeebled American dollar has dipped less sharply than the pound.
Full article hereSo we're measuring one basket currency against another! The european elite aren't going to allow their Grand Projet to collapse so will twist arms as far as necessary to keep it on track by fair means or more dubious ones.
Dogwatch said:
The european elite aren't going to allow their Grand Projet to collapse so will twist arms as far as necessary to keep it on track by fair means or more dubious ones.
So they'll have to bail out Greece to keep the Euro intact, then have to bail out all the other countries one by one... and those tricksy hedge-fund types will be picking off the weaklings one by one... so eventually France and Germany will have to pay off the debts of half of Europe? I don't see it happening.They should have done a few more checks before letting Greece join in the first place. But socialists always think that money magically comes from somewhere.
In theory UK should do well from this, but no doubt Gordy will find a way to piss yet more of the money we don't have into a black hole.
Or is it all a storm in a teacup and in a few months everything will be back to normal?
Timmy35 said:
Lost soul said:
like i said all i see is that the $$$ has picked up from its ridiculous low
Well you said the Euro was stable against the £ which it clearly isn't. Having dropped about 15%.It's also fallen sharply versus the Yen. And virtually all other currencies.
What??
Where are you guys getting these nonsense FX prices from??
Let's talk Facts:
Sorry if I've been a bit harsh here but as an importer from the Eurozone I am painfully aware of every fractional move in the exchange rates and so have been monitoring this issue for some time. It winds me up when I hear all this "strong Euro/weak Pound" talk especially when, as is the case here, it is not based in an analyis of the facts.
Where it goes or what happens form here is anyone's guess but, please, let's deal with FACTS when we are talking about historical data.
Where are you guys getting these nonsense FX prices from??
Let's talk Facts:
Silver933tt said:
The Euro is still around 25% stronger than the £ compared to 18-24months ago, it's £ that is very weak not the Euro.
Incorrect. The strongest the Euro has been against the Pound in recent times was A BRIEF PERIOD when it hit 0.98 in Dec 2008 (I remember well as I got screwed back in Ireland for Christmas!). Even from this extreme position, it has fallen only 11% or so to today's value at 0.87 . In truth its average price over the last 18 months has been about 0.90 so on that basis the fall is miniscule in the context of foreign exchange movements.Timmy35 said:
Actually it's been falling for some while, parity was being confidently predicted just before xmas with the Euro around 95c to the £. Presently it's fallen to 86.5c...
"Confidently predicted"?? I don't know who is the bigger fool: the man who "confidently predicts" the FX markets or the man who believes them. On a factual point though the highest the Euro reached against the £ in Q4 was again a BRIEF PERIOD in early October when it touched 0.94 and apart from this one blip, the average over all of Q4 is probably just below 0.90. Too much Daily Mail being read in this instance I think.Timmy35 said:
Well you said the Euro was stable against the £ which it clearly isn't. Having dropped about 15%.
No, wrong again. QED. Let's deal with facts and not just throw random numbers around.Lost Soul said:
Euro is stable against the GBP DKK (DKK where i live) , i think its more to do with the $$$ climbing than the Euro dropping
Yes, this looks to me like the case rather than the inaccurate data in the rest of this thread.Sorry if I've been a bit harsh here but as an importer from the Eurozone I am painfully aware of every fractional move in the exchange rates and so have been monitoring this issue for some time. It winds me up when I hear all this "strong Euro/weak Pound" talk especially when, as is the case here, it is not based in an analyis of the facts.
Where it goes or what happens form here is anyone's guess but, please, let's deal with FACTS when we are talking about historical data.
seaninog said:
What??
Where are you guys getting these nonsense FX prices from??
Let's talk Facts:
No, you're very wrong. The Euro hit nearly €1.5/£ about 4 years ago and held between 1.45-1.48 for around 2 years, not a brief period but A VERY LONG PERIOD OF 2 YEARS. It then hit around €1.05 a year ago - which is around 30% differential. Now it's €1.15 - around 24% differential. Hardly miniscule, in fact a massive drop in Sterling.Where are you guys getting these nonsense FX prices from??
Let's talk Facts:
Silver933tt said:
The Euro is still around 25% stronger than the £ compared to 18-24months ago, it's £ that is very weak not the Euro.
Incorrect. The strongest the Euro has been against the Pound in recent times was A BRIEF PERIOD when it hit 0.98 in Dec 2008 (I remember well as I got screwed back in Ireland for Christmas!). Even from this extreme position, it has fallen only 11% or so to today's value at 0.87 . In truth its average price over the last 18 months has been about 0.90 so on that basis the fall is miniscule in the context of foreign exchange movements.Here you go:
http://www.advfn.com/p.php?pid=qkchart&symbol=...
Edited by Silver993tt on Sunday 14th February 21:14
No, I'm not wrong. Though I think we're at cross purposes here.
Firstly, you're talking about £/€ and I was talking about €/£ which is how the market quotes the rate, much to the chagrin of the UK FX Dealers! (ie you refer to how many € per pound but I was talking about the inverse: how many pence per Euro).
Secondly, I was referring to recent history. You've now extended your time horizon to 4 years whereas your initial statement spoke of the last "18-24 months" and that's what I was talking about (but if you check your own chart you'll see the Euro's appreciation is nowhere near 25%, even over the last 24 months). Heck, if you want to go back far enough let's talk about the time I bought a car in Belgium at the turn of the century when I got about €1.70 for my £ - happy days for UK buyers indeed!
Good to see you've taken the time to look at the chart though. Fair play.
Firstly, you're talking about £/€ and I was talking about €/£ which is how the market quotes the rate, much to the chagrin of the UK FX Dealers! (ie you refer to how many € per pound but I was talking about the inverse: how many pence per Euro).
Secondly, I was referring to recent history. You've now extended your time horizon to 4 years whereas your initial statement spoke of the last "18-24 months" and that's what I was talking about (but if you check your own chart you'll see the Euro's appreciation is nowhere near 25%, even over the last 24 months). Heck, if you want to go back far enough let's talk about the time I bought a car in Belgium at the turn of the century when I got about €1.70 for my £ - happy days for UK buyers indeed!
Good to see you've taken the time to look at the chart though. Fair play.
Monetary Union will be very difficult to achieve without political union.
Lisbon Treaty = Political Union.
Watch what happens next!
As said above, it will not be allowed to fragment.
This disparity is unsustainable and in order to make it such, shut down the cause via political federation and homogenisation.
My prediction is Lisbon Turbo. The current situation is that it is not lawful for Eurozone countries to bail out each other. Greece cannot be allowed to fall, if the do get bailed out, I can't see why the PIIS wouldn't want some "free money" as well. You can wipe the slate clean by getting steps further towards EU rather than this "semi-fed".
Me personal opinion is that you can't have monetary union between rich and poor without political union being able to allocate funds accordingly.
This whole nationalism thing really is a spanner in the works.
Lisbon Treaty = Political Union.
Watch what happens next!
As said above, it will not be allowed to fragment.
This disparity is unsustainable and in order to make it such, shut down the cause via political federation and homogenisation.
My prediction is Lisbon Turbo. The current situation is that it is not lawful for Eurozone countries to bail out each other. Greece cannot be allowed to fall, if the do get bailed out, I can't see why the PIIS wouldn't want some "free money" as well. You can wipe the slate clean by getting steps further towards EU rather than this "semi-fed".
Me personal opinion is that you can't have monetary union between rich and poor without political union being able to allocate funds accordingly.
This whole nationalism thing really is a spanner in the works.
Europe isn't ready for political union - the general and entirely appropriate disgust with which people regard politicians in the UK, and which is the only general condition in which genuine leadership could be exercised from Brussels, is not universal - particularly in Germany, which, frankly, is where it matters. If the seas get really rocky, Lisbon will go down like a stray pedalo.
There is an opportunity for European politicians today, but they won't take it because their snouts are too deep in the trough.
If the switch from the D Mark to the Euro had been put to a referendum in Germany it would not have happened. Another case of politicians doing what is right for them rather than what their constituents want. As the Second World War disappears into ancient history, the willingness of the Germans to fund other European states only goes up to a point and to the extent that they feel that they are getting something from it. To generally underwrite corrupt and inefficient states, in which I include the UK, is only going to lead to their own bankruptcy, and that for Germany is genuinely unacceptable, and will not imho, happen. I therefore 'confidently predict' a gradual change to a two level Euro.
We are at the end of an era here, it is not some form of business as usual. For decades, since 1945 in fact, politicians have competed with each other to obtain advantage by bribing electorates with their own money, in the belief that ultimately, like the banks, they cannot be allowed to go under. The UK government cannot go on spending money without regard to how or when it is going to be paid back. Now the taxpayer is funding huge bonusses for bankers - have you ever heard anything so ludicrous? The money has in fact run out, from the NHS to foreign aid, and we face either efficiency or poverty. In Europe it is no different.
There is an opportunity for European politicians today, but they won't take it because their snouts are too deep in the trough.
If the switch from the D Mark to the Euro had been put to a referendum in Germany it would not have happened. Another case of politicians doing what is right for them rather than what their constituents want. As the Second World War disappears into ancient history, the willingness of the Germans to fund other European states only goes up to a point and to the extent that they feel that they are getting something from it. To generally underwrite corrupt and inefficient states, in which I include the UK, is only going to lead to their own bankruptcy, and that for Germany is genuinely unacceptable, and will not imho, happen. I therefore 'confidently predict' a gradual change to a two level Euro.
We are at the end of an era here, it is not some form of business as usual. For decades, since 1945 in fact, politicians have competed with each other to obtain advantage by bribing electorates with their own money, in the belief that ultimately, like the banks, they cannot be allowed to go under. The UK government cannot go on spending money without regard to how or when it is going to be paid back. Now the taxpayer is funding huge bonusses for bankers - have you ever heard anything so ludicrous? The money has in fact run out, from the NHS to foreign aid, and we face either efficiency or poverty. In Europe it is no different.
This is very interesting indeed.
Without political union being forced by those who forced (some) monetary union, the thing is doomed to failure IMO.
Having a N/S split isn't a union, it's a split! We can't have cracks in the project, IT MUST SUCCEED!
A couple of chaps I know, one being very up on his current affairs and EU business and another being an ex LSE Economist are convinced that the only way is for it to fall to bits.
It's either full on or off.
(A likely condition is political union for the prevention of bleating about redistribution of wealth). If it would be possible to "adjust" the Euro forex rates to sensible levels, you'd see the problem disappear. I gather Germany are reluctant to do this (also that a lot of the strength is due to extraneous factors).
I see it this way. They will bail Greece out, as the People's EUtopia has to continue at all costs. Hopefully the Euro will return to a sustainable value and then we will be the EUSSR by the time (and if) the Euro returns to priapist proportions.
Without political union being forced by those who forced (some) monetary union, the thing is doomed to failure IMO.
Having a N/S split isn't a union, it's a split! We can't have cracks in the project, IT MUST SUCCEED!
A couple of chaps I know, one being very up on his current affairs and EU business and another being an ex LSE Economist are convinced that the only way is for it to fall to bits.
It's either full on or off.
(A likely condition is political union for the prevention of bleating about redistribution of wealth). If it would be possible to "adjust" the Euro forex rates to sensible levels, you'd see the problem disappear. I gather Germany are reluctant to do this (also that a lot of the strength is due to extraneous factors).
I see it this way. They will bail Greece out, as the People's EUtopia has to continue at all costs. Hopefully the Euro will return to a sustainable value and then we will be the EUSSR by the time (and if) the Euro returns to priapist proportions.
Tangent Police said:
I see it this way. They will bail Greece out, as the People's EUtopia has to continue at all costs. Hopefully the Euro will return to a sustainable value and then we will be the EUSSR by the time (and if) the Euro returns to priapist proportions.
As the chap a bit further up said, where are some people getting their notion of Euro value from? What is a sustainable value for the yo-yo?Three years ago it was worth 66p - today it is worth 87p.
Three years ago It was worth $1.30 - today it is $1.36.
I think its demise is being greatly exaggerated.
http://www.google.co.uk/finance?chdnp=1&chdd=1...
Edited to add: some stuff for the Euro bears here from FT Alphaville
The declining euro, pictorial edition
http://ftalphaville.ft.com/blog/2010/02/16/150216/...
Build up in non-commercial short positions on the Euro (i.e. bets that it will go lower)
Edited by limpsfield on Tuesday 16th February 12:43
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