Thursday, Jul 12, 2007
Eurozone to reach breaking point in 18 months
The Telegraph: Dollar problems audio
Great auduio about the falling dollar, credit crunch and the future effects in the eurozone.
Posted by sold 2 rent 1 @ 02:01 PM (321 views) Add Comment
5 Comments
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1. harold said...
Funny how disastrous news in the US gets warped by Euro sceptics into disaster for the euro. As if Italy, Spain and France export most of their goods to the US. No, I'm sorry but the real problem will be for the $ and £, i.e., the US and UK, due to their astronomical borrowing.
2. vfr said...
Is it because oil is paid for in dollars that the southern economies might suffer? 1.40 euro/dollar. I think we should also ask why are the banks selling gold and moving into cash. Spain maybe to cover debts through lack of taxes. Switzerland unaffected by the euro plans to sell 250 tonnes i read somewhere over the next two years. Biggest stash of gold is held by the Germans. Agree that Eurosecptic springs to mind though.
3. sold 2 rent 1 said...
harold,
I think you missed the point.
The guy is not arguing that Europe as a whole is in a worse state than the UK - although Spain and Ireland are in pretty bad nick.
The UK has boomed much more than France or Italy and will surely have a bigger bust.
He is arguing that the fundamental differences between Germany and Club Med are too great to share the same curency in the long run.
The UK will be able to devalue and although this may cause inflation in the short term it will lead to the long term solution.
The Club Med countries will be locked into a high currency and will have to maintain very high unemployment just to keep wages rock bottom.
4. Tricky said...
Hey guys
Could somebody please explain the effect of the currencies - i.e. s2r1's point about the effect of the strong Euro on the different economies Germany vs Club Med vs Ireland. Also many have commented that the current IR rises which are propping up the pound and should the BOE relax this policy or cut IR, that sterling will get buggered - please explain this or drop a link where I can get good background information.
I'm learning much of my economics through the impetus of this site!
Awaiting the next HPC or else moving to the US/Canada!
5. dobber said...
Good post,
Very wise words as usual from Ambrose, prepare for meltdown.