Tuesday, June 10, 2008

Cracks appearing in Euro

Europe's deep rift exposed over ECB's interest rate policy

Spain believes bank is being 'bounced' into monetary tightening by German hardliners. Germany and Spain have clashed in an escalating dispute over the European Central Bank, exposing the deep rift that has emerged between Europe's North and South

Posted by holding out @ 10:11 AM (936 views)
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11 thoughts on “Cracks appearing in Euro

  • tyrellcorporation says:

    The Euro and the Teuro perhaps?

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  • tyrellcorporation says:

    Dude, did you mean Europhobe?

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  • japanese uncle says:

    Perhaps it is about time to contemplate the introduction of ‘Latin’, a single currency for Spain/France/Italy and other Med EU member states, while Mark will prevail in Germany and pro-German nations.

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  • Yes there should be a currency for the southern countries (the PIGS – Portugal, Italy, Greece, Spain) and one for the serious countries that do not constantly want to devalue and screw their prudent savers.

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  • Will the euro/pound exchange rate revert to its long run mean any time soon? Or is it different this time?

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  • Oh dear, another article by that well-known Europhile Ambrose Evans-Pritchard. With everyone feeling the pinch, even in Europe, these are being portrayed as cracks in the ERM. Well yes it is true that this is first real test on the Eurozone of a significant economic downturn. However don’t hold your breath for too long. There is a strong political commitment from all member states who have adopted the Euro to make it work. And all these states see the long-term benefit of their membership.

    Now I know Mr Ambrose Evans-Pritchard doesn’t like Europe too much, so I wonder what he’ll write when the pound has reached parity with the Euro, and there is talk of the UK joining the ERM because it’s in our best interests to do so. We are at 1.25 : 1. How long before our currency is rubbished (based on bad debts and negative equity) and we get to 1:1, or even weaker?

    Now that I see as a more likely trend. The ECB has been sensible enough not to pander to political whingers, but to at least keep rates on hold and thus fight inflation. Yes they are the more unpopular, but at least they are holding their ground. Good for them!

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  • As I’ve said before, it’s easier to remain friends when the sun is shining.

    The eurozone has yet to deal with a financial crisis or recession. What will prevail? National interests, or the eurozone’s interests collectively?

    The latter seems improbable..

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  • Given the fall of the GBP against the Euro combined with 25% house price falls by the end of next year, could we see a new breed of European BTL investor entering the market ? (An area we haven’t discussed yet).

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  • Cracking point str actually and if the things you mention had conspired to happen two years ago then I think that would have been a very real danger. But the credit crisis is affecting anyone and I don’t think the finance would be available to fund such an onslaught.

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  • I think the funds would be there if the numbers added up and with an effective discount to Euro investors of 40 odd % from September 2007 prices, I think they might.

    We might be owned and run by the Germans yet.

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  • nopensionnohouse says:

    Hey I have an idea. How about each country has their own currency with interest rates controlled according to their own particular challenges and situations?

    Nah, it will never catch on. Silly idea.

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