Tuesday, November 23, 2010

And the trouble continues, in the EU!

Merkel Points to `Serious' Bailout Risk as Spanish Bonds Drop

German Chancellor Angela Merkel said the prospect of serial European bailouts was “exceptionally serious,” sending the euro to a three-month low as officials estimated saving Ireland will cost 85 billion euros ($114 billion).

Posted by markj69 str05 @ 11:49 PM (1224 views)
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7 thoughts on “And the trouble continues, in the EU!

  • From the Telegraph….”EU president Herman Van Rompuy denied that Lisbon needs a lifeline, insisting that Portugal’s banks are well capitalised and do not face property losses”. “Portugal does not need any help – it is in a very different situation to Ireland,” he said.

    However….The euro fell to a two-month low of $1.3380 against the dollar.

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  • anecdotal. I know someone that bought a property in the Algarve a few years ago. At that time behind his property there was nothing but lots of fields. I visited recently (about 5 years later) and the place was full of properties, all of the land had been built on, and although the houses were of a fair size, the land they stood on was pokey to put it mildly.

    However none of these [about 20 ] in the immediate vicinity had been sold and they had been finished for around 18 months. Draw your own conclusion.

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  • And Irish Gov’t were bleating the same ‘We’re OK’ [email protected] the day, if not hours, before conceeding to reality.

    Do you ever get the feeling someones holding up a big poster for you to look at, whilst behind it the world is collapsing in chaos?

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  • Some observations:

    The Euro is worth more against the Pound that it was three months ago. This is odd (Prima-Facie) when we consider the PIIGS turbulence. Does it mean that we are just as badly-off, or does it mean that their mess is exaggerated?

    The equity markets did not comply with the consensus HPC opinion that they would rise in response to the announcement of more QE (US). Does this mean that the effects of QE are not as straightforward as assumed by most on this site?

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  • Studies of the ruins of Pompeii show that in the weeks and months prior to the AD79 eruption, homeowners had been busy mending the cracks in their mosaics and murals – blind to the impending eruption that had caused them..

    ..sometimes, when the truth is too difficult to face, people can be utterly blind to reality.

    Greece is bust, Ireland is bust, Portugal is bust, Spain is bust, Italy is bust – all need to devalue their currencies and inflate away their debt obligations..

    ..how long can this farce that is the eurozone continue?

    It is obvious that the single currency zone is going to fragment, if not fail completely – and equally obvious is the desirability of jumping before being pushed..

    ..still, a disorderly failure would undermine the grip of the Brussels conspiracy – another institution that would be better killed sooner rather than later..

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  • naughty naughty flash – who are you expecting to respond to that? Its of course (ego notwithstanding) that those who you want to respond who probably wont.

    I think the eur/dollar is the one to watch (and therefore the crosses are a bit in the background). The spike down in the dollar on QE2 (suck in) and then reversal was a good bet imo…. but then again to be fair i wasnt expecting it to break the prior high, (as we discussed) but when it did and the world and his mate were saying the dollar was due to collapse, on QE2 my antenna popped up, especially as we had the key reversal that day.

    As though you trade the real stuff for real reasons (rather than punting it) do you have a view on the Eur/ GBP rate?

    I agree with UT and anyone sensible – it was only a matter of time when some sort of creaking at the seams occurred. Especially when you start relaxing criteria and introducing more and more members…… odds are that at least one of them is going to misbehave at some point. Personally i think (and have always thought) we are well out of it, and not for any allegiance to the pound or xenophobia.

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  • techie: I wasn’t being entirely naughty. The first point was just a musing and I don’t have the answer. The second point was maybe a bit naughty but I really wanted to see if people had changed their opinion.

    The Euro/GBP is quite opaque to me because I think that Sterling has gradually and almost imperceptibly increased the strength of its coupling to the Euro and weakened the strength of its coupling to the Dollar. Obviously the Pound used to swing from parity to double, and then back again against the dollar but in duller times it moved with it. Now it has started to move more with the Euro, which is probably quite right because that’s where the bulk of our trade lies and most of the interest rate differentials have been narrowed. Obviously this new coupling makes it harder to predict EUR/GBP. This might be a boring answer but I think the rate is about right because no one is currently at an advantage. We got very used to buying stuff in Europe cheaply so there is a tendency to think that the Pound is too low. Whoever shouts loudest about higher interest rate intentions will temporarily have the stronger currency. Its them at the moment (which is probably why the Euro has held up against the Pound in this crisis) but I think that will change next year

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