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(LA Times) Obvious It's not you Eurozone, it's me. Let's just be friends   (latimesblogs.latimes.com) divider line 27
More: Obvious, eurozone, capital controls, High Frequency Economics, high frequencies, European Central Bank  
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1509 clicks; posted to Business » on 28 Nov 2011 at 9:15 AM   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»   |    Get this fabulous T-Shirt and impress the methane out of your friends! shirt it!



27 Comments   (+0 »)
   
 
2011-11-28 09:48:39 AM
As an American the fact that 1 USD buys .75 euros means that either the currency markets operate in really dumb ways or we're really farked on our side of the pond.
 
2011-11-28 09:52:49 AM
ha-ha-guy: As an American the fact that 1 USD buys .75 euros means that either the currency markets operate in really dumb ways or we're really farked on our side of the pond.

Currency values are determined by a alot of different factors that often work against each other. For example, the ECB currently has higher interest rates than the Federal Reserve.
 
2011-11-28 09:55:30 AM
Other news agencies report IMF getting ready to stabilize problem with ~800 billion euro bailout. I, for one, am glad the problem has been addressed and solved.
 
2011-11-28 09:57:00 AM
The unmentioned 800-lb gorilla sitting quietly in the corner of the room is the aftereffects of even one Euro country defaulting on its loans. If, for instance, Greece defaults and stiffs the banks it owes money to, every sub-Saharan African country will do the same, followed immediately by all the wobbly countries in South America and Asia.

THEN we're really farked on our side of the pond.
 
2011-11-28 10:03:47 AM
is this where someone points some other seemingly random news (opinion) article (new window) on todays staggeringly logical finance/market movements ?
 
2011-11-28 11:41:28 AM
ha-ha-guy: As an American the fact that 1 USD buys .75 euros means that either the currency markets operate in really dumb ways or we're really farked on our side of the pond.

Or, it simply means we like selling aircraft.
 
2011-11-28 12:02:49 PM
StoneColdAtheist: The unmentioned 800-lb gorilla sitting quietly in the corner of the room is the aftereffects of even one Euro country defaulting on its loans. If, for instance, Greece defaults and stiffs the banks it owes money to, every sub-Saharan African country will do the same, followed immediately by all the wobbly countries in South America and Asia.

THEN we're really farked on our side of the pond.


I doubt they would do so, since it would make it more difficult to get IMF money in the future (the sub-Saharan African nations and the South American nations). Actually, South America's doing pretty well right now. I would be surprised if a breakup of the EU or a weakening of the Euro was complemented by a strengthening of Mercosur (not as a direct consequence, just a coincidence).

The EU itself will under no circumstances allow Greece to default. However, any additional money given to Greece is going to cause resentment in the stronger European economies, because they don't view themselves as a unified economy, they view themselves as lots of regional economies. If money from California goes to help Mississippi, no one gets really up in arms and threatens to leave the Union (well, stupid people do), because California and Mississippi are viewed as the same country, same culture, same America (by most people). In Europe, no one thinks "I'm European before I'm French/German/Greek/whatever".

Anyway, Greece won't be allowed to default; the EU will step in. What that will mean ten years from now I don't know, but neither the Eurozone nor the EU as a whole (yes, I know one is not a perfect superset of the other) will be breaking up any time soon.
 
2011-11-28 12:25:35 PM
Lord Dimwit: StoneColdAtheist: The unmentioned 800-lb gorilla sitting quietly in the corner of the room is the aftereffects of even one Euro country defaulting on its loans. If, for instance, Greece defaults and stiffs the banks it owes money to, every sub-Saharan African country will do the same, followed immediately by all the wobbly countries in South America and Asia.

THEN we're really farked on our side of the pond.

I doubt they would do so, since it would make it more difficult to get IMF money in the future (the sub-Saharan African nations and the South American nations). Actually, South America's doing pretty well right now. I would be surprised if a breakup of the EU or a weakening of the Euro was complemented by a strengthening of Mercosur (not as a direct consequence, just a coincidence).

The EU itself will under no circumstances allow Greece to default. However, any additional money given to Greece is going to cause resentment in the stronger European economies, because they don't view themselves as a unified economy, they view themselves as lots of regional economies. If money from California goes to help Mississippi, no one gets really up in arms and threatens to leave the Union (well, stupid people do), because California and Mississippi are viewed as the same country, same culture, same America (by most people). In Europe, no one thinks "I'm European before I'm French/German/Greek/whatever".

Anyway, Greece won't be allowed to default; the EU will step in. What that will mean ten years from now I don't know, but neither the Eurozone nor the EU as a whole (yes, I know one is not a perfect superset of the other) will be breaking up any time soon.


And what of Italy? THey are hanging on by a thread and their bonds are trading at over 7%, which I understand is very bad. The IMF is saying they cannot possibly bail out the zones' third largest economy and the European central bank is giving them the finger.

Unless the Eurozone pulls a proverbial rabbit out of its collective asses in some form of fiscal unity, it's a wrap...I I honestly think it is too late for even that.
 
2011-11-28 12:30:04 PM
vinnybang: Lord Dimwit: StoneColdAtheist: The unmentioned 800-lb gorilla sitting quietly in the corner of the room is the aftereffects of even one Euro country defaulting on its loans. If, for instance, Greece defaults and stiffs the banks it owes money to, every sub-Saharan African country will do the same, followed immediately by all the wobbly countries in South America and Asia.

THEN we're really farked on our side of the pond.

I doubt they would do so, since it would make it more difficult to get IMF money in the future (the sub-Saharan African nations and the South American nations). Actually, South America's doing pretty well right now. I would be surprised if a breakup of the EU or a weakening of the Euro was complemented by a strengthening of Mercosur (not as a direct consequence, just a coincidence).

The EU itself will under no circumstances allow Greece to default. However, any additional money given to Greece is going to cause resentment in the stronger European economies, because they don't view themselves as a unified economy, they view themselves as lots of regional economies. If money from California goes to help Mississippi, no one gets really up in arms and threatens to leave the Union (well, stupid people do), because California and Mississippi are viewed as the same country, same culture, same America (by most people). In Europe, no one thinks "I'm European before I'm French/German/Greek/whatever".

Anyway, Greece won't be allowed to default; the EU will step in. What that will mean ten years from now I don't know, but neither the Eurozone nor the EU as a whole (yes, I know one is not a perfect superset of the other) will be breaking up any time soon.

And what of Italy? THey are hanging on by a thread and their bonds are trading at over 7%, which I understand is very bad. The IMF is saying they cannot possibly bail out the zones' third largest economy and the European central bank is giving them the finger.

Unless the Eurozone pulls a proverbial rabbit out of its collective asses in some form of fiscal unity, it's a wrap...I I honestly think it is too late for even that.


Italy won't be allowed to default either. Not at this point. The economy won't be bailed out necessarily, but massive currency inflation combined with incredibly severe austerity measures, isn't out of the picture. And Italy will take it, the inflation and austerity, because they know they're really boned if they're forced out of the Eurozone.
 
2011-11-28 12:35:47 PM
No.

http://online.wsj.com/article/SB1000142405297020369940457704417275444 6 162.html?mod=googlenews_wsj
 
2011-11-28 12:40:09 PM
krusader3z: No.

http://online.wsj.com/article/SB1000142405297020369940457704417275444 6 162.html?mod=googlenews_wsj


I do fully expect this crisis to result in more economic integration, not less.

However, any rosy future is less likely unless the Europeans solve their demographic time bomb. There simply aren't enough babies being born to support an aging population.
 
2011-11-28 12:59:05 PM
Lord Dimwit: Italy won't be allowed to default either. Not at this point. The economy won't be bailed out necessarily, but massive currency inflation combined with incredibly severe austerity measures, isn't out of the picture. And Italy will take it, the inflation and austerity, because they know they're really boned if they're forced out of the Eurozone.

I think you're indulging in wishful thinking. The EC cannot compel a member country to not default. If Greece/Portugal/Italy default...and they CAN--not saying they WILL...the (Euro) game is up and the world goes into another Great Depression.We'll know in another month or two.
 
2011-11-28 01:01:26 PM
StoneColdAtheist: Lord Dimwit: Italy won't be allowed to default either. Not at this point. The economy won't be bailed out necessarily, but massive currency inflation combined with incredibly severe austerity measures, isn't out of the picture. And Italy will take it, the inflation and austerity, because they know they're really boned if they're forced out of the Eurozone.

I think you're indulging in wishful thinking. The EC cannot compel a member country to not default. If Greece/Portugal/Italy default...and they CAN--not saying they WILL...the (Euro) game is up and the world goes into another Great Depression.We'll know in another month or two.


Right, I don't think they can literally force a member to avoid default, but they can be very persuasive. For example, despite what a lot of people are crowing, the members of the Eurozone know it's in their best interest to remain members, so being threatened with removal from the Eurozone if they default would probably be sufficient to keep them from defaulting.
 
2011-11-28 01:12:28 PM
StoneColdAtheist: The unmentioned 800-lb gorilla sitting quietly in the corner of the room is the aftereffects of even one Euro country defaulting on its loans. If, for instance, Greece defaults and stiffs the banks it owes money to, every sub-Saharan African country will do the same, followed immediately by all the wobbly countries in South America and Asia.

THEN we're really farked on our side of the pond.


Everyone saw what happened to (and continues to happen) Argentina when they defaulted in the late 90's/early 00's and NO ONE wants that to happen to them.
 
2011-11-28 01:24:13 PM
Before people also signal this as the death knell of "European socialism", keep in mind that you have five different countries in the Euro Zone in bad shape:

Ireland - A social democracy whose financial problems are a result of banking failures and a huge real estate boom

Spain - A social democracy whose financial problems are a result of banking failures and a huge real estate boom

Portugal - A social democracy whose financial problems are a result of banking failures and other booms/busts

Italy and Greece - Social democracies whose financial problems are a result of tax avoidance being national past times. Also note that Italy's debts aren't as bad as the others.

The remaining Euro Zone countries, however, are pretty much all social democracies who are not having financial problems. Some of those social democracies are the strongest economies around.
 
2011-11-28 03:31:40 PM
The Great Gazoo: Before people also signal this as the death knell of "European socialism", keep in mind that you have five different countries in the Euro Zone in bad shape:

Ireland - A social democracy whose financial problems are a result of banking failures and a huge real estate boom

Spain - A social democracy whose financial problems are a result of banking failures and a huge real estate boom

Portugal - A social democracy whose financial problems are a result of banking failures and other booms/busts

Italy and Greece - Social democracies whose financial problems are a result of tax avoidance being national past times. Also note that Italy's debts aren't as bad as the others.

The remaining Euro Zone countries, however, are pretty much all social democracies who are not having financial problems. Some of those social democracies are the strongest economies around.


If the PIIGS go, France is not far behind.
 
2011-11-28 03:35:25 PM
The Great Gazoo: StoneColdAtheist: The unmentioned 800-lb gorilla sitting quietly in the corner of the room is the aftereffects of even one Euro country defaulting on its loans.

Everyone saw what happened to (and continues to happen) Argentina when they defaulted in the late 90's/early 00's and NO ONE wants that to happen to them.


Yes, but it's a classic case of when one country defaults IT has a problem. When a bunch of countries all default more or less together, WE have a problem.
 
2011-11-28 03:43:48 PM
StoneColdAtheist: The unmentioned 800-lb gorilla sitting quietly in the corner of the room is the aftereffects of even one Euro country defaulting on its loans. If, for instance, Greece defaults and stiffs the banks it owes money to, every sub-Saharan African country will do the same, followed immediately by all the wobbly countries in South America and Asia.

THEN we're really farked on our side of the pond.




The bigger problem is that no country in the world, even the US, has a bazooka big enough to plug this hole. It's going to take in the range of $2-4 TRILLION just to plug the hole for a few months. After that, we're talking in the tens of trillions.

This deal they just made today is just another 'kick the can down the road for a few months'. At that time when Greece/Italy/Spain walks up again to say "Oops, we still dont have any money," then what? I'm sure the Fed has another few trillion dollars to give to Europe every 6 months.

We'll, we've seen Helicopter Ben's plan. Print print print. QE 2.5 is currently in effect (ZIRP til '13), and QE3 is a done deal for 2012. And as a result, gold to the moon.
 
2011-11-28 03:49:52 PM
StoneColdAtheist: The Great Gazoo: StoneColdAtheist: The unmentioned 800-lb gorilla sitting quietly in the corner of the room is the aftereffects of even one Euro country defaulting on its loans.

Everyone saw what happened to (and continues to happen) Argentina when they defaulted in the late 90's/early 00's and NO ONE wants that to happen to them.

Yes, but it's a classic case of when one country defaults IT has a problem. When a bunch of countries all default more or less together, WE have a problem.


Another example would be the Asian financial crises of 1997. It was bad for the countries involved, but the global economy as a whole was strong enough to absorb the effects. On the other hand, we're still recovering from the worldwide financial crises of 2008. The global economy can not absorb another blow right now. In fact at the moment every major economy is on the brink. If one falls they all fall.
 
2011-11-28 04:37:46 PM
Goodfella: We'll, we've seen Helicopter Ben's plan. Print print print. QE 2.5 is currently in effect (ZIRP til '13), and QE3 is a done deal for 2012. And as a result, gold to the moon.

As long as the CEB does the same thing, I'm down with this. In fact, I'm okay with us doing it even if they don't (though they'd be better off if they did). Inflation is preferable to depression.

BigBooper: Another example would be the Asian financial crises of 1997. It was bad for the countries involved, but the global economy as a whole was strong enough to absorb the effects. On the other hand, we're still recovering from the worldwide financial crises of 2008. The global economy can not absorb another blow right now. In fact at the moment every major economy is on the brink. If one falls they all fall.

Yep, 2012 is a whole 'nuther level of FUBAR.
 
2011-11-28 05:17:10 PM
The euro zone could shatter into different pieces, or a large block in the north and a fragmented south.

Pretty much how its been for centuries. The north works hard while the south coasts on its history and the "Mediterranean lifestyle"
 
2011-11-28 05:24:22 PM
Here's the other shoe dropping: Can China Rescue Its Economy? (new window).
 
2011-11-28 05:27:19 PM
Oops...I saw that on Goog's headlines, and now see that link as it's own link on Fark. I'll go over there now and add to the doom and gloom.
 
2011-11-28 05:31:35 PM
StoneColdAtheist: The Great Gazoo: StoneColdAtheist: The unmentioned 800-lb gorilla sitting quietly in the corner of the room is the aftereffects of even one Euro country defaulting on its loans.

Everyone saw what happened to (and continues to happen) Argentina when they defaulted in the late 90's/early 00's and NO ONE wants that to happen to them.

Yes, but it's a classic case of when one country defaults IT has a problem. When a bunch of countries all default more or less together, WE have a problem.


The way you had phrased it, I assumed you meant that other countries would CHOOSE to default. I was just saying that I don't think any of them would choose to do so. I may have read your original comment with an incorrect implication.
 
2011-11-28 05:58:15 PM
The Great Gazoo: StoneColdAtheist: Yes, but [Argentina was] a classic case of when one country defaults IT has a problem. When a bunch of countries all default more or less together, WE have a problem.

The way you had phrased it, I assumed you meant that other countries would CHOOSE to default. I was just saying that I don't think any of them would choose to do so. I may have read your original comment with an incorrect implication.


No, I agree that countries don't voluntarily go into default. That said, Greece has a crushing debt load that is denominated in Euros, which means that they can't inflate their way out of the hole they're in even by switching back to the Drachma and letting that inflate. Not only that, but the rest of Europe appears disinclined to rescue them an unknown number of times in the future to avoid a 'run on the bank' by other countries, as it were, so they're really in a pickle.

In the final analysis I agree with those who call Greece's default inevitable. To me what is important (and unknown) is how Europe handles Greec's eventual default. If they crank up the ECB presses and inflate the Euro then I think we have a way forward, even though this sticks in the craw of the Germans.

OTOH, if Greece gets a free ride on its debt we could well see other countries demanding debt forgiveness, too, and things could quickly get out of hand. Interesting times, eh?
 
2011-11-28 06:36:05 PM
Actually, it is you, Eurozone. You're a spendthrift, an addict, a thief, and a liar. Get the hell out and don't come back.
 
2011-11-29 04:47:30 AM
The Great Gazoo: Before people also signal this as the death knell of "European socialism", keep in mind that you have five different countries in the Euro Zone in bad shape:

Ireland - A social democracy whose financial problems are a result of banking failures and a huge real estate boom

Spain - A social democracy whose financial problems are a result of banking failures and a huge real estate boom

Portugal - A social democracy whose financial problems are a result of banking failures and other booms/busts

Italy and Greece - Social democracies whose financial problems are a result of tax avoidance being national past times. Also note that Italy's debts aren't as bad as the others.

The remaining Euro Zone countries, however, are pretty much all social democracies who are not having financial problems. Some of those social democracies are the strongest economies around.


Let's not forget about the problems in the other smalled central European nations. Hungary is also having major problems due to all their financing in CHF. If the Eurozone breaks up it will certiainly lead to a new worldwide depression. On the upside the USD should see massive gains acting as the reserve currency, but this won't help the general public much.
 
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