Down Goes the Euro!

Monday, February 01, 2010 , , , 26 Comments




Business Week:

Investors are pulling cash out of Europe at a record pace as central banks slow euro purchases, jeopardizing its status as a substitute to the dollar as the world’s reserve currency.

Last year, policy makers loaded up on euros, while analysts at Barclays Plc in London and Aletti Gestielle SGR SpA in Milan predicted central bankers would make good on threats to reduce the greenback’s dominance. Now the euro is down 8.1 percent since Nov. 25 in its fastest slide in 10 months amid concern that cash-strapped countries like Greece won’t pay their debts. Billionaire investor George Soros said Jan. 28 that there’s “no attractive alternative” to the dollar.

Traders have spurned European stocks in favor of shares elsewhere for a record 19 straight weeks, “clearly hurting” the currency by draining a net $13 billion from the market, said Geoffrey Yu, a UBS AG analyst. Investors are as bearish on the euro as they were when the 2008 financial crisis was pushing them to the dollar’s perceived safety, futures data show. After buying more euros than ever in 2009’s second quarter, central banks pared back, International Monetary Fund data show.

“The euro can fall further,” said Neil Mackinnon, a former U.K. Treasury official who is a London-based economist at VTB Capital Plc, the investment-banking unit of Russia’s second- biggest lender. “Sovereign-debt risk will continue to be a key theme,” he said. “The stresses created by the fiscal situation in Greece won’t go away quickly.”


Blame it on Greece, that's classy. Meanwhile the Euro could plummet to the lowest since its inception in 1999. Not only that but the price for sovereign debt default swaps are rising in Europe (amazing considering how awful the situation is here at home, eh kids?)

The cost of protecting $10 million in debt from 15 European governments for five years hit a record $91,060 a year last week, about double both September’s cost and the current price for insuring U.S. debt, data compiled by Bloomberg show. Prices for Portugal, Iceland, France, Greece and Germany swaps have risen the fastest in the world this year and are up about 55 percent on average, the data show. Greek debt insurance is now the developed world’s most expensive at almost $400,000.

“Greece is the catalyst, but it goes to the root of the entire structure of the euro,” said Adnan Akant, who helps oversee $39 billion as head of foreign exchange in New York at Fischer Francis Trees & Watts. “The U.S. and Asia are likely to outpace Europe in the economic recovery. That’s reason enough” to bet against the euro, he said.


Hahahahahahahaha LOL, did Mr Akant see Mr Obama's budget?

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.

26 comments:

Anonymous said...

"The reasons for the great speculative boom of the late twenties have long been debated. One culprit often pointed to is the Federal Reserve Board's decision early in 1927 to lower the rediscount rate one half point to 3.5%. The decision was based on the need to save international liquidity in the wake of Britain's overvaluation of the pound. Of course it also meant easier money at home. Surely this made stock speculation easier, but it did not cause it. The source of the Great Bull Market was the same as that of the Florida land boom that preceeded it: the notion that it was easy to get rich quickly."

Robert S. McElvaine's "The Great Depression"

:>) happy thoughts

the road to hell is paved with good intentions.

Anonymous said...

It's Groundhog Day JDA!

"The Wall Street Crash, the former President admitted, had caused "a normal recession." But the "great center of the storm was Europe." Hoover specifically pointed his finger at the European financial collapse of 1931 as the culprit that turned the "recession" into the Great Depression. Although I do not agree with this interpretation, it should not be dismissed out of hand. The Depression was, after all, a woldwide phenomenon."

BRUSSELS (Reuters) - The International Monetary Fund and finance ministers from the 16 countries using the euro believe the single currency is overvalued, the ministers' chairman said on Tuesday.

The head of the IMF's European department, Marek Belka, presented a regular report on the euro zone economy to the currency area's finance ministers and European Central Bank President Jean-Claude Trichet.

"We agreed with him when he said that the euro was overvalued and that some adjustment in that area would be desirable," the Eurogroup's chairman, Jean-Claude Juncker, told a news conference.

The euro was trading around 17-month highs against the dollar at $1.5088/89 on Tuesday as worries about Dubai's debt problems eased, while rising stock and commodity prices dimmed the greenback's safe-haven allure.

ruh roh Reorge

Anonymous said...
Anonymous said...
Anonymous said...

so, who's going to be having a Maalox moment this evening?

Anonymous said...

the first rule of trading is "don't panic"

the second rule of trading is "if there is a panic, be the first to panic"

now they are going to have all weekend long to mull over the situation. Tum, tum, tum, tums....

Jeff

Anonymous said...
Anonymous said...

http://www.dailymail.co.uk/news/worldnews/article-1250433/Greece-debt-bailout-EU-leaders-split-euro-crisis.html

"The eurozone faces the danger of a 'doubledip' recession after Germany's economy retreated into stagnation. "

Read more: http://www.dailymail.co.uk/news/worldnews/article-1250433/Greece-debt-bailout-EU-leaders-split-euro-crisis.html#ixzz0fT2nFNi0

As goes Germany, so goes the Euro. Jeff's opinion - like assholes, everyone has one. Also in the opinion category - the only people in recent history that would have a china man's chance in hell of making a single currency work in the Eurozone are now dead - the first being Napoleon and the second being Hitler. Neither one worked out too terribly well. And these modern day clowns think they can match wits with Napoleon? pfffffttt good luck with that. Were he alive, Napoleon could hand them their asses with half his brain tied up behind his back.

Anonymous said...

German poverty levels I am waiting for the German equivalent of a Sarah Palin populist politician to come out of the woodwork with a "how's the hopey Euro thingy working out for you?". One person's opinion: Germans are not going to for too long just spread their ass cheeks and "take one for the team" for very much longer. As goes Germany, so goes the Euro. Jeff

Anonymous said...

When I look into your Spanish eyes I know the reason why I am alive Somehow, I have my doubts that run of the mill Germans are going to be going gaga over Spanish eyes when the next round of bailing out needs to take place. That is assuming that they don't decide that this has been a fun ride but they want to get off now. The French can't and won't carry the Eurozone on their own. They are not capable of it and they are too lazy. I suspect that Germans may well look at their situation at home and decide blue eyes are just fine. Jeff

Anonymous said...
Anonymous said...

http://www.thelocal.de/money/20100319-25985.html

the cracks in "unity" continue to show up. I read this and my impression was that it was a thinly veiled German statement to the French that they could go fuck themselves. That's about as diplomatic as Germans get when there isn't a full on war going on. I don't put much stock in a long term EU Zone Happy Land... it's the old Bob Dylan lyric "Strange how people who suffer together have stronger connections than people who are most content." They've been in pig heaven for a number of years over there but the rubber is now meeting the road. Now that there is a little suffering going on, it's back to "every man for himself".

Crazy times - speaking of which and Bob Dylan in the same paragraph, I heard this on the i-pod this past week while walking and thought it was an appropriate song. Don't know why - his songs are more about "mood" than actual lyrics and melody that make crystal clear sense.

http://www.youtube.com/watch?v=UpI35SyWGhE

Anonymous said...
Anonymous said...

tick tick tick tick tick tick I'll bet these guys haven't taken a solid shit in six weeks. Tums for breakfast, Scotch straight up at lunch, and torch a bowl before they go to bed at night just so they can get a couple of hours of sleep.

Jeff

Anonymous said...

"Germany is not sympathetic, with officials saying Greece can't simply seek a bailout because it doesn't like the high costs markets are charging it because they see it as a bad risk."

This phrase is what sums up the entire article for me. Occam's Razor, know what I'm sayin'?

No one is going to answer my question on how to say "go fuck yourself" in German so I'm going to have to go look it up myself I guess.

Jeff

If Soros is still taking bets against the dollar and for the Euro, it would appear that the Germans are having a go at his ass once again - that was mean, I shouldn't have said that :>)

Jeff -

Your answer on the German is in the other place you asked the question ...

Anonymous said...

talk about your death by a thousand cuts It's not going to be a firing squad that does them in. It's going to be a thousand nasty paper cuts.

Anonymous said...

"If Soros is still taking bets against the dollar and for the Euro, it would appear that the Germans are having a go at his ass once again - that was mean, I shouldn't have said that :>)"

A well thought out commentary on George Soros from D.R.
taking the Germans to task

"Unless Mr. Soros is the penultimate deceiver of financial markets, governmental leaders, and men generally, he still has not learned what a strong and growing minority of gold investors know, which is that they no longer wish to be passengers in that car."

Anonymous said...

who knew that Nazis, monetary policy and central banking could be so damned interesting?... ok, maybe not really too interesting to most people except for the the types who dig JDA So, do you think that a good Jewish boy like Ben is open minded enough to take a few pointers from a dead Nazi like Schacht? It was a long time ago afterall, no hard feelings? chuckle.

Anonymous said...

"The Wall Street Crash, the former President admitted, had caused "a normal recession." But the "great center of the storm was Europe." Hoover specifically pointed his finger at the European financial collapse of 1931 as the culprit that turned the "recession" into the Great Depression. Although I do not agree with this interpretation, it should not be dismissed out of hand. The Depression was, after all, a woldwide phenomenon."

We've actually had the Domino Theory longer than just Vietnam. I think sometimes that it may be a self-fulfilling prophesy.

Despite being seen as vital for the survival of the euro, Germany's actions have been greeted with anger and frustration at home. A Bloomberg/YouGov poll published on Tuesday found that just 15% of Germans questioned approved of their government's performance during the euro crisis, while 75% disapproved.

My own thought is that frugal and thrifty Germans are NOT going to be cool with endlessly bailing out free spending swarthy people of Southern Europe. They're just not. I mean surely the Ant said to the Grasshopper "Fuck you, you lazy ass sack of shit. Freeze to death you worthless, fiddle playing dumb ass. When you're dead and gone, I promise to miss you". Know what I'm sayin?

As goes Germany, so goes the Euro.

Anonymous said...

oooooooh, the plot thickens....

Anonymous said...

uh oh.... Grumpy Germans yikes, that doesn't always end well....

Anonymous said...

rumble, rumble, rumble Germany and America were on a collision course on Tuesday night over the handling of Europe's debt crisis after Berlin savaged plans to boost the EU rescue fund as a "stupid idea" and told the White House to sort out its own mess before giving gratuitous advice to others.

"Like a forced marriage, Europe and Greece must kiss and pretend." Yikes! That rarely ends well.

Anonymous said...

fick dich I'll go ahead and confirm your suspicions about the Smug Bastard --- I hate fucking globalists. They are pompous, devious, self-serving at the expense of others, disingenuous assholes. More importantly, they are fucking dangerous. I laugh with delight when they fall flat on their asses.

Anonymous said...

The mass-circulation Bild writes:

"Obama's lecture on the euro crisis … is overbearing, arrogant and absurd. … In a nutshell, he is claiming that Europe is to blame for the current financial crisis, which is 'scaring the world.' Excuse me?"

Anonymous said...

the old phrase:

Heaven is where the police are British, the lovers French, the mechanics German, the chefs Italian, and it is all organized by the Swiss.

Hell is where the chefs are British, the mechanics French, the lovers Swiss, the police German, and it is all organized by the Italians.

hmmm, maybe that should be revised to read "Hell is where several of them decide to share a common currency"