Author Topic: Is the Euro Zone in an "Endgame?"  (Read 6392 times)

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Online David Rochlin

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Re: Is the Euro Zone in an "Endgame?"
« Reply #30 on: 19:38 08-Jul-2012 »
The EU remains successful as a free trade area, with the Euro, ironically threatening this by removing mechanisms where unproductive countries could compete by adjusting their currencies, independently.   But,  the vision of all citizens of members, being free to live, work and travel freely across all participating countries's borders is sort of dissolving, along with any intention to uniformly honor their rights.
   Still, it may be more difficult to reverse course, than to move forward. 
Advocates of recapitalizing Spanish Banks seem to have a certain attitude, that the political leaders can be ignored, and that financial ministers will make the real decisions.  Something does seem to happen to resolve each crisis at the last critical moment, so far...

Online David Rochlin

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Re: Is the Euro Zone in an "Endgame?"
« Reply #31 on: 09:26 10-Jul-2012 »
It appears that the bailout fund will loan Spain tens of billions, promising in advance that it will have the authority to transfer the loans, retroactively off of the books of the Spanish Government, just as soon as a bank supervisor assumes responsibility.  Of course, they know that it is unlikely to happen soon, if at all, but the Czars of the Zone will pretend that this surrender of soverignty is a mere formality.  When it doesn't work out, they will say: " Oops, sorry!".   Meanwhile, Spain will keep or take these loans off the books as Soverign debt, relying on the absurd promise...
So it seems that Europe will bypass constitutional changes and rely on the expedience of brazen financial fraud to save the zone.  Evidently even the limitations imposed by the Treaties will not prove to be an insurmountable obstacle for those determined to salvage "One Europe."
« Last Edit: 09:29 10-Jul-2012 by David Rochlin »

Offline P-N

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Re: Is the Euro Zone in an "Endgame?"
« Reply #32 on: 12:17 10-Jul-2012 »
And that was made possible yesterday by Luxembourg lifting its veto on the plan because the deal was in doing so Luxembourg got one of their people on the main board of directors of the ECB - which also happened yesterday.

The heart of all the EU problems are political and the Eurozone and Euro crisis is a symptom.

"When surrounded by the dark void of the willfully blind, it does not excuse those that are a spark of light their duty to shine" - Me

Online David Rochlin

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Re: Is the Euro Zone in an "Endgame?"
« Reply #33 on: 14:25 11-Jul-2012 »
The important thing to consider is that the treaties governing the EU and Eurozone no longer limit action, because any flimsy pretext for action,  is enough, and what are the consequences for those who exeed their mandate?  Probably a medal or knighthood and a better pension than the folks they govern will get after Austerity.

Oh, and Greece had the money socked away to survive without loan Tranches, until September.  I guess they decided not to use it to recapitalize their banks after all.  Which means Greek banks will have little money to loan, lots of Government Bond certificates for wallpaper.  Wasn't "Growth' the anti-austerity slogan?  But, the Greeks are going to show the rest of the world how to do this with their banks sidelined?  And as a bonus,will  they privatize state assets when banks are broke, resulting in a very, New Russia style, private sector, complete with Oligarchs?


Online David Rochlin

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Re: Is the Euro Zone in an "Endgame?"
« Reply #34 on: 02:16 21-Jul-2012 »
Round two of Spain's Euro-agony begins with the region of Valencia requesting financial aid from the central government.  Spain has a system such that semi-autonomous regions can borrow without much oversight and the central goverment has some role as guarantor.  Spain has been conducting a shell game moving debt between banks and these regions, but the money probably has stopped at Spanish banks during the recent audits in anticipation of recapitalization loans.  Valencia's aid request is not a surprise, exactly, but the Zone and markets are preparing for the unpleasant reality about how much Spain really owes...

albert

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Re: Is the Euro Zone in an "Endgame?"
« Reply #35 on: 07:32 21-Jul-2012 »
I doubt EU will ever really know how much Spain owes, as with Italy. If they come within 25% of the actual figure it will be a miracle.

This next week will be interesting. Greece is groaning about modifications to their agreements, Spain wants the money b basically sans strings, Italy is gearing up to ask for money.....and that long slow train wreck continues.

Online David Rochlin

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Re: Is the Euro Zone in an "Endgame?"
« Reply #36 on: 14:04 21-Jul-2012 »
 Greece is now written off as lost.  The problem is that the government is actually spending money intended to recapitalize banks on delaying the inevitable, but making growth impossible.  They have maybe three months.  No bailout authorities will take them seriously.  The Greek people simply have a different thought process regarding financial matters.
   Spain is a much more nuanced situation, and is viewed as cooperating fully with austerity, but playing a deep game, and whenever it seems they have to show their cards, a few are always missing.  Since Spanish financial problems stem from honest, straightforward, real estate swindling, and not outright,  twisted, devious, financial fraud, like Greek problems, generally EU Governments feel obliged to trust Spain.  It could have happened to anybody.
     Spanish interest rates on sovereign debt have just gone to 7.3%, a level regarded as not sustainable
     Italy has the potential to work out of it's huge, outsize debt, because of an export oriented, industrial economy.  They just have to reduce corruption and improve productivity.  The imminent problem for them is that Burlusconi appears poised to make his comeback in politics...

Carlusha

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Re: Is the Euro Zone in an "Endgame?"
« Reply #37 on: 14:49 21-Jul-2012 »

The Greek people simply have a different thought process regarding financial matters.


Yes, they do and they will not accept the reality of the situation.

Incredibly, the average annual salary on Greece?s railways is EUR 75,000, which includes cleaners and track workers.

The railways earns $120m from ticket sales yet the wage bill alone is $750m. Many trades are able to retire ay 50 years of age with a 95% of final year's salary as pension.

The entire underground (metro) system has free travel.

They won't pay tax or if they do, very little.

New report from last year:

UK Daily Mail

Online David Rochlin

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Re: Is the Euro Zone in an "Endgame?"
« Reply #38 on: 18:33 21-Jul-2012 »
The Eurozone crisis is the fable of the "Grasshopper and the Ant" writ large.
The position of Germany is stronger, but also unrealistic. 

Is 7% unsustainable?  This was the topic of a Forbes piece and the conclusion is that if only Sovereign debt is considered, this figure applies to Italy with debt of 120% of GDP, but is misapplied to Spain which only has Sovereign debt of 80% of GDP.  7% could still be a valid number when all debt obligations the central government  has assumed, are considered, including banks, local governments.  But, it would be a guess.
« Last Edit: 12:57 22-Jul-2012 by David Rochlin »

Offline Tis_me

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Re: Is the Euro Zone in an "Endgame?"
« Reply #39 on: 16:18 23-Jul-2012 »
Euro itself is rolling over from recent corrective move, should see it sell off down to 11,700(Usd) area over the next month or two...

Was at approx 12,600 at time of post, now hovering around 12,100, so 500 points given up in a month...
"Give a man a fish and he will eat for a day. Teach him how to fish, and he will sit in a boat and drink beer all day."

Online David Rochlin

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Re: Is the Euro Zone in an "Endgame?"
« Reply #40 on: 04:14 24-Jul-2012 »
Many people have predicted a $1.20 Euro, but a few even see it trading at par.  This is good for those who owe debts payable in Euros, and a significant number of apartment mortgages in Ukraine, are paid in that currency.  The low Euro should help stimulate industry in the Eurozone.  Companies like Airbus get more orders when the Euro is down.  (Of course the carbon tax on airlines is working against that particular company.)

Online David Rochlin

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Re: Is the Euro Zone in an "Endgame?"
« Reply #41 on: 13:41 15-Aug-2012 »
What is going on with Greece?  On the surface, they appear to be showing utter contempt for their bailout agreements.  Instead, they are using their bank recapitalization funds, and selling bonds to their own banks.  But all this money is being loaned to the Greek government through the back door.  Greece has effectively borrowed it all from the ECB through the back door.  They will pay more interest in theory, but in practice it is all zero in default.
http://online.wsj.com/article/SB10000872396390444318104577588703832255074.html?mod=googlenews_wsj

And this article in Marketwatch suggests that while we all wait for the curtain to fall, for something dramatic, the Euro might already be dead in some limited sense.  Yes, you can still buy stuff at the Supermarket, but is the Euro really still performing, doing its full service as a currency?  Clearly it is premature to call the Euro dead, but the idea that it might sort of fade away gradually, bit by bit,  (sort of a pun there,) without a dramatic collapse and traders jumping out of windows at Canary Wharf, is at least worth thinking about.

http://www.marketwatch.com/story/when-will-the-euro-collapse-its-already-dead-2012-08-15



albert

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Re: Is the Euro Zone in an "Endgame?"
« Reply #42 on: 16:56 15-Aug-2012 »
The sitrep in EU is not looking too good. I have noticed of late that the constant noise about Greece has ceased. Spain and Italy were in the news for a few days, and then again silence. Being a suspicious old SOB, my thoughts are the German, Austrian, and Swiss banks are still dumping Greek, Spanish and Italian debt like mad. When they get to a break even point, then the fetuccini will hit the fan.

Of interest is one of my main suppliers, located in the Fatherland, ardent supporters of the Euro and EU. Since early June they have quietly requested payment in dollars, not Euros as before. I didn't say a word, just complied. We're not talking megabucks here, but still, if a relatively small business in the Fatherland is requesting that, then the illness is more deeply rooted than many of the 'expurts' think.

The interesting gig is going to be Cyprus. Seems the banks there bought heavily in to Greek, and to some extent Spanish, debt. Now, who is it that we all know and love who tends to stash their cash in bucolic little Cyprus, you know, the same Cyprus that is now begging for an EU bailout?

Online David Rochlin

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Re: Is the Euro Zone in an "Endgame?"
« Reply #43 on: 23:08 15-Aug-2012 »
Sounds like you are suggesting that all our favorite Ukrainian oligarchs are going to be losing some chunk of their ill gotten billions, lost in the laundering.  Right now, what is happening is something like TARP in the U.S., but on a smaller scale, and much less publicised.   Whether this is to delay the inevitable or actually solves something, I really can't say. Some of the activities amount to printing money.  Others are about under the table loans to governments, through banks.   
One of the links I provided, suggested that merchants are reluctant to sell products or commodities to Greece on even short term credit, due to the liklihood of payment in Drachmas. 

Offline kyivkpic

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Re: Is the Euro Zone in an "Endgame?"
« Reply #44 on: 23:24 15-Aug-2012 »
I'm not sure what it is worth but my wife works for a supranational corporation that produces a large array of consumer products and the President of aforementioned corporation recently gave a speech  in which he reported that they expect something in the next few months. The are preparing for a significant drop in sales. They're taking concrete actions (insurance, no ordering of surplus inventory, etc).

The report projects the hr:dollar going to 10.5:1. The same as P-N's prediction if I remember correctly.

This should be fun.  :-X :-\
« Last Edit: 23:28 15-Aug-2012 by kyivkpic »
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