If the Euro falls, is that really bad for the $?

[mrcreosote]

Kissing Cameron's ass for what? Jobs?



Taxes?



Maybe they encourage business with their competative loans?



Trust me, Camreron just fucked the UK for a long long time. The thing is we're actually part of europe wether we like it or not due to geography. Europe is our major export destination. Or it used to be.

What good is exports to people who require $30 of your dollars to buy a $20 export good?

This is not wealth creation, on which all commerce depends ...it is wealth destruction.Attempts to sustain the unsustainable is, well...unsustainable.

The debt investors are gonna get haircuts like hippies drafted into the Viet Nam war. Total, complete and unavoidable
Until Govt. picks the winners and makes taxpayers pay to bail them out... again. Until they can't anymore.
Too much debt.
Sovereign debt ratios of investment banks today make 2008 debt ratios look like a fart in a bathtub.
They traded a housing bubble for a 'safe' sovereign debt bubble and then they doubled-down, meanwhile the 'off book' derivative mess is still compounding underneath it all.
Think about this...
Goldman Sachs holds paper worth many times OVER the entire PLANET'S GDP.
A ton of it on dead-beats.Oopsie-daisy.
These clowns are insane.

Your gonna need a bigger seat-belt.

 

[alkalien]

That is the whole point, you don't need no haircut if you can make your debt go away by hyper inflation.

When we are discussing how big a problem a country has, we look at the rate of interest and both UK and US are below spanish or italien rates you would think that the non Euro coutries are better off. But actually, italy and spain both mostly sell to private investors while the US and UK don't. There is one big inflation coming and that's gonna kill the exchange rates!

 

[mrcreosote]

LOL,

I'm sticking with Paul Krugman...

All I need is 10 more credit cards and inflation won't bother me a bit. I'll spend my way to prosperity.

I'll just send everyone else the bill. Krugmanonomics...Easy as pie.

 

[SuperConductor]

Your gonna need a bigger seat-belt.

I'm on my bike and got my helmet so no worries for me

I was just showin you the relevant quotes from that article. This is the kind of thing I was meaning when I said Cameron just fucked us... and this is a yahoo/afp link not the Guardian for a change.

British media unite against 'outrageous' French calls

Calls by France's central bank chief and prime minister to have Britain's credit rating downgraded were Friday branded as "outrageous" and "ignorant" by an angry British press.
French President Nicolas Sarkozy should also feel "ashamed" of his reported outburst at Prime Minister David Cameron after last week's European Union treaty change negotiations, a leading title argued.
French bank chief Christian Noyer told regional newspaper Le Telegramme on Thursday that rating agencies -- which have warned France could lose its top AAA rating -- should instead turn their fire on Britain due to a slew of gloomy economic data.
His comments were dismissed as "outrageous" and "plain wrong" by The Times.
"It is simply not the job of a central bank governor to urge the downgrading of another country's credit," it added.
"There is only one good answer when asked about another country's rating. 'Sans commentaire' (no comment)," argued the broadsheet.
The Sun ran a scathing leading article attacking "treacherous" Noyer under the headline "Gall of Gaul."
"You find out who your friends are in a crisis," it continued. "We shouldn't be surprised, then, when the head of the Bank of France tries to better his country's economic position by sabotaging ours."
"Monsieur Noyer, you're a AAA-rated fool," it concluded.
The Financial Times joined in the condemnation, accusing Noyer of "resorting to nationalism".
"Noyer's suggestion... would be funny if it wasn't for the fact that he is the governor of the Bank of France," added the business broadsheet.
The Daily Telegraph, which carried "France declares war of words on Britain" as its front-page headline, also quoted Conservative MP David Ruffley calling the comments "another example of Gallic self-delusion on an epic scale".
French Prime Minister Francois Fillon later supported Noyer's comments.
The Times said the pair's behaviour was "inexcusable" while the Telegraph claimed it revealed "an alarming ignorance of the reasons behind Europe (Chicago Options: ^REURUSD - news) 's sovereign debt crisis".
Britain and France clashed at last week's EU crisis summit when London refused to join the other 26 members of the European Union in agreeing on a new fiscal pact to prop up the euro.
The Telegraph said Sarkozy should be "ashamed" after it was reported he had accused Cameron of behaving like "an obstinate kid" during negotiations and that he had boasted of leading the EU in saying "no to the English".
"His comments confirm the suspicion that he placed Mr Cameron in an impossible position, knowing he could then be used as a convenient scapegoat," said its editorial. "And they call us perfidious."
The Independent and Guardian declined to comment on the French reaction, the latter instead dedicating its editorial to the conviction of former French leader Jacques Chirac.

Sorry British media but you've got fuck all to do with how credit ratings agencies make decisions other than they probably do what you don't want them to. Delusional fuckwits.

This is what happens when you thumb your nose at people with more power than you, they turn on you and fuck your shit up. Not at the table? Not in with a chance. I was thinking it would be next year before we saw this kind of deterioration but fuck me if it isn't happenning right now. Remember what happened in europe during the last recession of this magnitude.

 

[SpasticGramps]

Belgium was just downgraded two notches due to "funding issues." Lot's of countries were placed on credit watch negative today,

I reckon there will be a barge of downgrades either in the next couple of weeks or beginning of Q1 next year. These are all lagging indicators. Bond markets are already trading as if these downgrades have taken place. Despite that, come downgrade time I reckon markets will react strongly to the downside.

Recession has been confirmed in the EU. This will cause the situation to deteriorate very quickly into next year (a la 2008). I expect the ECB and FED to be forced to monetize everything Q1 next year. In other words central banks will be going all in with a 2-7 off suit. I think that could last about a year or two until faith in the currencies is finally lost and then things will get really shitty.

 

[mrcreosote]

Good article SuperConductor,

Made me laugh. Cameron got the Gallic version of the famous Italian-American phrase:

"Yo scumbag...Fu*k Me? No...Fu*k YOU!"

Get the Royal Navy up to snuff... There's gonna be a channel crossing.
I'll bring the popcorn.

 

[SpasticGramps]

Torrent of bad financial news flows out of Europe Associated Press

DUBLIN (AP) — Alarming financial news flowed out of Europe in a torrent Friday, just a week after the EU leaders struck a deal they thought would contain the continent's debt crisis.

The bombardment shredded hopes of a lasting solution to the turmoil that is endangering the euro — the currency used by 17 European nations — and threatening the entire global economy.

In quick succession:

— The Fitch Ratings agency announced it was considering further cuts to the credit scores of six eurozone nations — heavyweights Italy and Spain, as well as Belgium, Cyprus, Ireland and Slovenia. It said all six could face downgrades of one or two notches.

— Ireland's economy shrunk again much deeper than had been expected, with its third-quarter gross domestic product falling 1.9 percent. Ireland is one of three eurozone nations kept solvent only by an international bailout.

— Bankers and hedge funds were balking in talks about forgiving 50 percent of Greece's massive debts, a key issue in the debate over Greece's second rescue bailout.

— The red ink in Spain's regional governments surged 22 percent in the last year, endangering the central government's efforts to cut overall Spanish debt.

— France, the second-largest eurozone economy after Germany, warned that it faced at least a temporary recession next year.

— The euro hovered Friday just above $1.30, a cent higher than its 11-month low.

I'll bring the popcorn.

 

[mrcreosote]

Poor Belgium,
They're not even going to get that New Govt. smell out of the car before it goes over the cliff.

Thinking of the Fed buying Euro bonds makes me think of the Lone Ranger & Tonto riding to the rescue with Tonto right behind him drawing a bead on his back with an arrow.

Filleting our wallets with the death of a thousand cuts.

 

[bombadil.360]

if the euro falls, a few questions need to be asked:

1. will it land on its butt? possibly hurting its coxis?

2. will it land on its face? breaking teeth and cutting open its chin?

3. why did it fall? was it drunk? or does it simply have poor eye-motion coordination?

 

[Bullfrog44]

When the Euro falls, here are your answers:

1. At first
2. The second impact is square on the face. The after math looks like Humpty Dumpty post fall.
3. They fell because they asked an American for a "fag" and got pushed off. (Fag is cigarette in Europe) And yes, it was drunk.

 

[SpasticGramps]

3. why did it fall? was it drunk

It was wasted.

Pimco's El-Erian Sees Risk Europe May Spark Lehman-Like Crisis

Dec. 20 (Bloomberg) -- The head of the world's biggest bond fund said he sees a more than 1 in 3 chance that the euro zone will break apart and trigger a financial crisis akin to the one that devastated the global economy in 2008.

"It would be the equivalent of a sudden stop" in which financial markets seized up, Mohamed El-Erian, chief executive officer of Pacific Investment Management Co. in Newport Beach, California, said. "It would be really, really messy."

The global economy suffered its worst recession since World War II after the collapse of Lehman Brothers Holdings Inc. in September 2008 triggered steep falls in global stock markets. Gross domestic product in the U.S., the world's largest economy, shrank by 5.1 percent.

El-Erian said in a Bloomberg interview that the crisis in Europe is no longer just about what will happen to periphery nations like Greece. "It is now a crisis for the euro zone as a whole," he said.

He said the most likely outcome -- with a 1 in 2 chance -- is that European policy makers "get their act together" and manage the transition to a smaller currency union. The least likely is that the 17-nation euro zone stays intact: the possibility of that occurring is just 15 percent, he said.

Europe bolstered its anti-crisis arsenal this week, channeling 150 billion euros ($196 billion) to the International Monetary Fund as the European Central Bank widened its support for sagging bond markets.


Italian Bonds


Bonds of Italy and Spain rallied on expectations that the ECB's unprecedented backing for banks will lead lenders to buy more government debt. Italian two-year note yields dropped 20 basis points, or 0.2 percentage point, to 4.94 percent at 3:47 p.m. London time, after reaching 4.91 percent, the least since Oct. 31. Spain's two-year note yields slid three basis points to 3.34 percent.

El-Erian said that policy makers in Europe are still behind the curve in their efforts to contain the turmoil in the financial markets.

"The contamination has been allowed to travel from the outer core all the way in and threaten the inner core," he said.

The premium that France must pay over Germany to borrow for 10 years has "gotten to levels that were once deemed unthinkable," he said. That spread today stood at 113 basis points, up from 40 basis points at the end of last year though down from a high of more than 200 points earlier this quarter.


Credit Ratings


Credit ratings of many European nations are also under review, El-Erian said. Standard & Poor's said on Dec. 5 that Germany and France may be stripped of their AAA credit ratings as the region's crisis prompted the New York firm to put 15 euro nations on review for possible downgrade.

El-Erian singled out nine countries that might remain in the currency union if policy makers decide to downsize it -- Austria, Belgium, Finland, France, Germany, Italy, Luxembourg, the Netherlands and Spain.

"The critical issue is whether Italy and Spain will be included," he said.

Pimco expects Europe's economy to shrink by 1 percent to 2 percent in the coming year, with the risks to that forecast skewed to the downside, El-Erian added.

He voiced skepticism that the recent acceleration in U.S. growth will prove sustainable and forecast that the world's largest economy will expand little, if at all, over the next year. He said the recent growth spurt had been fueled by a drop in savings that he doesn't expect to last.

"Currently projections are for 3 to 3.5 percent" economic growth in the fourth quarter, El-Erian said. "It wouldn't surprise me if we end up below that."

The economy expanded at an annualized rate of 2 percent in the third quarter, according to the Commerce Department in Washington.

 

[ShroomDr]

it fell $0.03 more

1 euro = 1.3045 US dollars.

Xmas specials at the bay here i come.

 

[knna]

yeah, now ECB lends on long term without restriction a 1%, likely wont be any problem of liquidity and it wont become a solvency issue. Now banks buy the sovereign debt instead of the ECB directly and European taxpayers gifts money to the banks, as always (they borrow at 1% from ECB and buy public debt with way higher interest rate).

That surely will establish the European bonds market and strength bank's budgets. Likely € wont continue dropping because uncertainness was the cause of driving it down.

BTW, I found an article which explains way better than me and briefly what I tried to explain the other day: http://www.aljazeera.com/indepth/opinion/2011/12/2011121874651469307.html

PS: It is a shame that an American Economist need to publish it at aljazeera and no any US or EU media publish nothing like that.

 

[SpasticGramps]

yeah, now ECB lends on long term without restriction a 1%, likely wont be any problem of liquidity and it wont become a solvency issue. Now banks buy the sovereign debt instead of the ECB directly and European taxpayers gifts money to the banks, as always (they borrow at 1% from ECB and buy public debt with way higher interest rate).

That surely will establish the European bonds market and strength bank's budgets. Likely € wont continue dropping because uncertainness was the cause of driving it down.

Right. You are talking about the latest EU Hail Mary rumor. The LTRO program launched by the ECB that was paraded around by MSM outlets as a form of stealth monetization that would allow banks to buy bonds. This led to a massive global rally. The only problem with this is that it is nonsensical and while it fooled retail investors and the momo chasers for the day professional investors saw it for what it was. A big nothing.

The problem with your reasoning is that banks are in trouble because they hold so much worthless sovereign paper. They aren't and cannot use this latest liquidity injection to buy more insolvent sovereign paper as it would just exasperate their own insolvency further worsening counter-party risk problems. Nothing highlighted this latest failure more than right after the LTRO allocation the ECB had to step in and monetize Italian and Spanish bonds in the secondary market as they remained bidless (ie. these gimmicks aren't fooling the market anymore).

They are hoarding this cash due to the worsening credit crunch or better yet perpetuating the ponzi even more by buying their own worthless corporate bonds. Not only was the amount tapped massive compared to expectations, but the FED's swap line is also getting tapped at near record levels too. What this LTRO did show is just how dire the funding situation is in the EU. What the Keynesians are going to learn is that you cannot solve a solvency problem with liquidity.

Citigroup Analyzes The Failure Of The LTRO, Muses On The Upcoming French Downgrade

Now that the LTRO flop has been digested, one of the more curious explanations for the failure comes from Citi's Steven Englander, who suggests that, surprise, surprise, Italian banks were lying yesterday when they said that they were ready and willing to buy Italian debt with LTRO proceeds. To wit: " One dose of cold water were comments from the Italian Bank Association that EBA rules won’t permit Italian banks to buy sovereign debt – this is a complete reversal from reports yesterday that indicated that Italian bank collateral would benefit from government guarantees in going to the ECB and lead to incremental Italian bank buying of sovereign debt."

PS: It is a shame that an American Economist need to publish it at aljazeera and no any US or EU media publish nothing like that.

Maybe because that article's assumptions are categorically false?

 

[knna]

Im not here to convince anybody, just to share my viewpoint. If you disagree it and think article's assumption are categorically false, I respect your viewpoint.

But I think your viewpoint dont stand with reality. It never been a solvency crisis, but a political war, as the article I linked explain very well. If it were a solvency crisis, it would have affected other nations with higher debt over GDP and worse deficits. But it didnt.

If you see the fundamentals of Japan, for example, they are way closer to an insolvency than any other country in the world.

If you compare the fundamentals of UK compared with countries strongly attacked as Spain, you can see UK have 1/3 more debt than Spain and a higher budget deficit. If it is a solvency crisis, UK would be paying interest rates 6-7x higher. The difference is on the response from ECB.

If you are an investor who lives from your own capital rents, or an executive, I understand your point of view negating reality, because defending it benefits you. On the other hand, if you live from your job, I would say you are not being very smart.

 

[ShroomDr]

So my own analysis is...

Plutocracy is on the rise and the people of the world are suffering.

It does no good to the Chinese to have a falling Euro and Dollar. They already devalue their currency, if their currency is too high, they cant sell their goods cheap.

 

[SpasticGramps]

If you see the fundamentals of Japan, for example, they are way closer to an insolvency than any other country in the world.

If you compare the fundamentals of UK compared with countries strongly attacked as Spain, you can see UK have 1/3 more debt than Spain and a higher budget deficit.

Your absolutely right. Japan and the UK will be the next dominoes. Japan first. They are all insolvent. So is the US, but we will be the last domino to fall. It's not that the market won't force atonement on the rest of the countries, it's just the contagion hasn't reached them yet and for differing reasons.

I do agree with the premise that this is a "class war". The underclasses are about to be fleeced again by the oligarchs. Their currencies will be destroyed and the oligarchs will "carpet bag" their assets when they are destitute. It's how it's always been. The western world (Japan included) has reached the Keyensian end point. The world has more debt than could ever be paid off and we've reached a point where the creation of more debt does not equate to an increase in GDP (ie. Debt Overdose).

I strongly disagree with the authors premise that ALL these countries (plus many others) aren't insolvent. The math just doesn't work for them anymore.

Mark my words. Japan will be the next domino to fall.

I did enjoy the article though. Only time will tell who is negating reality. We all suffer from some form of denial.

Psssst France: Here Is Why You May Want To Cool It With The Britain Bashing - The UK's 950% Debt To GDP

While certainly humorous, entertaining and very, very childish, the recent war of words between France and Britain has the potential to become the worst thing to ever happen to Europe. Actually, make that the world and modern civilization. Why? Because while we sympathize with England, and are stunned by the immature petulant response from France and its head banker Christian Noyer to the threat of an imminent S&P downgrade of its overblown AAA rating, the truth is that France is actually 100% correct in telling the world to shift its attention from France and to Britain. So why is this bad. Because as the chart below shows, if there is anything the global financial system needs, is for the rating agencies, bond vigilantes, and lastly, general public itself, to realize that the UK's consolidated debt (non-financial, financial, government and household) to GDP is... just under 1000%. That's right: the UK debt, when one adds to its more tenable sovereign debt tranche all the other debt carried on UK books (and thus making the transfer of private debt to the public balance sheet impossible), is nearly ten times greater than the country's GDP. To call that "game over" is an insult to game overs everywhere. So here's the bottom line: France should quietly and happily accept a downgrade, because the worst that could happen would be a few big French banks collapsing, and that's it. If, on the other hand, the UK becomes the center of attention (recall this is the same UK that allows unlimited rehypothecation of worthless assets, and the same UK that unleashed the juggernaut known as AIG-FP's Joe Cassano - after all there is a reason why the UK has 600% its GDP in financial liabilities - financial innovation always goes there where it is least regulated), then this island, which far more so than the US is the true center of the global banking ponzi scheme, will suddenly find itself at the mercy of the market. At that point the only question is whether the vigilantes will dare to take down the UK, as said take down will result in an implosion in the very fabric of modern finance, much more so than what even a full collapse of France could ever achieve, or if due to the certain Mutual Assured Destruction that would follow a coordinated UK onslaught, the market will simply very quietly proceed to ignore the elephant in the room.

 

[mpd]

The ECB dumped almost half a trillion Euros on to the markets and THE MARKETS FELL.
Get ready for some serious consequences. We are about to find out what a full-reserve banking system will be like.

The hard way...

 

[mrcreosote]

The ECB dumped almost half a trillion Euros on to the markets and THE MARKETS FELL.

Uh-oh...
You know you are truly screwed when even the lemmings are stopping to look over the cliff...

Good article gramps... this link in it:
http://www.zerohedge.com/news/why-u...ic-consequences-eurozone-canadian-banks-jeffe

will be the cancerous lung on the autopsy slab when the postmortem on the global banking system collapse begins.
The problem is not a lack of liquidity...The problem is TOO MUCH liquidity based on ...absolutely nothing at all. Zip. Nada.

Trillions of air-dollars created to buy a fart in a mitten.
Heehee...guess you could call them mouse farts since all it takes is a mouse click to create thin air money.

 

[ShroomDr]

1 euro = 1.2643 US dollars.

She keeps falling!