HeartThais Posted March 9, 2009 Report Share Posted March 9, 2009 http://www.eurointelligence.com/article.581+M5caf1307fb0.0.html Essay by Euro-centric website that talks about the potential for speculative attacks on Central and Eastern European (CEE) currencies and Spanish/Irish/Greek sovereign credit. My bottomline: hedge your Euros. "We have written about the euro areaâ??s No Bailout clause last week, and argued that this clause loses its bite in times of crisis. But beyond vague commitments, we have not seen any test of the euro areaâ??s readiness to spring to a member stateâ??s aid. We doubt that Germany is going to relax its tough-mindedness on this issue, especially not before the September elections, so this a period of acute danger." "So we are saying that the probability of a speculative attack is much higher than EU leaders are currently prepared to admit. Given this lack of preparedness, we cannot see how they can defend themselves successfully against such attacks for as long as they keep agreeing on the minimal set of policy choices â?? minimal coordination on stimulus and on bank rescues (last autumn), on bank supervision (the de Larosiere report), and on east Europe (Sundayâ??s summit). We believe that the probability of a speculative attack of one sort or another is very high, and that the probability of a successful speculative attack is non-trivial. The weaker the policy response, the stronger will be the latter probability. This is why we believe the outcome of the March 1 informal EU is extremely disappointing, potentially leading to great danger." Link to comment Share on other sites More sharing options...
drogon Posted March 9, 2009 Report Share Posted March 9, 2009 Read the same kind of article in the Spanish press this morning... This is more dream than reality given the truely huge amounts which would have to be used and these scenarios don't take into account a reaction by other EU countries. Although if the Czech republic became another UK wouldn't bother me at all -> look at the UK's current situation and with Spain in the deepest possible poo. Spain is in deep poo right now except for its banks...although the articles I read were more focused on a possible speculative attack against BBVA bank (which is the second biggest one after Santander if my memory is good) Given the global panick -> even if such a massive speculative attack occured I am pretty sure it will be "blocked"...the world couldn't afford EU to crumble right now. Link to comment Share on other sites More sharing options...
HeartThais Posted March 9, 2009 Author Report Share Posted March 9, 2009 This is more dream than reality given the truely huge amounts which would have to be used and these scenarios don't take into account a reaction by other EU countries. Given the global panick -> even if such a massive speculative attack occured I am pretty sure it will be "blocked"...the world couldn't afford EU to crumble right now. I'm interested in how you come to these conclusions. You think Latvia or Hungary is in a better position to fend off an attack than the UK was when it failed? I don't know how much money would be required to stage a successful attack on Latvia while you seem confident that the amount is too large to be a dream. All I know is that bigger countries than Latvia have been broken. Who could have imagined Russia defaulting? Also, your comments imply you believe there is some kind of global committee that decides when a country will be allowed to default. I assure you there is no such committee. If there were, we would not have been witness to Russia or UK defaults/central bank collapse. When default occurs it happens suddenly. When pressed on the possibility of Eurozone defaults, the EU response was, "Don't worry. We won't let that happen. It wouldn't be clever to reveal exactly how we will prevent it but trust us." So you aren't the only person that thinks any potential calamity in the EU will be "blocked" by a secret plan that will definitely work. My point in these posts is that there is a very disturbing pattern of European complacency in the face of multiple looming Eurocentric disasters. Just a few weeks ago, a German on this forum replied something to the effect of "Why should we do as much to stimulate the economy? We didn't start this mess, it's the fault of the US and our economy is essentially much healthier." But what if it isn't complacency? What if it is a symptom of a dysfunctional system that requires decision making by a committee of countries that don't see eye-to-eye? What if it is a symptom of German citizens being weary and resentful of shouldering the burden for the rest of Europe? We should all pray it is complacency or incompetence and not much worse. Drogon, you said you have the option of being paid in dollars or Euros. If I were you, I'd choose dollars. Unfortunately, I don't have that option. Link to comment Share on other sites More sharing options...
drogon Posted March 9, 2009 Report Share Posted March 9, 2009 No way I want to run away to the USA...Hell might be a better place. I indeed have the option to find a job almost anywhere (except Asia) despite the current crisis but there is no way I will go to the USA now despite my affection for SFO... What will be the future? No idea and I don't think anyone else knows better (otherwise they would have saved their ass seeing the crisis coming) Although I disagree with your "alarmist" news I only had a few economy courses at uni so I am in no position to provide strong arguments. Though, I enjoy reading your links as they provide another point of view. Anyway, no matter who is right or wrong, all I can do at my level is saving my own ass following the events. Thanks for disagreeing with me Link to comment Share on other sites More sharing options...
HeartThais Posted March 9, 2009 Author Report Share Posted March 9, 2009 I thought you had choice of both denomination and location. There is no way I go back to working in the USA. Asia is the place to be. US urges more fiscal stimulus, Europe happy as is: http://www.reuters.com/article/politicsNews/idUSTRE52805720090309 "Europe, though, looked set to reject the call from Larry Summers, with German Finance Minister Peer Steinbrueck saying as he entered a meeting with European counterparts in Brussels: "We are not debating any additional measures." Since you are in Spain you know that unemployment is at a staggering 15%. 20% unemployment by the end of the year isn't out of the question. The coordinated EU response: If Spain or any other Eurozone country (doesn't include non-Euro EU countries) is on the brink of default, we have a secret plan to bail it out. In the meantime, any discussion of more stimulus to possibly prevent this from happening in the first place is out of the question. Doesn't that sound a bit... rigid (and silly)? Link to comment Share on other sites More sharing options...
Faustian Posted March 10, 2009 Report Share Posted March 10, 2009 Very silly and rigid, but it's all posturing to project some sort of strength, even though anyone with a brain isn't fooled. This crisis has made many fools of many leaders and their announcements. For me, it's nicely demonstrated how much of it is based on bullshit. Link to comment Share on other sites More sharing options...
drogon Posted March 10, 2009 Report Share Posted March 10, 2009 HeartThais. Yes in my previous company (changed job just two weeks ago) I had the choice between USD and euros. Spain is indeed in deep shit and some financial analysts see unemployment rise above 20%... I don't feel concerned as this is a multinational which already fired a few thousands of people in EU and US and they wouldn't have hired me to fire me in two months.... Spain has many problems but its banking sector has been one of the less affected in the world, so I believe they have room for a very slow recovery. Anyway, I can do nothing no matter which way it goes Link to comment Share on other sites More sharing options...
HeartThais Posted March 10, 2009 Author Report Share Posted March 10, 2009 I think I have a brain and I am fooled. I really don't think it is posturing. For example: Here is an interactive graphic that shows just how much exposure Western Europe has to CEE. Check out Austria(55% of GDP) and Sweden(21.4% of GDP): http://www.ft.com/cms/s/0/ea19fec8-028e-11de-b58b-000077b07658.html And here is Merkel's and EU's response to the crisis last week: http://online.wsj.com/article/SB123591435325503221.html?mod=rss_whats_news_us Summary: Last week, the EU (led by German Chancellor Merkel) rejected an Eastern European bailout. The thing is that Austria, Sweden, Spain owns a huge chunk of the bank debt of Eastern Europe. If Eastern Europe falls, so does the Eurozone. "Most critical was the cold shoulder from Germany, which, as Europe's largest economy and the one with most access to borrowing, would play the largest role in financing any aid. Germany, the EU's strongest economy, is unwilling to unwind its own fiscal discipline to pay for the spending excesses of others. Admitting countries with weaker finances could hurt the strength of the euro or push up inflation across the euro zone." Are you f'ing kidding me? Inflation is at 1% and dropping like a rock and they are worried about inflation? I hope they are posturing but doesn't seem like it... But we do get a glimpse of what kind of issues the EU does think is important: "The EU resolved one contentious issue on the eve of the summit: It approved France's much-criticized plan to give â?¬6 billion in low-interest loans to domestic car makers. The French plan had drawn howls of protectionism -- particularly from the Czech Republic, where PSA Peugeot Citroen SA makes small cars -- since it made the aid contingent on the car makers keeping French factories open." Link to comment Share on other sites More sharing options...
HeartThais Posted March 10, 2009 Author Report Share Posted March 10, 2009 I don't feel concerned as this is a multinational which already fired a few thousands of people in EU and US and they wouldn't have hired me to fire me in two months.... Good luck. Bank of America just rescinded offers to all their foreign hires. I don't work for them, but I myself am worried about getting pink slipped any day. Link to comment Share on other sites More sharing options...
drogon Posted March 10, 2009 Report Share Posted March 10, 2009 Yes I know, my lucky cousin is working for Bank of America in LOS... I might get fired too one day but I will always be able to find a job in EU or almost any western country...problem is I wish to find once again a job in Asia and there are currently no possibilities... Best of luck to you Link to comment Share on other sites More sharing options...
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