

Ask NH: Is euro going down with Greece? - randomstrings

What do you think of the current crisis in Europe? Is euro a stable currency? Will the EU/IWF bailout rescue Greece? Is the crisis going to spread to other countries?
======
jacquesm
I sure hope it will go down a bit, but Greece will survive this. If you take
the EU/US trade in to account and you're a net exporter (like I am) then a
weaker Euro is great, after all, my income is in dollars, but most of my
expenses are in Euros.

After years and years of steady decline of the dollar, from a high of about
1.06 iirc to .63 or so it really wouldn't hurt to see things go the other way
again for a while.

The EU will bail out Greece only to the extent that they don't allow
themselves to be pulled under (think of one swimmer trying to rescue another),
and that's not very far. The Greek economy fortunately isn't a very large one
in EU terms, but still large enough to do serious damage.

If it spreads (Spain, Italy and Portugal are mentioned with some regularity as
candidates) it could have a huge impact.

Populist politicians (such as 'Wilders' in the Netherlands) are already using
this as a way to gather votes with their 'drop the EUro' theme, but it is
unlikely that will ever happen.

If it weren't for the Euro this credit crisis would have potentially been a
lot worse than it is for Europe.

A big part of the problem here, both in Greece and Italy is that they have a
huge corruption problem, hopefully this will give them the incentive to
address that.

~~~
anigbrowl
_A big part of the problem here, both in Greece and Italy is that they have a
huge corruption problem, hopefully this will give them the incentive to
address that._

Indeed. In the past many countries tried to devalue their way out of the
problem; euro membership is forcing them to address the actual fiscal problems
rather than obscuring them with monetary policy. I'm Irish myself and we too
had been down this road before joining the euro but I think the Irish
government has learned the dangers of that.

Portugal's economy is also small so even if they have problems, it's more
about appearances than fundamentals. Italy's is bigger but the one thing they
have going for them is that much more of their debt is internal; Spain is my
biggest worry.

I see Angela Merkel has been throwing a shit-fit this morning over the fact
the many of the same banks that were begging for government support in 2008/9
are now taking a leading role in jacking up spreads on Greece. Eurozone
bankers are likely to find themselves under severe regulatory restraint before
too long: this is going to cause further tension between the UK and the rest
of the EU.

~~~
hga
I've read that the exposure of Spanish banks to Portuguese sovereign debt is
dangerously high. Any opinions or knowledge about that?

I suspect the biggest issue in general is cascading failures.

~~~
anigbrowl
No idea, I'm afraid. I don't monitor them so closely.

------
bgnm2000
I trade forex on currensee.com (which is a social network of forex traders) -
a lot of them are shorting the EUR/USD because of it, and a poll in the
discussion area say that 50% of members who voted think the eur will crash due
to greece.

Just an interesting insight. I don't have an opinion one way or the other.

------
randomstrings
<http://news.bbc.co.uk/1/hi/business/10101581.stm>

US markets plunge on continuing Greek debt concerns

