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 The Euro is shaky

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PostSubject: The Euro is shaky   Fri Jun 13, 2008 9:04 pm

Time for some quick discussion on the Euro. It was last year when some excellent discussion was held on fiat currency, gold backing and fluctuations etc. I posted what I consider a fine post at the time when I was asked about the future strenght of Euro versus dollar. I replyed that it was a mistake to compare one against the other as both were being inflated. I drew an analogy. I likened both currencies to 2 terminal patients in a hospital room awaiting death. The dollar was in worse shape and was clearly dying. I said that compared to the dollar patient the euro patient looked pretty good and would outlast him. However he was terminal too. There was a complicating facor though. The dollar patient was just going to waste away till an infection killed him. The Euro patient had an enemy though who was likely to sneak in and shoot him in the bed.
This enemy was the fact that the Euro is really backed by shag all. The US is clearly a cohesive political unit whereas the EU is not. Any bit of civil disturbance could call the whole political situation into question. In an economic crunch the EU could break up almost overnight.
The currency markets will be asking if the Euro has any future. The news on the dollar id dire so the fact that the euro is still falling agiaist it reflects this concern
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PostSubject: Re: The Euro is shaky   Fri Jun 13, 2008 9:13 pm

youngdan wrote:
Time for some quick discussion on the Euro. It was last year when some excellent discussion was held on fiat currency, gold backing and fluctuations etc. I posted what I consider a fine post at the time when I was asked about the future strenght of Euro versus dollar. I replyed that it was a mistake to compare one against the other as both were being inflated. I drew an analogy. I likened both currencies to 2 terminal patients in a hospital room awaiting death. The dollar was in worse shape and was clearly dying. I said that compared to the dollar patient the euro patient looked pretty good and would outlast him. However he was terminal too. There was a complicating facor though. The dollar patient was just going to waste away till an infection killed him. The Euro patient had an enemy though who was likely to sneak in and shoot him in the bed.
This enemy was the fact that the Euro is really backed by shag all. The US is clearly a cohesive political unit whereas the EU is not. Any bit of civil disturbance could call the whole political situation into question. In an economic crunch the EU could break up almost overnight.
The currency markets will be asking if the Euro has any future. The news on the dollar id dire so the fact that the euro is still falling agiaist it reflects this concern

Relax Dan - in a weeks time normal service will be resumed and the financial markets will have long forgotten the Lisbon treaty and Ireland.
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PostSubject: Re: The Euro is shaky   Fri Jun 13, 2008 9:24 pm

Well the currencies of both economies are a lot more complex than simple politics - big business doesn't give an arse for what way we vote nor what colour your president is as long as he sings the right song. There's always a business who wants to see another bidness go outta bidness thus the strength behind currencies rely on demand from massive industries like German car manufacturers, software giants, bio-agro corporations as well as banks, investors, supply, demand, tourism and lord knows what else you can think of. The power of a currency can be hit by investors like Soros but the bottom lines are infrastructural - will massive companies just up and leave a country when a currency goes southwards? This could actually be good for US-EU commerce, mate.

The issue is always going to be energy - there's no getting away from that. That's another bottom line there's no getting away from - the EU is tight there but we seem more willing than you to adjust to the inevitable shocks; Spain has the same amount of wind-produced energy as you do, our vehicles are smaller and we are already used to high oil prices.

It's no secret that a lot of us around these forums are worried about where the energy bounce will settle ... roll on the air car.
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PostSubject: Re: The Euro is shaky   Fri Jun 13, 2008 10:33 pm

This was a year ago and Lisbon was not the danger. The danger as I see it is when the economy continues to weaken. When the ECB raises rates next month to nail the real estate in Ireland and really nail it in Spain where the crash is a few months ahead of Ireland. Budget deficits will not be allowed to exceed the limits set so the often mentioned idea of borrowing will not be allowed. When these and more stresses are at hand the folly of each country not having control of it's own monetary system will be clear for all to see. The Euro could expire very quickly.
When the extent of new taxes are understood you will see a big changing of opinions. Either that or close down the entire health service because that is the size gap that appears to be shaping up. 17 billion euro for Ireland. The politicians responsible realise now that with Lisbon done this hot potatoe must be addressed at last
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PostSubject: Re: The Euro is shaky   Fri Jun 13, 2008 10:41 pm

Well there's nothing can be done if the economy weakens though I don't think it has or will in reality - sectors are withering away goodo - the housing shite is nearly gone back down to normal but no-one is dying much over that. Youngfellas and youngladies here are buying cars and computers and televisions and so on even though I believe spending is down ... is it only down because less knobs elsewhere aren't buying Porsches and SUVs? How can bean counters be pleased at all? A little steam taken out of the economy is no bad thing. If I'd like some work done on my house now then I'd say that plumbers and all their campañeros are going a bit cheaper these days. Normally I'd put in my own drive way but this weather I'm feeling lazy about DIY so maybe I should go out and read the notices in the supermarket..

How down is the economy going? The HSE reckon they'll introduce measures to cut €200 million off their expenses too.
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PostSubject: Re: The Euro is shaky   Fri Jun 13, 2008 10:46 pm

The economy is just starting to sink in Ireland imo. Time will tell
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PostSubject: Re: The Euro is shaky   Fri Jun 13, 2008 11:30 pm

I don't know about the rest of ye here but down here in Clare things seem to be booming still - developers are fighting over whether one or two retail parks should be established in Ennis... Dunnes have just opened a new section to their shopping centre and a multi-storey recently; the council have recently completed a new building and it's very flash; there are developments along the river in Ennis where I took the photos etc.

One private development of 1000 homes with high energy ratings and located in a spacious area cannot go ahead because the Ennis sewerage infrastructure is total shit and needs public money before the private can go in apparently. There is a good debate that Ennis should be pedestrianised more so it can function as a better overall public space - good idea I say, get the fat fuckers out walking whatever the weather and maybe we'll reduce the HSE heart bill into the bargain. A public living and retail space might draw more hippies and food outlets, buskers etc. - are they afraid of under-gentrifying the place or some shite?

Limerick is apparently booming too for some reason - there are a few semi-skyscrapers being erected around the place down there.

In the long you might be right if we don't get ourselves a sustainable plan in my opinion but voting No to Lisbon shouldn't have anything to do with impeding that.
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PostSubject: Re: The Euro is shaky   Fri Jun 13, 2008 11:33 pm

Auditor #9 wrote:
I don't know about the rest of ye here but down here in Clare things seem to be booming still - developers are fighting over whether one or two retail parks should be established in Ennis... Dunnes have just opened a new section to their shopping centre and a multi-storey recently; the council have recently completed a new building and it's very flash; there are developments along the river in Ennis where I took the photos etc.

Ireland's economy, according to the Centre for European Reform, ESRI and Deutsche Bank will, in the medium to long-term, out-perform the rest of the rich world.
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PostSubject: Re: The Euro is shaky   Sun Jun 15, 2008 12:30 pm

I was in Lahinch yesterday and the woman in the art gallery there told me that American visitor numbers were noticably down and this is due to the strong Euro so the Surfing Capital of Ireland (Lahinch) doesn't mind if the Euro falls a bit against the dollar ...

$1.53 for a Euro
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PostSubject: Re: The Euro is shaky   Sun Jun 15, 2008 9:27 pm

Quote :
the Ennis sewerage infrastructure is total shit and needs public money before the private can go in apparently.


The same goes for more than half the towns and cities of Ireland, Auditor #9. I fear that we will not have enough houses to go around in a couple of years time, whether they are affordable or not won't be the question - they won't be there at all.
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PostSubject: Re: The Euro is shaky   Mon Jun 16, 2008 4:10 am

I start a serious thread and when I return Auditor and Cactus are discussing(not talking) shit.
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PostSubject: Re: The Euro is shaky   Mon Jun 16, 2008 8:48 pm

youngdan wrote:
I start a serious thread and when I return Auditor and Cactus are discussing(not talking) shit.

Sorry youndan, not only talking about shit but also off topic. btw - do you have any views on Sterling?
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PostSubject: Re: The Euro is shaky   Mon Jun 16, 2008 9:42 pm

I was only talking in jest Molly as I believe threads are conversations and should drift in whatever dirrection they take. There are far too many threads imo. For example would not one thread be plenty for Lisbon and one thread for alternative transportation. The situation now is that I can not find where I posted.
I do not follow sterling at all as it takes a lot of reading just to follow factors likely to influence the dollar and euro. I do think however the British were wise to hold onto their own monetary system
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PostSubject: Re: The Euro is shaky   Mon Jun 16, 2008 9:45 pm

youngdan wrote:
I was only talking in jest Molly as I believe threads are conversations and should drift in whatever dirrection they take. There are far too many threads imo. For example would not one thread be plenty for Lisbon and one thread for alternative transportation. The situation now is that I can not find where I posted.

I do not follow sterling at all as it takes a lot of reading just to follow factors likely to influence the dollar and euro. I do think however the British were wise to hold onto their own monetary system

I take note of your feedback on the number of threads. I will take it back to the Editorial Team and we will try and keep things more compact. It took me a while now to find the "New political parties" thread I was looking for just now.

Sterling has not done too well against the Euro until the No vote gave it a bit of a knock.
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PostSubject: Re: The Euro is shaky   Mon Jun 16, 2008 10:28 pm

Sterling has some great advantages. A currency depends a lot on the faith people have in it. Sterling has been around for hundreds of years while the Euro is new. Probability theory suggests that the euro is vastly more likely to disappear than sterling. The Euro can not survive without a political unit behind it. The vote calls into question just how much support there is for polical union. The spinners talk a lot about free trade. Total hogwash because all two countries have to do is not charge tarifs to one another. It is all about world government and a lot of eyes have been opened in the last few days
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PostSubject: Re: The Euro is shaky   Mon Jun 16, 2008 10:30 pm

youngdan wrote:
Sterling has some great advantages. A currency depends a lot on the faith people have in it. Sterling has been around for hundreds of years while the Euro is new. Probability theory suggests that the euro is vastly more likely to disappear than sterling. The Euro can not survive without a political unit behind it. The vote calls into question just how much support there is for polical union. The spinners talk a lot about free trade. Total hogwash because all two countries have to do is not charge tarifs to one another. It is all about world government and a lot of eyes have been opened in the last few days

Now you mention it, I can't think of any currencies apart from the Euro without an army to go with it.
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PostSubject: Re: The Euro is shaky   Mon Jun 16, 2008 11:46 pm

I wonder to what extent it's true that a currency depends on the faith people have in it ... isn't the value more to do with the stability of the economic bloc or nation it derives from? And I mean production and political stability. It's a promise to exchange some token for goods and services in the end - the more stable the price / value is over time the better, no?

I'm not at all familiar with how and why speculators can be allowed to bet on currencies themselves either - it could be inviting disaster for some nations as well as being immoral... It would be like betting on whether your neighbour did or didn't get a better job / did or didn't leave his missus for a better one / did or didn't get a more powerful car etc.

One thing I am trying to appreciate a bit more recently is the independence of the likes of Sterling; sometimes we get caught up in the idea of a big bland project where everything is simplified and currencies are all the same but within certain bands currencies should be allowed to float like the old Exchange Rate Mechanism I think but pegging them statically to one another like a lot of the Euro currency countries have done might spell a bit of economic inflexibility that you'd be better off having. Being able to devalue your currency is one dirty trick not left to you (so in effect you can drop all your prices and make your country competitive overnight ) but also your currency has a natural potential difference from your neighbours and could lead to more economic activity because of the differences. For example, if the value of STG or the Danish currency were to weaken then the mother countries could see an influx of business through consumers as people crossed your borders to avail of the cheaper prices there. As in any market, that could drive the value of your currency back up again anyway.

The point is it's often more about activity rather than growth - differences give people a reason to avail of whatever is different. Activity, movement, interest.

I'll also do a little bit of tidying up on the threads you mentioned above youngdan - one thread for electric cars & hybrid cars but the Air Car should have it's own thread though - or should it ? Maybe I'll just lump em all in together as you say rightly in an alternative transport thread.
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PostSubject: Re: The Euro is shaky   Tue Jun 17, 2008 12:19 am

youngdan wrote:
Total hogwash because all two
countries have to do is not charge tarifs to one another. It is all about world
government and a lot of eyes have been opened in the last few days

But that is a very narrow definition of free trade because if one country
employs slaves, child labour and keeps
its costs down generally it should have a competitive advantage. Production
simply moves location.

IMO the Euro is overvalued. If it stays where it is it will
do real damage to manufacturing, tourism etc. In the long run there has to be
an adjustment down of all three currencies against some of the eastern
currencies. In my simplistic view of the world; we can’t rely on slave labour in
developing countries to produce goods for us and we can’t run our economies on
credit and deficits. Macabre's observation stands true today.
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PostSubject: Re: The Euro is shaky   Tue Jun 17, 2008 12:23 am

Squire wrote:

IMO the Euro is overvalued.

It is indeed, it was 22% over-valued against the dollar as of last July. It needs to fall sharply against the dollar in order to reach fair value.
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PostSubject: Re: The Euro is shaky   Tue Jun 17, 2008 12:23 am

Squire wrote:
youngdan wrote:
Total hogwash because all two
countries have to do is not charge tarifs to one another. It is all about world
government and a lot of eyes have been opened in the last few days

But that is a very narrow definition of free trade because if one country
employs slaves, child labour and keeps
its costs down generally it should have a competitive advantage. Production
simply moves location.

IMO the Euro is overvalued. If it stays where it is it will
do real damage to manufacturing, tourism etc. In the long run there has to be
an adjustment down of all three currencies against some of the eastern
currencies. In my simplistic view of the world; we can’t rely on slave labour in
developing countries to produce goods for us and we can’t run our economies on
credit and deficits. Macabre's observation stands true today.

Yes, agreed. We are much poorer than we think we are, and are running up debts. The idea that services are wealth-producing is unsound. Services that don't create new value are consumption, not wealth producing.
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PostSubject: Re: The Euro is shaky   Tue Jun 17, 2008 12:40 am

If a country is using slave labour then it is very hard to compete against them. Let's say the chinese are doing this. In a fair world they would be hit with stiff tarifs. Free trade sounds good but it is a race to the bottom with the living standards of the west reduced to that of the 3rd world. It is happening right now. The entire system of floating currencies is a fraud. If the euro is devalued by 30% you have just been robbed of 30% of every shilling you had. A currency needs to be tied to something of static value so that it's value is not dropping everyday. A pound sterling was just one pound of sterling silver
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PostSubject: Re: The Euro is shaky   Tue Jun 17, 2008 1:59 am

Not Gold and Silver again. It just did not produce stability
in the past so why think it would now? The value of both are as open to
speculation as currencies. Yes you can't manufacture more of the stuff but you
can mine it and as the importance rises expect to see modern alchemy. If a country finds itself knee deep in gold
either it prints more of the paper stuff to hold parity or it increases the
value of its paper relative to the metal. Either way severe problems on the
home front.

Agree regarding race to the bottom. If your currency is pegged to a level
that means your industry cannot compete, you are overvalued. If people use
child labour we should forget this free trade nonsense and either put tariffs
on the goods or ban them completely.

I agree the concept of free trade is flawed. What is trade but the movement of
goods and services so how can it be free when labour movement is restricted and
governments distort the market by imposing their own criteria and tax regimes.
It is a phrase that everyone trots out, a goal that can’t be achieved unless
there is a world currency, and government and no regional policy. That only
happens in Star Trek.
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PostSubject: Re: The Euro is shaky   Tue Jun 17, 2008 2:11 am

Could ye see the dollar and euro being pegged one to the other inside a flexible band by agreement between both countries? I believe the likes of this happened before or at least several governments intervened to create a dollar value in 1985
http://en.wikipedia.org/wiki/Plaza_accord
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PostSubject: Re: The Euro is shaky   Tue Jun 17, 2008 2:22 am

Well we agree on some things at least. I would like a gold backed currency as I think it was very stable. Prices were more or less the same in 1900 as they were in 1800 whereas now the price of everything is rising by the day almost. Get rid of central banks and have honest money and these expense wars are no more.
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PostSubject: Re: The Euro is shaky   Tue Jun 17, 2008 2:36 am

Well we should try to do an experiment sometime and see who it benefits that prices are going up and down and currencies with them . It would hardly benefit ordinary people at either coast of the Pond anyway, would it? Like I said before, Clare and Ireland in general benefit from American tourism to some degree and this year it has been absent in places. What do Americans do when they come here, rent a car and find that the gas is hugely overpriced compared to at home? Interestingly the price of petrol is very low around Killarney where tons of visitors appear all year round, often from America.

The prices of some goods are plummetting though dan - second hand cars here, computers indeed technology in general is dropping massively in price. If you are into it then you can have home cinema relatively cheaply here now. Would you want it, maybe not. It's leisure though and you can't forget that people liking to enjoy themselves is a big part of economics too. The tourism and entertainment industries are important worldwide.

Again what does fluctuation of prices really mean? Weird demand patterns? Undersupply in one area of resources? Lack of consumer interest in a particular sector out of fashion ? The whims of investors or of moralizing governments ?
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