The Euro is shaky

Non essentials would be falling in price even with the volumn of money increasing because demand for them is practically zero in tough times. Once again inflation benefits governments because they get to spend the increase at no effort in getting it. The cost is shifted to the donkeys that do not know why they are paying more for essentials.

Auditor #9 wrote:

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

Can't see much happening before Bush hands over the keys, even then who would
be in a hurry to tie their currency to a bag of cement? I just cannot get my
mind around that trade deficit http://www.americaneconomicalert.org/ticker_home.asp

It's 324 billion right now. But it was zero at the start of the year it says. Will they have it paid off by the end of this year?

Mother of God. That ticker should go on the portal outside while there still is a portal and that number hasn't taken over everything. There'll be another 10 billion added to it over night or something.

No, tying the Euro to that is a bad idea. European countries have no combined ticker like that do we?

As far as I know it is a site you can't access if you are routed through China. If true wonder why the size of the deficit would be regarded sensitive?

A combined one for Europe would be interesting.

Squire wrote:

As far as I know it is a site you can't access if you are routed through China. If true wonder why the size of the deficit would be regarded sensitive?

A combined one for Europe would be interesting.

Is not a lot of the US deficit effectively owned by China, who have huge dollar holdings to keep the whole make and sell show on the road? How sustainable is that?

cactus flower wrote:

Is not a lot of the US deficit effectively owned by China, who have huge dollar holdings to keep the whole make and sell show on the road? How sustainable is that?

That was my thinking but it is a bizarre situation. China
has build an industrial base more suited in producing frippery for the West
than it is in producing for its own considerable needs. They really don’t need
external trade over and above a need to buy any resources they don’t need. The
amount of potential work needed in infra structure is colossal. All the things
we tend to take for granted tend not to exist when you head up country.

India is similar, they need dwellings, offices, warehouses,
sewerage treatment, energy production, roads, telecommunication networks; the
list is endless. If the money that had went into the Irish property market had
been invested in some of the rising economies, our houses would be more
affordable, we would be earning say 10% and feeling very smug.

These countries are moving forward at a good pace but the
investment needed is utterly staggering.

Wisdom says bubbles happen because too much money chases too
few goods. I think it happens because too few people have access to wider
investment opportunities and don’t trust others to manage their investment
hence they pile into something they think they know or something that is in the
news. Property; dot.com, tulip bulbs and other sure fire certainties. Only
invest where you can see a clear need and even clearer return and possible exit
strategy.

Anyway to the Euro when you consider how much it can buy out
east compared to here you have to conclude that long term it can’t last. With
regards the Dollar and Sterling, imagine
what current value is doing to future sales of the Airbus to take but one
example. We are not efficient enough to afford the up lift.

China is certainly investing in infrastructure, and seems to have gone hydro and nuclear for energy as well as buying up a good swathe of Africa's mineral resources.

Hamish McRae in the London Indo: The Real Test Lies Ahead

Quote :

But Europe does have something to celebrate – the euro has just had its tenth birthday.

Given some of the reservations, including my own, about the long-term prospects for the currency, just being around might be considered an achievement, but of course it has done more than survive. There have been bumps on the way but it is currently the strongest major currency in the world, and the eurozone has had a reasonable growth and employment performance for the past decade. Not bad at all.

The central point here surely is that the euro has achieved the main objectives needed to secure its place as a reliable global currency. It is perceived as being well-managed, with the reputation of the European Central Bank, after a wobbly start, now at least as solid as that of the US Federal Reserve or the Bank of England. In fact, many would argue that it has been more effective than the Fed in restraining inflation, particularly given the diverse needs of the different eurozone members. Its record on inflation is not as good as that of the Bank of England, though better than the Fed, but it has sufficient credibility to sustain long bond yields lower than either the US or the UK.

But arguably these were easy times. What happens next? ...

Hamish McRae in the London Indo: The Real Test Lies Ahead