Panic as the euro is rushed into intensive care
7 May 2010
Eurozone leaders face an unprecedented emergency as they head to Brussels today, after Thursday’s shock stock market plunge confirmed fears that the Greek debt crisis is spiralling out of control.
In a staggering, panic-stricken day of trading, the euro hit a 15-month low against the dollar.
Wall Street stocks plunged by nearly 10 percent at one stage, it seems a technical glitch played a role, but even after clawing back the worst of the losses, the US markets were still battered, ending three percent lower extending a week-long losing streak.
Asian worries
The trend has continued across Asia today, where stocks have fallen across the board and the Bank of Japan fed billions into the market in a dramatic pre-emptive strike. The Japanese prime minister said he was “very worried” by the instability.
Rattled investors are taking flight from the single European currency over fears that a 110 billion euro bail-out will not be enough to prevent Greece from collapsing under its mammoth debt mountain and going bankrupt, dragging other eurozone nations with it.
Shaken foundations
In the past days, the Greek debt problem has turned into a financial cliff-hanger that is starting to engulf Spain, Portugal and other eurozone countries. This domino-like contagion threatens not only the survival of the euro, but is also shaking the very foundations of the European Union, analysts say.
“I am holding my breath,” said Paul de Grauwe, an economics professor at the Catholic University of Leuven and advisor to the European Commission. “A few months ago, I would have said we could have solved this by taking steps to stabilise the euro. But that didn’t happen. The contagion has already happened.”
Indecision
Eurozone leaders will be under huge pressure when they meet in Brussels later on Friday to find a way to restore calm after their weeks of dangerous indecision over whether or not to bail out Athens. The summit had been called to formally rubber-stamp their loan to Greece, funded jointly with the International Monetary Fund, which was agreed last week as a way to help the country ride out the storm and secure its debts. But when it finally came, this lifeline failed to calm market jitters.
“Leaders must find a way of preventing the crisis in Greece spiralling out of control, prevent it from bankrupting Greece and prevent it from spreading to the other eurozone countries. Because if it does, it will quite possibly lead to the unravelling of the eurozone,” says Simon Tilford, chief economist at the Centre for European Reform in London. “That would be terribly damaging for Europe, for the EU and the political fall-out would be enormous.”
But at this late stage little can be done, says Cinzia Alcidi of the Brussels-based Centre for European Policy Studies (CEPS). “If there is panic there is not much you can do. The role of [government leaders] is to send out a message in order to manage expectations. But if there’s panic, this doesn’t work in the usual way. So no matter what happens [tonight], I expect no change in the markets.”
War on speculators
As Wall Street dived, the German Chancellor, Angela Merkel, lambasted speculators and said she was “determined to win” in what she termed “a battle of the politicians against the markets.” She also attacked ratings agencies, which have played a critical role by downgrading Portugal’s debt rating this week, thereby deepening the pressure on the euro. Both Merkel and French leader Nicholas Sarkozy have called for more regulation and tighter controls on ratings agencies.
Peter de Gauw of Leuven University though points out that Merkel contributed to the crisis “by constantly hesitating and going back on her promises. That helped sharpen the crisis and created a situation whereby we now have to pay more than we would have paid otherwise.”
Simon Tilford argues that the current market fears are “fully justified” and Berlin is wrong to shoot the messenger. “Financial speculators will not be to blame if the euro really does start to unravel,” he told RNW.
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Panic as the euro is rushed into intensive care
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Pauli Wallnuts
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Kingdoc wrote:Chances are some states will simply have to leave the EU.
that would be a great day for democracyhttp://www.youtube.com/watch?v=yXbNLkNh ... re=related" onclick="window.open(this.href);return false;
I was living in Italy just as the euro was introduced and the majority of my Italian friends were not in favour ! although at the time the prices were rounded off exactly so everything was the same price , but 9-10 years in i dont believe it to be the case anymore !?
I am personally against the euro !
I am personally against the euro !
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cantona7
- Posts: 4131
- Joined: Sat 8th Jul 2006 10:01 pm
- Location: Seattle- trips to the 'dam, 7 by the time i caught up with freedom i was out of breathe
i cant give you 100% info but how about exchanging half now and then gamble on the other half before u leave? i personally dont bring my euros except maybe enough to last me an hr or two or buy a meal/train tickets. but usually i just arrive with dollars in my pocket for when i get home..for euros i just use my atm. check your bank though to see what the charges for foreign atm use are if anything. mine charges a fee on each transaction. bank of america ftl. i think im changin to wells fargo or something.melb-dam-lover wrote:Just wanted to get some advice.
How does everyone think the Euro will go over the next two months? I am thinking whether or not to change all of my Australian dollars to Euro now (currently getting 0.70 Euro per AUD Dollar) or wait until I leave if it will continue to weaken?
educating myself and waiting for the next trip.
instagram @shooter_mcdabbin
instagram @shooter_mcdabbin
This is what I am thinking. Most of the banks here have similar fees, but as long as you use ATMs with "brother banks" (banks that have a partnership with my Aussie bank), the fees are minimal.cantona7 wrote:i cant give you 100% info but how about exchanging half now and then gamble on the other half before u leave? i personally dont bring my euros except maybe enough to last me an hr or two or buy a meal/train tickets. but usually i just arrive with dollars in my pocket for when i get home..for euros i just use my atm. check your bank though to see what the charges for foreign atm use are if anything. mine charges a fee on each transaction. bank of america ftl. i think im changin to wells fargo or something.melb-dam-lover wrote:Just wanted to get some advice.
How does everyone think the Euro will go over the next two months? I am thinking whether or not to change all of my Australian dollars to Euro now (currently getting 0.70 Euro per AUD Dollar) or wait until I leave if it will continue to weaken?
I might just go and put it all on a travel card now or something.
This statement makes absolutely no sense. While Italy may have debt problems, France has, and is, benefiting from the Euro. Even as it falls, French exports become more competitive, as do German exports. Countries like Italy, which have nothing to export, do not benefit from this.cantona7 wrote:my neighbor whos from croatia but lived in italy/france said he thinks italy may go back to lira and france may go back to the franc.
