Is this the end of the Euro?

Now I am not a Jimbo by any means but I have been reading a lot about a Euro bond issue by Germany yesterday that was a very big flop, much to everyone's surprise. The attached gives a sort of summary but listening to the pundits on BBC money programme tonight It is far more serious than I ever thought . Several are openly saying it is a massive loss of confidence in the entire Euro monetary union , and one even suggested that Germany has a plan for getting out .
http://www.bloomberg.com/news/2011-11-2 ... call-.html
Now I have no financial interest in the Euro at all but surely if this happens it will impact on both the pound and the dollar. What I can't fathom is for good or bad .What will happen? Will the member states revert back to their original currencies? If so , at what value .Anybody with a crystal ball and a reasonable assessment what it all means?

Judging on what you want to believe, those 20 or so bottles of liquor that you bought at Ngeesoon may help soothe the pain if the Euro fails....assuming all your cash isn't in your mattress.

The link did not work for me so I won't comment on the article, however here are some brief thoughts on my position regarding the EEC and the EUR that (by concidence) I was just putting together.

The EEC puts me in conflict with myself, instinctively the nationalistic little Englander part of me really doesn’t like it but when I stand back and look at it coolly, rationally and objectively I am forced to admit that it is actually better in the long run for the UK (and every other member).

It is incredibly easy to find all kinds of faults with the EEC and the EUR and there are multitudinous arguments for not being a member of the EEC and not having the EUR as your currency, however in the long run I believe every country in the EEC (including Germany) benefits by being in the EEC and will benefit further by having the EUR as a common currency.

Operationally the current structure of the EEC for the “EUR” countries inevitably creates trade imbalances that cannot be remedied by conventional measures that were the norm before they had a common currency i.e. traditionally when a trade imbalance occurred surplus countries would revalue their currency (or it would "float" upwards and deficit countries would devalue their currency (or it would "sink" downwards, such measures are obviously unavailable when there is a common currency.

As the conventional remedy is unavailable, in my opinion the only realistic available alternative is currently highly politically unpalatable by the “Sovereign” countries that are in surplus as it needs those surplus "Sovereign" countries to redistribute some of their gains to deficit countries.

At first sight this appears manifestly unfair, but it should be remembered that surplus "Sovereign" countries benefit as their currency does not float upwards.

The biggest beneficiary by far within the EUR countries has been Germany, in traditional terms its “currency” has been kept artificially low and its exports have benefitted enormously whereas the Mediterranean deficit countries have their “currency” held artificially high and their exports have suffered and, as more and more time passes, so the problem gets further and further exacerbated.

Reading between the lines, my understanding is that this is actually fully understood by all the participants, most especially by Angela Merkel and Germany who have been the primary beneficiary, but as an extremely astute politician Angela Merkel also knows that for her politically it can be suicide to do it and it can be suicide not to do it, she really is caught between a rock and a hard place.

The biggest clamours for the breakup of the EUR are coming from the US (who would be a huge beneficiary if the EUR were to fail and/or the EEC were to break up), UK and European fright wing politicians who revel in jingoistic chest thumping and the financial markets in general who view it as a huge money making opportunity for tomorrow (the short termism of the markets prevents them thinking as far ahead as the day after tomorrow).

Standing back from all the things I don’t like (and there are many) and taking all aspects into consideration my perception is that the sum of all the arguments for not being in the EEC and the EUR are heavily outweighed by sum of all the arguments for being in the EEC and the EUR.

The EEC as a whole can compete on a reasonably level playing field with the US and China, but if it were to be split up the potential for each country to be vulnerable to economic sabotage by other countries and/or financial institutions increases dramatically – anyone happen to remember how easily George Soros was able to make a killing on the GBP?

"Now I am not a Jimbo by any means but I have been reading a lot about a Euro bond issue by Germany yesterday that was a very big flop, much to everyone's surprise. The attached gives a sort of summary but listening to the pundits on BBC money programme tonight It is far more serious than I ever thought . Several are openly saying it is a massive loss of confidence in the entire Euro monetary union , and one even suggested that Germany has a plan for getting out ."

I agree with you that this is an important new development in this process but I don't interpret it the same way... It could actually be a good sign. If the Euro was to fail then German bonds would benefit as a safety heaven like US Treasury bonds. The lack of interest in buying more German bonds tells me that Germany isn't planning to get away from the Euro but quite the contrary. It seems that Germany has made more commitments to the Euro and is fully on board and leading the recovery.

i think the Euro and the union was ded even before it starts.........thats wy i vote NO! If more people have voted NO i think Sweden still was one of the richests countrys in the world, after enter the union.....the swedish welfare systembeen cut down and the system we have now is like the other big brothers system, egoistic and selvfish and all the youngesters been cut out of work!

IMO most anti- europeans would be delighted if the Euro failed then they could all shout "told you so". I don't think this will be the case. Yes there are problems, but the UK( and other European countries) have no Euro, and their economy is in big,big trouble.
For UK expats living in Thailand the result of not joining the Euro has been very costly. When it was first introduced the GP pound would buy 150 Euro cents.( Good time to join). Since then the pound is becoming a worthless piece of paper and one would be lucky to get 110 cents. In real terms expats who rely on the UK exchange rate it means a drop of earnings or pension of over 30% ( someone correct my figures if they"re wrong. maths was never my strong subject). As the worlds 3rd strongest economy I would be very surprised if the Euro failed.

As I have said before, reports of the imminent death of the EURO are greatly exaggerated.

It continues to amaze me how the financial media, and in particular the US financial media, is unable to comprehend just how deeply committed EURO member countries are to making it work.

Memories of the death, destruction and family losses of two world wars in the European theatre are indelibly seared into the psyche of the EEC and EURO advocates.

As I pointed out about myself earlier “instinctively the nationalistic little Englander part of me really doesn’t like it but when I stand back and look at it coolly, rationally and objectively I am forced to admit that it is actually better in the long run for the UK”.

While I know many people who, like myself, because of nationalistic pride do not really like the loss of sovereignty involved in being a member of the EEC and having the EURO as a currency (instead of our hallowed pound), when push comes to shove in assessing the longer term economic benefits they are of the same mind as myself.

Well said Jimbo, I couldn't agree more

JimboPSM wrote:.



While I know many people who, like myself, because of nationalistic pride do not really like the loss of sovereignty involved in being a member of the EEC and having the EURO as a currency (instead of our hallowed pound), when push comes to shove in assessing the longer term economic benefits they are of the same mind as myself.

Little bit going beyond my question here. The economists were discussing the future of the Euro of which GB is not a member, there was no mention nor was one intended by me to doubt the future of the EEC to which we are committed .
Although I must admit I felt at the time and still do , that we were better off sticking to our commonwealth friends, who , after all share many complimentary traits with us, than joining the Greater Europe community, who have proved in the past to be somewhat antagonistic to our aims and ambitions, sometimes appearing to be more foe than friend .

My bias is that I am an American and read mostly EURO-related articles written by Americans, but I have the impression that Euro currency will be discarded within a couple of years, or months. Nations will likely return to their traditional coins and script. Hopefully people using the EURO will discover how to best protect themselves from this costly change.

The big advantage the U.S. has over the European socialist democracies was set im place decades ago. When France and other nations began to nationalize banks, railroads, etc. capital fled to the U.S. and little returned.

This may change soon. Obama loves the socialist democracies of Europe and is transforming the U.S. to mirror their socialist economies. Obama's massive increases in debt is draining the U.S. economy, forcing it downward to the point that U.S. revenue will be so dimished by servicing debt that too little will remain to provide capital necessary for generating new business and expanding old. This will place the U.S. in the same financial difficulties being experienced in Europe. We will then all be in the same dismal capital-poor boat.

the euro does not work nor ever will.they have refused to have their books or accounts audited from day one.because it would let the world see that it could never work.i give it 6 months before it goes bust.the old saying u an not pay out more than u have coming in.

MALC wrote:.i give it 6 months before it goes bust

That's exactly what the Sun newspaper said when it was first introduced. Not that I would read the comic I saw it at a friends house

What's left out of the discussion is the web of economic links between nations and banking institutions. Not to mention the $600 Trillion (yes, six hundred trillion measured in USD) in derivatives floating about. There is no country that will benefit. There are countries which will be less affected than others (i.e. China), but they will all be sucked into the resulting vortex of massive system collapses.

Think Jenga where each piece is a country and the European countries are on or near the bottom of the structure holding the rest of the financial world up...