Barroso sounds warning note for euro

Scofflaw

The Commission is apparently unhappy with the lack of political will to reach a solution to the crisis:

EC president José Manuel Barroso just told the press conference that the euro will probably collapse unless his proposals -- or similar measures to bolster the single currency union -- are accepted.

He said:

Without stronger economic governance in the eurozone it will be difficult if not impossible to sustain the common currency.

The EC president, who sounds both desperate and exasperated to our ears, is admitting that the euro is under water -- and appealing to the 17 governments, especially Berlin, to get their act together and save it...

The euro itself has fallen today, hovering around $1.339 against the dollar.

The press conference finishes, with Barroso delivering a ringing defence of the ECB's independence and its "non-standard measures" - buying up sovereign bonds in the secondary market. He says:

We should not expect the ECB to do what our member states, our governments, should do, they are not in a position to replace the work our governments should do in terms of fiscal consolidation and structural reforms...

Unusually strong words, but the actions of the Member States have looked all along like an argument over deck seating on the Titanic, with the Germans reluctant to move their towel.

cordially,
Scofflaw

Slozer

Scofflaw wrote: »

but the actions of the Member States have looked all along like an argument over deck seating on the Titanic, with the Germans reluctant to move their towel.

cordially,
Scofflaw

and the iceberg ahead is clearly visible.

Scofflaw

Slozer wrote: »

and the iceberg ahead is clearly visible.

To be honest, the iceberg has already struck. The Titanic* analogy breaks down slightly because the Member States actually have the wherewithal to patch the breach and refloat the boat, but for various national reasons are reluctant to do so.

Hence, in fact, this rather exasperated speech from the Commission.

cordially,
Scofflaw

_Kaiser_

Given the conflicting interests, inability to reach consensus or take effective measures to deal with the crisis in the interests of ALL affected nations (not just the top two) maybe it's time to grab what we can, find a lifeboat and let the ship go down.

Scofflaw

Kaiser2000 wrote: »

Given the conflicting interests, inability to reach consensus or take effective measures to deal with the crisis in the interests of ALL affected nations (not just the top two) maybe it's time to grab what we can, find a lifeboat and let the ship go down.

The argument against doing so is the very large size of the waves and the small size and quality of lifeboat we can afford. The markets could break an independent Irish currency in a morning's trading, and make a reasonable profit by doing so.

cordially,
Scofflaw

HellFireClub

Scofflaw wrote: »

To be honest, the iceberg has already struck. The Titanic* analogy breaks down slightly because the Member States actually have the wherewithal to patch the breach and refloat the boat, but for various national reasons are reluctant to do so.

Hence, in fact, this rather exasperated speech from the Commission.

cordially,
Scofflaw

Where was Barosso when German banks were flying pallets of cash into Anglo and other basket case Irish banks???

The time for tighter control and the likes of what is being proposed, was ten years ago.

Chuck Stone

So what now?

A Euro-bond and 'peer' reviewed budgets?

Germany suffers "disaster" at bond auction


A "disastrous" sale of German government bonds this morning sparked fears the debt crisis is beginning to threaten even Berlin, with the Bundesbank forced to buy some of the debt to ensure the auction did not fail.

http://www.telegraph.co.uk/finance/financialcrisis/8909701/Germany-suffers-disaster-at-bond-auction.html

Things are looking very shaky.

Scofflaw

HellFireClub wrote: »

Where was Barosso when German banks were flying pallets of cash into Anglo and other basket case Irish banks???

It's hard to answer questions about something that nobody has ever shown to be the case. If you have evidence for your view there, I'd dearly like to see it, because nobody else has ever been able to provide it. If you can't defend it, though...

HellFireClub wrote: »

The time for tighter control and the likes of what is being proposed, was ten years ago.

Sure - but that doesn't mean it isn't worth doing now.

cordially,
Scofflaw

Slozer

The survivors were the ones that got to the lifeboats and off the ship first!

Scofflaw

Slozer wrote: »

The survivors were the ones that got to the lifeboats and off the ship first!

That's somewhere else the Titanic analogy tends to fall a little short - the weather was very calm. The weather in the markets is anything but.

cordially,
Scofflaw

mikom

As long as I get to ride Kate Winslet then the Euro can do what it likes.

Tora Bora

Scofflaw wrote: »

The Commission is apparently unhappy with the lack of political will to reach a solution to the crisis:



Unusually strong words, but the actions of the Member States have looked all along like an argument over deck seating on the Titanic, with the Germans reluctant to move their towel.

cordially,
Scofflaw

If the euro goes tits up, merkel may well find the towel she stubbornly refuses to move, is only a fig leaf after all:D And what's behind the fig leaf, might not be so pretty:cool:

Scofflaw

mikom wrote: »

As long as I get to ride Kate Winslet then the Euro can do what it likes.

Admittedly, that's another place the analogy doesn't work.

Tora Bora wrote:

If the euro goes tits up, merkel may well find the towel she stubbornly refuses to move, is only a fig leaf after all And what's behind the fig leaf, might not be so pretty

Quite possibly so. One way or the other, the Germans are faced with losses.

cordially,
Scofflaw

Duke Leonal Felmet

No thanks. I would rather be out of the Euro than this scenario.

thebman

I think the best analogy is Apollo 13 TBH. The Euro countries lack the will to turn it into a successful failure it seems.

SupaNova

And here is Merkel from yesterday:

"We don't have any bazookas to pull out of the bag. We see no alternative to the policy we are following which calls for budget cuts and keeping the ECB from becoming a lender of last resort"

"We need to tell markets very clearly, and this must be done soon, that there is no other way forward then the one we are pursuing. Policy makers must sit tight through the turbulence. If markets think that the Euro is about to break up, they are wrong. We must tell markets that we are ready to defend the currency, that it has a great future and will become the strongest currency in the world"

---

I really don't see weaker members wanting to leave, as without the pressure of external forces i don't see politicians addressing fiscal deficits, which would make re-introducing a national currency foolish. The argument for Germany not leaving because they need a weak currency is not as strong. Before the Euro, the DM was the strongest and most responsibly managed currency for decades and yet the German economy powered on. The biggest benefit of the Euro for every member is the ease of trade that exists in a single currency without having to deal with the manipulations of national currencies causing upheaval. Without a national printing press, euro-zone members will eventually be forced into responsible fiscal positions which is a good thing.

All i see coming is more of the same.

The Euro really is getting a disproportionate amount of press in comparison to the UK and US.

Scofflaw

SupaNova wrote: »

And here is Merkel from yesterday:

"We don't have any bazookas to pull out of the bag. We see no alternative to the policy we are following which calls for budget cuts and keeping the ECB from becoming a lender of last resort"

"We need to tell markets very clearly, and this must be done soon, that there is no other way forward then the one we are pursuing. Policy makers must sit tight through the turbulence. If markets think that the Euro is about to break up, they are wrong. We must tell markets that we are ready to defend the currency, that it has a great future and will become the strongest currency in the world"

---

I really don't see weaker members wanting to leave, as without the pressure of external forces i don't see politicians addressing fiscal deficits, which would make re-introducing a national currency foolish. The argument for Germany not leaving because they need a weak currency is not as strong. Before the Euro, the DM was the strongest and most responsibly managed currency for decades and yet the German economy powered on. The biggest benefit of the Euro for every member is the ease of trade that exists in a single currency without having to deal with the manipulations of national currencies causing upheaval. Without a national printing press, euro-zone members will eventually be forced into responsible fiscal positions which is a good thing.

All i see coming is more of the same.

The Euro really is getting a disproportionate amount of press in comparison to the UK and US.

It does seem to be the case that a lot of the objections to our membership of the euro are currently based on the idea that if we weren't in the euro we could turn our printing presses to full steam ahead rather than suffer the pain involved in balancing the budget. On top of that, of course, it seems many people believe that were it not for those pesky banks, we'd have a balanced budget.

cordially,
Scofflaw

Benny_Cake

I can see the point here,but this would all require treaty change and so on,which takes months if not years.Will the euro still be around by then?

Scofflaw

Benny_Cake wrote: »

I can see the point here,but this would all require treaty change and so on,which takes months if not years.Will the euro still be around by then?

Under the circumstances, they can probably happen on a timescale of months. There's certainly a lot of pre-positioning footwork going on in respect of them at the moment - and it seems that the government have outlined the position for Ireland as being that without some kind of massive debt-relief bribe, any treaty changes requiring an Irish referendum are going to fail.

I'm still not sure, despite the ongoing panic, what exactly it's supposed to take to "break" the euro, at least in terms of market activity. It's a political construct, so it seems that only a political decision by its membership would end it.

cordially,
Scofflaw

Benny_Cake

Scofflaw wrote: »

Under the circumstances, they can probably happen on a timescale of months. There's certainly a lot of pre-positioning footwork going on in respect of them at the moment - and it seems that the government have outlined the position for Ireland as being that without some kind of massive debt-relief bribe, any treaty changes requiring an Irish referendum are going to fail.

I'm still not sure, despite the ongoing panic, what exactly it's supposed to take to "break" the euro, at least in terms of market activity. It's a political construct, so it seems that only a political decision by its membership would end it.

cordially,
Scofflaw

I would assume that if a country needed to roll over debt but couldn't,and the ECB refused to step in - that would "break" the euro.In all likelihood they would surely continue to buy bonds,particularly if a long-term solution was on the horizon.

bytesize

What happens with someone like myself. I have moved abroad as there was no future for me in Ireland. I have brought all my money with me but have been reluctant in exchanging it for another currency for the simple fact that I am losing too much in the process and am simply trying to live off what I am earning now rather than touching what I brought with me.

The exchange rates are on a nose dive towards worthless in terms of the Euro and unless it changes direction soon, I fear I will lose too much. In the last 6 months the Euro has lost 10% of it's worth against the currency I am using. That means for every 1000Euro exchanged, 100Euro has gone down the pisser before anything even reaches my hand.

Germany and France need to realise that their countries well-being is not top priority. After-all, the chain is only as strong as it's weakest link, or in this case links.

Scofflaw

Benny_Cake wrote: »

I would assume that if a country needed to roll over debt but couldn't,and the ECB refused to step in - that would "break" the euro.

I'm not sure how it would - the country in question would have to default, which would be a huge blow to confidence in the euro, but there's no reason it would cause the euro to stop being.

Benny_Cake wrote: »

In all likelihood they would surely continue to buy bonds,particularly if a long-term solution was on the horizon.

Currently, that is the long-term solution!

cordially,
Scofflaw