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Sounds like a bad time to purchase a large amount of the euro dollars ?Comment
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Is this a bad time to purchase a large amount of euro dollars?Comment
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Technically a ''euro dollar'' is an American dollar held abroad, typically in Europe.
As to euros, yes it is a bad times to be holding them. Some currencies of European countries that still have national currencies, however, are fine but not all of them. Norwegian, Danish, or Swedish Kronor, British pounds, and Polish zloty, for example are fine. Hungarian forints for economic reasons and Romanian lei for recent political reasons are not. The Bulgarian lev is pegged to the euro, so it is no different than holding euros. The Swiss franc used to be a good one, but their central bank for about a year has been trying to maintain a ratio with the euro to prevent killing their export market to Europe. Ironically, some are now recommending the Iceland kronor as a currency to hold. When their economy imploded a couple of years ago, they refused to bail out their banks and instead let them go belly up, and now their economy is on a sustainable path.Last edited by Carolinian; 07-22-2012, 06:53 AM.Comment
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Carolinian, I am so confuse over this issue. I wanted to purchase one to two thousands dollars in euro currency on 07/23/2012 for an overcoming trip to Italy, Egypt and Israel on a 14 days cruise vacation for early fall of this year.
The euro dollars was trading at 1.21 last week. I wanted to buy but my spouse is saying waiting after reading your comments.
What sure we do ?Comment
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This saga has been ongoing for many months. And even in this thread you can go back several months and see many predictions of the soon-to-be immediate demise of the euro. I feel the story will be going for years. There may be a country or two dropping out, but the euro will still be alive.
I feel there's a lot of newspapers exploiting this story, and some are falling for it.Comment
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When the euro was launched, The Economist magazine called it ''a political project with economic consequences'' and pointed out why ''one size does not fit all''. What is holding the euro together with bailing wire is the political ideology of the European political elite, but the fundamental contradictions inherent in the euro can only be papered over for so long.
Eventually one of two things has to happen, either massive money printing (which the Germans are unlikely to ever support) or a break up of the euro, either of which will substantially devalue it. A breakup could be total or partial. Detailed studies have shown that some of the more solvent countries like the Netherlands and Finland would be better off to leave the euro. The second largest party in the Netherlands has called for a referendum on whether to remain in the euro. The leader of Italy's largest party has also questioned whether Italy should remain in the euro. Germany is probably screwed either way. If they leave the euro, not only do their banks hold lots of questionable paper from south Europe, but the ECB's payment balancing system ''Target 2'' will also leave them holding a big bag of drachma, pesetas, lire, etc. if those countries leave the euro.
The real question is how long the European political elite can continue to kick the can down the road, and it is there where opinions vary. I don't think anyone knows for sure. It may be a few weeks or a year or two, but my guess is a shorter rather than longer period. The longer they keep papering over the problems the worse the ultimate train wreck is going to be. There may be both ups and downs, as sometimes market sentiment gets carried away with some temporary respite, but it is mostly going to be down. If they can get away with kicking the can down the road for a while, then it will be a slower path downward. If there is a major trigger, the euro could go off the cliff. Spanish and Italian borrowing rates are the thing most seem to be watching. Some elections may provide a trigger. If the Greek elections had turned out the other way, they likely would have. The Italian elections are not too far down the road, and they could well provide a trigger.
A couple of years ago, I had a lot of my cash in euros. Now I have a hundred euros as ''getting off the plane'' money and will get what I need from ATM's on the spot. It is not a currency I keep any savings in anymore, and I would not pre-buy it at the local exchange houses for any trips (fortunately here, I can often do a 3 currency transaction between dollars and euros by way of local currency for less than a 1% total exchange loss).Comment
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My bet is that you'll still be posting on this thread about the imminent demise of the euro two or three years from now. I guess we'll see.Originally posted by Carolinian View Post
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This is one of the few areas where I agree with Soros that the euro probably has months at the most if all they do is fiddling around the edges. A total surrender by Germany and resulting eurobonds and a transfer union would mean the euro still existed but its value would be greatly dimished. It would also be the end of Merkel's political career and probably that of her party as well. which is why that is unlikely to happen. The more likely scenario is a partial or total breakup.Originally posted by ace2000 View PostMy bet is that you'll still be posting on this thread about the imminent demise of the euro two or three years from now. I guess we'll see.
There is also the question of when a triggering event will occur, and that may be a matter of luck as much as anything. They certianly dodged a bullet with the Greek election.
Even though the local currency of the country I work in has been less volatile than either the dollar or euro, many people here are conditioned to keep their money in hard currencies instead. At one time that was mostly the dollar but then became mostly the euro. Now it is strongly turning back to the dollar.Comment
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I'm just a casual observer of this story. But, the stuff I've read states that the euro will be fine even if Greece exits. And some are saying that it would be best for Greece if they did go... meaning their recovery would happen sooner, though there would be hard short term consequences.Originally posted by Carolinian View PostComment
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The same economic problems that the euro has visited upon Greece, it has also visited on most of southern Europe. Spain and to a slighty lesser degree Italy are on the same trajectory as Greece, and both are according to many both too big to fail and too big to bail. I don't know what you are reading, but it does not seem to be from anyone with any economic background.Originally posted by ace2000 View Post
If Greece had been kicked out early, instead of trying to circle the wagons to ''save the euro'' that might have helped keep some other countries on an even keel, but Greece leaving at this point solves little.
Spain is a good example. Greece got in trouble because its government cheated on its accounting. That did not happen in Spain where they played by the rules and kept government debt at the levels it was supposed to be at. Spain's economy overheated because the ECB kept interest rates low for Germany's benefit, but since the same policy applied to all of the Eurozone and to both government and private borrowing, it meant cheap money for property developers in places like Spain and Ireland and they went crazy borrowing that cheap money and overbuilding. That eventually, as it had to, ended badly, causing banks to wobble and unemployment to skyrocket, further damaging the economies and sending them into a downward spiral. In turn, that caused investors to have concerns about government paying its debts, so government bond interest rates also soared. Thanks to the straightjacket of the euro, the national governments of Spain and Ireland no longer had the tools, like raising interest rates or devaluing the currency, to head off the property roller coaster when it first started or at any point, and now they are badly screwed. They are victims of the euro and its disasterous ''one size fits all'' concept.
Incidentally, the euro is now below !.21 to the dollar. I am glad I got rid of mine while it was in the 1.40s to the dollar, mostly the upper 40sLast edited by Carolinian; 07-23-2012, 04:22 AM.Comment
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Moody's changes bond outlook for Germany to negative
http://www.marketwatch.com/story/moo...ive-2012-07-23Comment
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Greece likely to need ANOTHER debt restructuring
http://www.reuters.com/article/2012/...86N11D20120724Comment
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