Looks like the Euro will survive

[ivanm]

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The following is an excerpt from business news on msnbc.com:


China says its exports grew 48.5%

China's exports jumped the most in six years in May, rising 48.5%  from a year earlier, the nation’s customs bureau said. That surpassed just about all estimates.


Japan's economy grew at an annualized 5% rate in the three months to March. China’s national pension fund said the euro will survive Europe’s debt crisis, according to a Reuters report.

[Pepsi]

Doesn't look good to me with investors showing big concern over debt

 

  Following a decline after the initial reports of the EU/IMF €750 billion package and ECB bond purchases, peripheral euro area bond spreads (over German bonds) have widened.

    In particular, the bond spreads for Italy and Spain have widened the most relative to their levels before the rescue package was unveiled.

    After initially declining four weeks ago, sovereign debt spreads have begun widening for peripheral euro area countries. As of June 9, the 10-year bond spread stands at 554 basis points (bps) for Greece, 258 bps for Ireland, 265 bps for Portugal, and 211 bps for Spain.

    The spread to Italian bonds has increased 76 bps since May 11, from 1% to 1.75%, while Portuguese bond spreads are 112 bps higher during the same period. U.K. bond spreads are essentially unchanged.

Euro CDS Spreads

    Similarly, CDS spreads have widened after the initial response to the stabilization package.

http://www.calculatedriskblog.com/2010/06/update-on-european-bond-and-cds-spreads.html

[ivanm]

Doesn't look good to me with investors showing big concern over debt

 
http://www.calculatedriskblog.com/2010/06/update-on-european-bond-and-cds-spreads.html

It may take a while for things to work out.  Excessive debt just isn't a good thing, particularly for the little countries like Greece.

[Mornac]

Euro to hit dollar parity in 2011, if still exists: analyst
Jun 11

The euro is set to sink to parity with the dollar in 2011 because of the slow pace of economic recovery in Europe, if it has not broken up by then, a consultancy predicted Friday.

In a quarterly report on global economic prospects the London-based Centre for Economics and Business Research (CEBR) forecast that the European single currency would fall to parity against the US greenback next year.

The CEBR predicts that the Federal Reserve Bank will start to raise US interest rates in late 2010 in response to strengthening growth.

In contrast, it says, the European Central Bank "will remain hamstrung by the weakness of the European economy and will be forced to hold rates down."

CEBR chief executive Douglas McWilliams said the report was prepared on the assumption that the embattled euro would still exist a year from now -- but he was pessimistic about the long-term prospects for the currency.

"It is almost inevitable that the euro will break up at some point," McWilliams said. "It could be soon, it might be in five to 10 years time."

"In the meantime, the one certainty is that the euro will be weak," McWilliams said.

"It has already fallen by 30 cents against the dollar this year and will probably fall the final 20 cents to break parity when it becomes clear that US rates are about to rise while euro rates will be held down because of the weakness of the economy."

Report author Charles Davis said the global recovery was "surprisingly robust in the emerging markets while clear risks remain in the advanced economies," highlighting two main concerns.

"Overheating in the emerging markets will require monetary policy tightening and the fear that in some of the weaker economies in the Western world that growth will slow even further when fiscal stimuli are removed."


http://www.breitbart.com/article.php?id=CNG.b0320c064d1eb19c9176b234a046992b.911&show_article=1

[ivanm]

Mornac:

You apparently do not care for the Eurodollar or the EU organization.  Why is that? There are numerous small countries in Europe, each with its own currency.  It seems to me that a common currency would facilitate trade, even tourism. 

We are a part of NAFTA and possibly some other orgs that are primarily trade oriented, so why can't the European countries organize for the common good?  I am not saying that I really like the idea of NAFTA but for some countries it is probably a good deal for them to join such an organization.

[Mornac]

Mornac:

You apparently do not care for the Eurodollar or the EU organization.

--That is correct.

Why is that?

--Mostly because I believe in sovereignty for individual countries whereas the EU only believes in sovereignty for the Boys in Brussels.

There are numerous small countries in Europe, each with its own currency.

--Not anymore. Most of those who are not already in the eurozone are obliged to join it in the coming years. Notable exceptions are the UK, Sweden, and Denmark (and of course Switzerland and other sensible countries who have chosen not to join the EU). Also notable is the fact that these non-Euro countries have not suffered nearly as much in the current economic crisis as their common currency neighbors have. 

It seems to me that a common currency would facilitate trade, even tourism.

--That it does – at a cost to the members with the strongest economies.  

We are a part of NAFTA and possibly some other orgs that are primarily trade oriented, so why can't the European countries organize for the common good?

--Because as usual the “common good” only benefits and encourages the weakest and least motivated. Look no further than Greece for an example.

I am not saying that I really like the idea of NAFTA but for some countries it is probably a good deal for them to join such an organization.

--Oh there’s no doubt about that. The problem is that I belong to the countries which foot the bill to make it a good deal for them.

[johnhp]

 
--Because as usual the “common good” only benefits and encourages the weakest and least motivated. Look no further than Greece for an example.

Mornac jettisons another Catholic teaching

"The common good is the purpose that gives meaning to the progress and development, which would otherwise be limited solely to the production of material goods; they are necessary, but without an orientation towards the common good, consumerism prevails in the end, along with waste, poverty, and imbalances, negative factors for progress and development."

A just society must be the achievement of politics, not of the Church. Yet the promotion of justice through efforts to bring about openness of mind and will to the demands of the common good is something which concerns the Church deeply.

Deus Caritas Est

Apparently, Mornac prefers to exercise the privation of care.

[ivanm]

--That is correct.
--Mostly because I believe in sovereignty for individual countries whereas the EU only believes in sovereignty for the Boys in Brussels.
--Not anymore. Most of those who are not already in the eurozone are obliged to join it in the coming years. Notable exceptions are the UK, Sweden, and Denmark (and of course Switzerland and other sensible countries who have chosen not to join the EU). Also notable is the fact that these non-Euro countries have not suffered nearly as much in the current economic crisis as their common currency neighbors have. 
 
--That it does – at a cost to the members with the strongest economies.  
--Because as usual the “common good” only benefits and encourages the weakest and least motivated. Look no further than Greece for an example.
--Oh there’s no doubt about that. The problem is that I belong to the countries which foot the bill to make it a good deal for them.

You mentioned "belonging to the countries which foot the bill". Do you have citizenship in more than one country.

Little countries can ban together economically just as they ban together politically, the UN being a case and NATO another.  It may be rough on the larger countries but can you blame the little ones for doing so?  As to sovereignty, I had hoped that each member nation of the EU could remain politically independent.  However, their economic independence may be in jeapordy.  Maybe it depends on whether or not they are better off economically for joining up?

Don't take me wrong as I am usually not supportive of economic or political collectivism but I am just trying to see the member countries' points of view on the issue.   It must have been attractive to some or they would not have organized into the EU. In the modern age a relatively large and strong economy like that of Germany can really put pressure on a small country with little economic clout.  Greece, for example, has been a basket case for decades now and without some help just cannot compete with the larger and more successful economies.  If the value of its currency is weak then its imports must be very costly.


Maybe the EU was a grand scheme that didn't pan out?

[Mornac]

You mentioned "belonging to the countries which foot the bill". Do you have citizenship in more than one country.

--USA, France.

Little countries can ban together economically…

--Much to their advantage. I always thought that Benelux as a coup for it members.

just as they ban together politically, the UN being a case…

--A mistake.

and NATO another.

--May have outlived its usefulness, but yes.

It may be rough on the larger countries but can you blame the little ones for doing so?

--Absolutely not. They have nothing to lose and much to gain.

As to sovereignty, I had hoped that each member nation of the EU could remain politically independent.

--Too late. They just continued regurgitating their constitution at differing temperatures and various odors until the reluctant countries were able to convince enough of their populace to swallow the vomit. 

However, their economic independence may be in jeapordy.

--With economic independence goes cultural independence.

Maybe it depends on whether or not they are better off economically for joining up?

--The little freeloaders are. The big workhorses aren’t.

Don't take me wrong as I am usually not supportive of economic or political collectivism but I am just trying to see the member countries' points of view on the issue.   It must have been attractive to some or they would not have organized into the EU. In the modern age a relatively large and strong economy like that of Germany can really put pressure on a small country with little economic clout.  Greece, for example, has been a basket case for decades now and without some help just cannot compete with the larger and more successful economies.  If the value of its currency is weak then its imports must be very costly.

--It’s just a backup plan for the Stalin method of Communism. When they saw that failing, the European collectivists rolled out the EU to try a different angle. When this one fails, I’m sure they’ll have another at the ready.

Maybe the EU was a grand scheme that didn't pan out?

--Let’s hope it doesn’t. 

[ivanm]

--USA, France.
--Much to their advantage. I always thought that Benelux as a coup for it members.
--A mistake.
--May have outlived its usefulness, but yes.
 
--Absolutely not. They have nothing to lose and much to gain.
--Too late. They just continued regurgitating their constitution at differing temperatures and various odors until the reluctant countries were able to convince enough of their populace to swallow the vomit.  
--With economic independence goes cultural independence.
--The little freeloaders are. The big workhorses aren’t.
--It’s just a backup plan for the Stalin method of Communism. When they saw that failing, the European collectivists rolled out the EU to try a different angle. When this one fails, I’m sure they’ll have another at the ready.
--Let’s hope it doesn’t.  

Are you saying that the UN is a mistake?  I think the priniciple is sound, but I also think that the major powers such as the US do the heavy lifting.  However, the idea of using a collective force to repel a threat to world peace is sound IMO. It appears that we have somewhat the same thing in Afghanistan with what appears to be a NATO operation.

At one time the UN was controlled primarily by five major powers that emerged from WW II, and Russia was the common adversary or fly in the ointment.  In time the threat of international communism subsided, particularly after the former USSR collapsed, and the role of the UN changed to fighting regional conflicts or brush fires as I call them.  For example, Gulf I was a brush fire compared to Korea or Viet Nam, and was one of the few decisive victories the allies have had since WW II.  Perhaps we didn't go far enough in Gulf I but the objective of kicking
SH out of Kuwait was accomplished and the president said "Enough, let's go home."

Gulf II has been somewhat of a disappointment compared to Gulf I but the jury is still out on that one.  We have taken down SH and his barbaric regime and have given the Iraqi people a chance to have a form of representative government, which I think is an improvement over what they had under SH. This was also a collaborative effort
of UN member nations although I don't remember it being called a UN action.  Nonetheless, the fact that it was a joint effort supports the concept of UN peace keeping, or peace making in this instance.

Look back at the two major world wars.  The "allies" were a group of western nations that joined together to repel the threat of German expansion.  In WW II the "Axis" was the term for Germany, Italy, and Japan plus maybe a few other small countries and the "Allies" were composed of many countries like France, England, the US, Australia, and Canada, just to name a few.  Many of the small Euro countries had so been badly damaged by the Nazis that they had little to offer, and France was just such a country.  It had suffered mightily in both wars before the others joined in the fight.

So it is not always a case of the little guys free loading off the big boys because the burden and losses for a tiny country are probably much greater, relatively speaking, than for a large country like the US. 

One must look at the concept of a united effort, be it political like the UN or economic like the EU. You are entitled to your opinion on such organizations but to reject them out of hand without considering the merits of such arrangements may be short sighted.  Improved communication and transportation permits the ready flow of people, merchandise, and services from one country to another, and anything that can facilitate that, such as a common currency, seems to be appropriate and beneficial to me.

As an American touring Europe I would much rather use a common currency like the Eurodollar to make my purchaeses than to have to be constantly figuring exchange rates and carrying different types of currency.  Maybe they should adopt the dollar as a common currency because it is very common, or at least was when I was there as a service man.  I was in Germany at the time and the conversion was easy.  A mark was worth just over an American quarter and most merhcants accepted the quarter as a Mark.  With a little practice I was able to evaluate the cost of a German product or service priced in Marks and therefore compare it in value to what I would pay back in America.
 
Being a GI I was lucky as I did not have to buy anything on the German economy unless I wanted to, but I did as many of the silverplate articles and the crystal pieces were attractive to me. The prices at that time seemed to be reasonable to me compared to what I would have paid in America for an equivalent article.

[ivanm]

--USA, France.
--Much to their advantage. I always thought that Benelux as a coup for it members.
--A mistake.
--May have outlived its usefulness, but yes.
 
--Absolutely not. They have nothing to lose and much to gain.
--Too late. They just continued regurgitating their constitution at differing temperatures and various odors until the reluctant countries were able to convince enough of their populace to swallow the vomit.  
--With economic independence goes cultural independence.
--The little freeloaders are. The big workhorses aren’t.
--It’s just a backup plan for the Stalin method of Communism. When they saw that failing, the European collectivists rolled out the EU to try a different angle. When this one fails, I’m sure they’ll have another at the ready.
--Let’s hope it doesn’t.  

What is your native country, your place of birth? And did being born in that country give you citizenship there?  I don't remember how it works when a baby is born to a US military family living abroad, so that is why I am asking.

[ivanm]

It appears that the collective GDP of the European Union rivals that of the US.  The following charts from wikipedia tell the story.

Use Google to search for "GDP by country".

By the way, the GDP for the state of California was on the order of 1.85 Trillion dollars in 2007 so I hope you can understand the Europeand desire to have a collective force in international trade. 

[Mornac]

Are you saying that the UN is a mistake?

--Pretty much. Don’t get me wrong – I’m all for a round table where nations can sit down to iron out their differences in front of and with the cooperation of other nations. However I am vehemently opposed to the participation of countries of which I am a citizen getting involved in a club that makes international policy which requires such countries to follow laws made by an organization they place on a higher plane. A military alliance is one thing if it is in the interest of the immediate safety of the citizens of the countries involved. What I object to is “global armies” under the command of an international club of worthless liberal nitwits playing a game of Risk on an Earth-sized game board.

[Mornac]

What is your native country, your place of birth?

--USA.

your place of birth?

--Chicago, Ill.

And did being born in that country give you citizenship there?

--That and the fact that both of my parents are Americans.

I don't remember how it works when a baby is born to a US military family living abroad, so that is why I am asking.

--That’s an interesting question and I’ve never thought about it before. I’m guessing that military bases abroad are considered “U.S. soil” much like embassies are. Therefore I presume if a baby is born at a medical facility on base, he would be considered a natural born American citizen and nothing else. If he were born off-base at a facility in the host country and at least one of his parents was an American, he would be a natural born citizen with the right to also claim citizenship of the country in which he was born.

[Mornac]

It appears that the collective GDP of the European Union rivals that of the US.  The following charts from wikipedia tell the story.

Use Google to search for "GDP by country".

By the way, the GDP for the state of California was on the order of 1.85 Trillion dollars in 2007 so I hope you can understand the Europeand desire to have a collective force in international trade. 

--I have no objection to Europe being a collective force in international trade. I just believe that they can do it the way they always have – through trade treaties (Look how well the EEC worked). They have no need of international civil laws, constitutions, and courts to go along with it.