Ask NH: Is euro going down with Greece?
What do you think of the current crisis in Europe? Is euro a stable currency? Will the EU/IWF bailout rescue Greece? Is the crisis going to spread to other countries?
After years and years of steady decline of the dollar, from a high of about 1.06 iirc to .63 or so it really wouldn't hurt to see things go the other way again for a while.
The EU will bail out Greece only to the extent that they don't allow themselves to be pulled under (think of one swimmer trying to rescue another), and that's not very far. The Greek economy fortunately isn't a very large one in EU terms, but still large enough to do serious damage.
If it spreads (Spain, Italy and Portugal are mentioned with some regularity as candidates) it could have a huge impact.
Populist politicians (such as 'Wilders' in the Netherlands) are already using this as a way to gather votes with their 'drop the EUro' theme, but it is unlikely that will ever happen.
If it weren't for the Euro this credit crisis would have potentially been a lot worse than it is for Europe.
A big part of the problem here, both in Greece and Italy is that they have a huge corruption problem, hopefully this will give them the incentive to address that.
Indeed. In the past many countries tried to devalue their way out of the problem; euro membership is forcing them to address the actual fiscal problems rather than obscuring them with monetary policy. I'm Irish myself and we too had been down this road before joining the euro but I think the Irish government has learned the dangers of that.
Portugal's economy is also small so even if they have problems, it's more about appearances than fundamentals. Italy's is bigger but the one thing they have going for them is that much more of their debt is internal; Spain is my biggest worry.
I see Angela Merkel has been throwing a shit-fit this morning over the fact the many of the same banks that were begging for government support in 2008/9 are now taking a leading role in jacking up spreads on Greece. Eurozone bankers are likely to find themselves under severe regulatory restraint before too long: this is going to cause further tension between the UK and the rest of the EU.
I suspect the biggest issue in general is cascading failures.
Just an interesting insight. I don't have an opinion one way or the other.
US markets plunge on continuing Greek debt concerns