Re: The Eurozone Thread

[Lamplighter]

I will be amazed if the euro makes it to the end of 2012, personally, LL.

I'm not going to make any predictions, bonny, because there are going to be many people in the less well-off countries who will suffer if it does fail. This was a good idea., but badly executed with no back-up plan if anything did go wrong. How they could actually lock in the countries without a withdrawal option if finances went pear-shaped I will never understand. LL

[bb1]

How they could actually lock in the countries without a withdrawal option if finances went pear-shaped I will never understand.


Indeed; to me, I feel that the lack of a Plan B is what is behind a lot of the panic - there simply is no strategy for what to do if it doesn't work.

Oh - apart from the UK evacuating people from Europe yet again...

[Lamplighter]

There was a very good program on TV today about how the West went bust. A lot of it I already knew about, but some of it was totally new to me. I will try and see if I can find which channel it was on and post the link here. I do think the papers are, yet again, racheting up the ante; it makes for good copy, does it not, to make it appear that everything is going to collapse any time now? After what the papers have done to the Dowlers and McCanns I am not prepared to believe any of them, to be truthful. I shall hold my opinion to myself at present, and not be swept along by media speculation. As it is, at present the exchange between here and the UK is benefiting from all this, we are getting good value for our £s. 6 months ago the rate was 265 to the £, now it is 360, quite a good upswing. LL

[bb1]

Yes, Sabot said much the same thing, LL.

I find it hard to make sense of it, though I am none too sure there is sense to be made. I cannot help thinking that if someone would just say, The euro is a failed experiment, sorry. All countries can go back to their own currency, but to avoid instability and panic, this is what will happen...

It's this rudderless drift, this feeling that attempts to save the euro are as useful as rearranging the deckchairs on the Titanic, that to me is making matters worse?

[Lamplighter]

There is another problem stemming from all this, for instance, people in Central and Eastern were encouraged to take out mortgages, car loans etc in Swiss Francs, which was okay a few years ago but now is dreadful as the Swiss Franc has appreciated and many repayments are now at least double or, in some cases, treble what they were 6 months ago. This has caused many countries to sink into deep debt, as many of these governments also borrowed in Swiss Francs. For instance, a know of a lady whose payment for her car stared a year ago at about £200 per month. She is now paying over £600 per month. She is an expat from Holland so she does have the finances to pay this, but imagine a native person trying to pay that kind of money where their income is often below what in the UK would be the poverty line.

This is a link to Al Jazeera's 'Counting the Cost' which goes into this problem and others, in great detail: http://www.aljazeera.com/programmes/countingthecost/2011/11/2011112683748936679.html

[bb1]

It is truly a collossal mess, and I shudder to think how it is going to end.

http://www.dailymail.co.uk/news/article-2075721/A-financial-Dunkirk-Britain-draws-plans-rescue-expats-Spain-Portugal-hit-financial-oblivion.html

A financial Dunkirk: Britain draws up plans to rescue expats if Spain and Portugal are hit by financial oblivion

By WIL LONGBOTTOM
Last updated at 10:00 AM on 18th December 2011
Comments (33)
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Evacuation plans for British expats stranded in Spain and Portugal if their banking systems collapse are being drawn up by the Foreign Office.
The contingency plans are being put in place to help thousands of Britons if they were unable to get to their money in the event of a catastrophic banking collapse in two of the most vulnerable eurozone economies.
Around one million British expats live in Spain, particularly around Marbella and Malaga, and some 50,000 in Portugal.

The Foreign Office is concerned that those who have invested savings in their adopted countries would face losing their homes if banks called in loans and they were unable to access money.
Last week ratings agency Standard & Poor's downgraded 10 Spanish banks, including Banco Popular.
Among options being considered for a 'nightmare scenario' include sending planes, ships and coaches to evacuate expats - some through Gibraltar.
Small loans could also be made available to stranded Britons and pressure would be exerted on the Spanish and Portuguese governments to allow access to funds to pay for everyday essentials.
Both countries have a deposit guarantee, like the UK, which means depositors are covered for up to €100,000.
But in the event of a collapse, most banks would limit withdrawals.

Many expats have retired to the south of Spain on fixed incomes, having used their savings to buy villas and apartments.
A senior Foreign Office source told The Sunday Times: 'The nuclear scenario would be having thousands of Brits stranded at the airports in Spain and Portugal with no way to get money from the cash dispenser and no way to get home.
'Who would be blamed for this? The Foreign Office.
'We are looking at how we can help evacuate them if the banks in Spain and Portugal collapse, getting people cash, things like that, sending planes.'
Expats could face losing their villas and apartments because they were unable to afford mortgage payments or withdraw enough cash as banks tried to stop money leaving the country.
They could also lose savings if banks in either country collapsed.
Jeremy Cook, chief economist at World First - foreign currency exchange specialists - told the newspaper: 'Countries have individual safeguards on deposits but for people with large deposits in a bank it would be difficult to say whether all that money would be protected.'

Sounds like a good time to buy shares in Ryanair and ferries....

[bb1]

UK Refusing To Help With EU Bailout Fund

Chancellor George Osborne has refused to contribute to the IMF's bailout fund for the EU, Sky News has learned.

Mr Osborne told his EU colleagues he will not provide any cash to boost the fund, which is specifically aimed at the troubled eurozone.
The conference call with 26 other EU finance ministers lasted three hours but ended without Britain's agreement to put in up to 50bn euros.
Mr Osborne insisted that while Britain was ready to take part in global efforts to bolster the IMF's coffers, it would not participate in a fund only aimed at the beleaguered eurozone region.
:: Read more about the on going crisis on Sky's in-depth eurozone page.
Sky's economics editor Ed Conway said: "Although we had known for a while that George Osborne had been reluctant to give money specifically for this eurozone bailout package, the fact he has gone ahead and done it will come as another blow to what was supposed to be the plan to save the euro."
He added: "It leaves us going into the Christmas season with no conclusive and no big bazooka that had been promised for so long. There will be consternation, I think, among investors at this news."
A Treasury spokesman said: "The UK has always been willing to consider further resources for the IMF but for its global role and as part of a global agreement."

France and Britain have been at loggerheads over the eurozone crisis

Some other non-euro countries could yet decide to contribute money to the fund, with decisions set to be made at a G20 summit to be held in Mexico early next year.
Mr Osborne's move comes days after David Cameron became the first British prime minister to use his veto by refusing to agree a new EU treaty aimed at easing the eurozone crisis.

The German foreign minister Guido Westerwelle pledged on Monday to "build bridges" with Britain, insisting it was an "indispensable partner" in the EU.
At a joint press conference in London with Foreign Secretary William Hague, Mr Westerwelle said the union had to remain "united".
"For Germany the United Kingdom is an indispensable partner in the European Union," he said. "We think we have a common destiny...
"No country - not Germany, not Great Britain, not France - no country is strong and big enough to face the challenges of globalisation alone."
Mr Cameron has faced accusations that he risks making the UK isolated from the rest of Europe and unable to make decisions about the future of world finance.
But the Prime Minister has insisted he had to take the drastic step because the treaty being discussed did not "adequately protect Britain's interests".
Using the veto has put the Tories ahead of Labour in recent opinion polls and bolstered Mr Cameron's standing in his own party but it has angered his Lib Dem coalition partners.

More at:

http://news.sky.com/home/politics/article/16133522

It's just coming through on the Breaking News tape that the Czech Republic, Denmark, Sweden and Poland have pledged to make loans.

Think this might be a good time to call your bank manager, LL.

[Lamplighter]

My bank manager is in Austria - at least for the Eurozone. My actual funds are based mainly in the UK and Norway, neither of whom are in the Eurozone. I don't think I need to worry at this moment in time. But he will keep an eye on things and take whatever action he deems necessary. LL

[bb1]

I think....anyone outside the eurozone should weather the storm eventually? But this seemingly endless crisis cannot be doing much for confidence in the euro.

[Lamplighter]

I think....anyone outside the eurozone should weather the storm eventually? But this seemingly endless crisis cannot be doing much for confidence in the euro.

I am of the opinion that the media is hyping this all up; makes good copy especially as in the run up to Christmas stories are always thin on the ground. Personally, I refuse to panic, I will carry on as usual. Behaving like a butterfly caught in a meths bottle is definitely not the way to deal with these matters. We will see what we will see; nothing the average man in the street can do will change things as they stand at present. LL

[bb1]

Indeed, there is little any of us can do about it, LL.

I feel myself that one of the reasons worst-case scenarios are being hyped up is the lack of anything resembling leadership at the top - the situation just seems to be drifting away from their control?

[Lamplighter]

Indeed, there is little any of us can do about it, LL.

I feel myself that one of the reasons worst-case scenarios are being hyped up is the lack of anything resembling leadership at the top - the situation just seems to be drifting away from their control?

The big, almost unsolvable problem is the fact that, despite what many will say, Europe is STILL a number of tribal groups, each with their own allegiances. Old hatreds and antipathies die hard, as we have seen over the snidey comments made by the French to the UK after the French were told they could well lose their triple A rating. When lambasting the Germans about their past attempts to rule Europe, perhaps people should consider Napoleon? The Brits stopped him, eventually, but if he had had his way Europe would all now be speaking French. I am afraid Sarkozy sees himself as a great statesman, which he certainly is not. I don't know about anyone else, but I would trust him as far as I could throw him which with the RA would nowadays mean about 6"!! You can never really get such disparate tribes to agree, there will always be arguments, punch-ups, flounces, even, God forbid, wars. LL

[bb1]

Yes, it never takes long for the insults to start flying at, say, World Cup time..or the old jokes....

I personally find Sarkhozy deeply irritating, and he is too short to be a great statesman.

[Lamplighter]

I personally find Sarkhozy deeply irritating, and he is too short to be a great statesman.

Well, Napoleon was a short a*se! I don't see Sarkosy surviving much longer; Merkel finds him irritating too, so I have heard from a friend whose son works in the Bundestag for Merkel's party. I think the German Foreign Minister's recent favourable comments re the UK point clearly to the fact that they don't want this rift. I think the finger-pointing for all this tit-for-tat sniping should be aimed at Sarkozy. LL

[bb1]

I think you'll like this one, LL:

http://www.cntraveler.com/daily-traveler/2011/12/spain-economy-british-expats?mbid=ob_ppc_all

If Spain's Economy Crumbles, At Least the British Expats Will Be Safe



Spain, Catalonia, Costa Brava, Girona Province, La Selva comarca, Tossa de Mar, an area popular with British expats

It’s sometimes said that the wisest guidance for diplomats is “imagine the unimaginable.” Well, the Brits seem to have exceeded themselves in this department.

Looking at Europe from the detachment of their desks in London’s Foreign Office, some officials have decided that the euro will be stricken by the insolvency of whole nations.

The main focus of their concern is Spain, where a million Brits live (it’s amazing what moving just 600 miles south of England can do for the climate). British newspapers are reporting that the Foreign Office has plans to evacuate these expats (and others in Portugal) in the event that both debt-loaded Iberian nations go bust.

The reasoning is that, as banks fail from runs on their meager reserves, mortgages will be in jeopardy and cash will dry up, leaving hundreds of thousands of Brits destitute.

To me, this seems hysterical—in both senses of the word.

First, the Spanish themselves would, presumably, face the same consequences and emergency measures would keep the banks operating.

Second, that huge population of Brits is essential to the economies of the regions in which they live—predominantly along the Mediterranean coasts—and their departure would be catastrophic, far greater in its impact than a devalued euro. Third, many expats, including some who are friends of mine, keep their savings and pensions in British accounts and draw on them as needed.

This whole story smacks of the worst kind of official butt-covering by people who, in the past, have been tardy in evacuating Brits from truly dangerous situations— in Libya, for example. Most dangerous of all—and in this it is woefully inept diplomacy—the Foreign Office plan simply serves to spread panic and run the risk of being self-fulfilling.

It reflects a mindset that was once nicely enshrined in a quote attributed to a particularly dim-witted British monarch, George V, who said “abroad is a nasty place.”

Afterthought: If you want a delicious taste of the expat Brit life in Spain, rent the movie Sexy Beast.

[bb1]

Oh my....

http://news.sky.com/home/business/article/16148669

France Confirms Loss Of AAA Credit Rating

Ratings agency Standard & Poor's is to downgrade the credit rating of France, the country's finance minister has confirmed.

The euro fell to a 17-month low on the currency markets amid early reports of the news - the latest in the eurozone crisis - and stock markets across the world also declined.
It is understood the agency will confirm the announcement after markets close in the US.
French president Nicolas Sarkozy held crisis talks with key ministers after news of the downgrade emerged.
Other countries within the single market are also at risk of a downgrade by the prominent ratings agency, among them Austria, Italy and Slovakia.
Reuters columnist Peter Thal Larsen told Sky News: "If we are talking about expectations then clearly France is what we would consider to be most vulnerable to a potential downgrade."

Standard and Poor's have not yet confirmed the news

A French downgrade would be significant due to the country's role as one of the AAA guarantors of the eurozone's rescue fund, the EFSF, which would in turn also need to be downgraded.
Germany would then become the only major AAA-rated economy underwriting the fund.
This would make it more difficult to raise funds to bail out weaker countries, like Italy and Spain, if the need arose.
But Mr Larsen added that the move by Standard & Poor's (S&P) would not be particularly surprising, as the ratings agency had put several eurozone countries, including Germany, on notice a few months ago.

He said the downgrades would provide a "reality check" to the markets that the eurozone's problems are nowhere close to being solved.
Germany, The Netherlands, Finland and Luxembourg are among the countries not believed to be affected by a downgrade.
The announcement is particularly bad news for Nicolas Sarkozy who faces presidential elections later this year and has staked much of his reputation on being the man to lead France out of the crisis.

Valerie Pecresse, a French government spokeswoman, told a television channel in the country: "France today is a safe investment, it can repay its debt and the news concerning our deficit is better than expected."
She made no direct comment on the country’s credit rating, but French finance minister Francois Baroin reportedly visited at President Sarkozy's offices on Friday afternoon.
Last December, when rumours of a potential French downgrade began, politicians in the country reacted strongly, suggesting that any downgrade would be unjustified.
It was even suggested publically by one senior figure that Britain should be downgraded before France because it had "as much debt, more inflation, less growth than us and…credit is slumping".
Reports of a breakdown in talks between Greece and its banks to restructure its debts also fuelled fears of a default.

===========

It is being reported that Austria has been downgraded too.

[bb1]

Italy too, now:

http://news.sky.com/home/business/article/16148669

France, Austria and Italy have all had their credit ratings downgraded by ratings agency Standard & Poor's.

France and Austria now both hold AA+ ratings, while Italy, which formerly held a BBB+ rating, now finds itself on BBB.
More countries are expected to be downgraded in the next few hours.

[Sabot]

I really don't understand what the fuss is all about. The Euro was trading at 65 pence five years ago. It is now trading at 83 pence which isn't much down on a couple of months ago.
I realise that there is a bit more to it than just The Pound, but The Euro is looking fine from where I am sitting. In fact I wish it would drop a good bit more. 70 pence would be great.

[bb1]

I had a feeling it wouldn't really be bad news for you, Sabot, but I do get lost in high financial matters.

[Sabot]

I had a feeling it wouldn't really be bad news for you, Sabot, but I do get lost in high financial matters.

I have trouble looking at the overall picture, Bonny. but 65 pence coincided with the exchange rate of The Franc which was long ongoing, and was perfectly acceptable. And then the markets lost faith in The Pound, so it was a bit more to do with The Pound dropping than The Euro rising, although obviously The Euro has risen. This is causing problems with trading between Nations, so to me, and not necessarily me personally, it would be a good thing all round if The Euro dropped a bit.
I have been battling with the present exchange rate for more than three years now, and it hasn't been funny. This why I am still having to work at the age of 73. Quite possibly I would go on working anyway, but there is a big difference between wanting to and having to.

[bb1]

Oh Lord, more have gone down, Sabot:

http://news.sky.com/home/business/article/16148669

A string of eurozone countries have had their credit ratings downgraded in a mass blitz by agency Standard and Poor's.

France, Austria, Italy, Spain, Portugal, Slovakia and Cyprus have all been cut in a brutal round of downgrades.
France and Austria both now hold AA+ ratings, while Italy, formerly an A-rated country, holds a BBB+.
Spain will move down to an AA- rating, while Portugal moves to BB, Slovakia to A+ and Cyprus to BB+.
Austria, France, Malta, Slovakia, Slovenia, Cyprus, Italy, Spain and Portugal also had their long-term ratings lowered.
Only Germany, The Netherlands, Finland and Luxembourg kept their top-notch ratings in the cuts.

Standard and Poor's have not yet confirmed the news

Ireland and Greece will also not face further bad news, according to reports.

[Sabot]

It will be interesting to see what the exchange rates are tomorrow. Nothing happening at the moment.

[bb1]

I can't work it out, Sabot, beyond insecurity and uncertainty are bad for everyone - and I see Sarkhozy is facing an election this year.

I cannot see him being too popular in France, after this?

[Sabot]

Sarkozy has done some unpopular but very necessary things, Bonny. But Strauss Kahn has blotted his copy book, so I am not giving up on Sarkozy yet. He did only raise the pension age by two years, which was a good bit less than UK.

[bb1]

Oh, the UK pension age is farcical, Sabot.

What on earth is the point in forcing people in their sixties to carry on working regardless of their fitness, when so many young people cannot find jobs?

Insanity. I do freely admit I cannot stand Cameron.

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