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The euro and the explosion


FRANKFURT. It is strictly for the euro. For weeks, the crumbling value of the common currency, yesterday, were paid less than $ 1.40 per euro, as little as half a year, not more. "The euro is struck," writes Helaba in a recent market commentary. This is demonstrated by the fact that ignoring positive news and negative reporting would be taken as an opportunity to sell the currency.

Here, the exchange rate in December was still at more than $ 1.50. At that time, it is the U.S. currency, which is counted in. With every cheap dollar that the Federal Reserve pumped to combat financial crisis in the markets, losing the tickets, which are already in circulation in value. The crash of the greenback seems to be unstoppable, ruined the dollar to Billigwährung. More and more investors make their money in the euro area. To run the news from Greece on the ticker.

In early December, the rating agency Fitch classifies the creditworthiness of southern Europeans down from A to BBB +. The medium-term outlook for the development of public finances worried, tells Fitch. The deficit of the Hellenes in the past year has climbed to 13 percent of gross domestic product (GDP), the total debt now amounts to 113 percent of GDP.

For the first time in ten years, Greece will no longer be classified as so-called A-country. The other two major agencies, S & P and Moody? S punish the Greeks from the notoriously damp and revise its credit ratings.

Jean-Claude Trichet, the chief monetary authorities of the EU is concerned about the debt problem of southern Europeans. "The situation in Greece is very difficult," said the ECB chief at a hearing before the Economic and Monetary Affairs Committee of the European Parliament in Brussels. The investors are confused. In Athens, but also to the other European stock exchanges where equity prices kink. Rumors of an impending state bankruptcy make the rounds. The euro exchange rate continue to crumble.

The Greek Finance Minister Giorgos Papaconstantinou said that they would do everything in his power to get the debt problem under control. To believe the right thing, no one seems to like. No other EU country is so well known for its lax financial management and creative accounting, as the Greeks. There are examples enough, the best is from the year 2004: Back then it turns out that Athens has quite generously rounded than in 2001 aim was to recognize their own debt as low as possible in order to meet the Maastricht criteria and joining the euro .

Brussels can go through the Greek trickery. Monetary union is primarily a political aim, the souped-up stock of the Greeks is the success story of the euro does not preclude standing. Somehow to believe the financial experts of the EU, would you go with the debt the state already.

The trouble here: Greece is not alone. Also in Spain, Portugal, Italy or Ireland, huge gaping holes in the budget. Blame, if you will, is the euro itself Thanks to the monetary union are wages, particularly in southern Europe over the years to increase strongly. That alone would be a success unless accompanied by productivity gains in the country would be so pathetic.

The so-called unit labor costs, a meaningful size to assess the competitiveness of a country, are in the PIGS countries compared to Germany or France, much too high. If there were not the euro could, the Greeks their national currency, the drachma, easy to devalue. They could then offer their goods cheaper on world markets and would not have to fear competition from other exporting nations.

But time has passed. The Greeks have the euro – the EU is a problem. Because without the income from exports, it will have the Southern Europeans difficult to repay their debt. Moreover, the debt service due to the poorer ratings will be more expensive. Greece has no choice but to radically reduce its spending. The crucial question is whether the government in Athens, the austerity policy actually trying to enforce – and if in doubt, the other EU states will rush to the rescue.

Much will depend on whether the world economy will grow after the Einruch last year term. "Only when the economy in the euro area shows its good side, is expected to Greece that it manages to increase its tax revenues to the extent that fiscal consolidation is possible," it says in the Commerzbank.

But the mistrust is high. Nowhere is this so clearly in those days as at the World Economic Forum in Davos. Experts credit the upswing in recent months, not quite on the road. "We have not yet turned the corner", says George Soros, the renowned U.S. investor.

For the euro area are not good prospects. Many therefore assumes the worst. He had never been so pessimistic, set against the single currency have been as now, says the New York economics professor Nouriel Roubini. "But in the farther distance, not this year or next year, break up the monetary union," says Doctor Doom.