Eurozone & euro

[Hannia]

No matter where one turned today, the financial chatter was re EUROZONE & EURO.

Personally, I never quite understood what made them think that they could make it work anyway.

Nothing official, but it seems that unwinding the Eurozone is in the works. The multi-country EURO
would be retained only by a shrunken core, the original group, and the PIIGS & peripheral countries
would continue participation in the trading block, but would be in control of their own individual currencies.

The EURO is expected to survive, but is likely to be EURO per USD by yr's end, if not sooner.

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What did occur to me as I was listening to this chatter, is perhaps Ukraine will be able to join the EU trading block sooner than later. That would certainly help harness Yanukovich's politics some.

[bm-21Lemko]

well I believe the two biggest backers of the Euro were Germany and France and they made the Euro strong. But there have been disputes between these two banking powerhouses. Also people are still losing faith in the market around the world and are pulling out their money they have invested in shares making the euro decline in value as well.

I dont know. I always thought if a smaller nation used the euro as their currency they would bring down the value of it fromt he rest of the nations using it.

good news for Ukraine though.

[Hannia]

The average investor has very little to do w/what is happening w/the EURO. It is the big boys, the professionals, that are shorting it. AND I would not be in the least bit surprised if this were being done w/a nod from the original EU core. I suspect that the die is cast and the current EURO devaluation is just a step in the unwinding process.

Lemko, you are correct, that is good for Ukraine.

[Hannia]

Coincidentally, just found this in my news box, as per AP.
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BERLIN (AP) -- Germany insisted Wednesday that European Union treaties must be changed to allow tougher sanctions for excessive government debt, despite the head of the EU executive body calling the demand naive.

EU Commission president Jose Manuel Barroso criticized Germany for its role in the euro crisis and said it would be "naive" to believe the EU treaties could be changed according to German wishes without other nations wanting amendments as well.

Barroso also said in an interview published Tuesday by the daily Frankfurter Allgemeine Zeitung that the commission won't make a proposal for changing the treaties, as the most recent revision was a traumatic experience.

"We will push for what is necessary," Chancellor Angela Merkel's spokesman, Christoph Steegmans, told reporters. "As we are discussing new goals and instruments, then we will eventually need changes in the treaties."

Steegmans said Germany knows how difficult such changes will be.

"But if we as Germans or as Europeans in general were to decide today that for the next 20 years we cannot change a comma or any single item in the European treaties, that would mean we are a system that freezes, and we do not want that," Steegmans said.

"The European Union has to be able to react to the challenges of our time and if new things come up like during the financial market crisis, one must set a new framework," he said.

Germany has pushed for tougher sanctions for EU governments running excessive deficits that could endanger euro stability and says the changes would require treaty amendments. Among other things, Germany wants to see those countries cut off temporarily from EU financial support.

Barroso supported that suggestion, but was critical of Germany's role in the crisis that led to a multibillion dollar aid package for Greece.

He said he understood that Germany had some constitutional constraints to overcome before helping Greece, but overall "our decision process simply took too long" and the markets received contradictory signals.

"As I have said, a faster solution apparently was not possible," he told the newspaper. "Maybe one could have said even more clearly that Germany has a strong interest in keeping the euro stable, not only for the sake of European solidarity, but out of self-interest."

Barroso added, that "our union needs Germany in a leading role," he said.

He added that he wants to see Germany "speak up for Europe. Otherwise, we have a problem."

[Gotno Gizmo]

I am at a loss to see how Ukraine can benefit from the current problems surrounding the Euro. My belief is that this crisis (being a follow on from the current global demise) is a consequence of those countries that enjoy higher rates of pay, social services and pensions far beyond the expectations of most of those countries outside the EU with whom they are competing, and from whom they are purchasing more and more goods. Most EU governments are now trying to kerb wages, social condidtions and pension rights much to the dissatisfaction of their citizens. This will have the effect of these citizens to tend to lay blame for their diffuculties on other countries within the EU, rather than examining the bigger global picture. It will not produce an environment within the EU in which they will be inclined to accept new and lesser economic nations amongst their midst. Their citizens would object to another country with a low economic growth complicating what is already a worrying situation, when their could be no clear advantage for themselves.

I have no doubts that the "Smart Money" that I often refer to in my threads is participating in the Euro's decline and are making billions for themselves. George Zhoros made billions by successfully betting against the fall of the British Pound several years ago.

Finally, I must say that Ukraine says much about modern human society. I see elderly widows on Lugansk's streets with cups in their hands begging for kopeks, I see others sifting through waste bins for something to use/ sell or eat. Further down the street I pass one of the disproportionate number of banks to see very expensive imported motor cars by the score. Perhaps Ukraine isn't such a poor country, but is just a haven for mafia types!

[Hannia]

GG,

There is nothing official going on yet, but the let's face it, the core group is discussing its options. I have no doubt that they are heading to some kind of unwinding of the treaty.

The new EU concept would exclude any financial responsibility by the shrunken core to the PIIGs and peripheral countries. It would be similar to the NAFTA Treaty that the USA has w/Mexico.

With the Euro being driven down, it would be to the core's advantage to increase the numbers participating in the Treaty. The core will be the primary exporting group. In order to accomplish the participation increase, the qualifications for membership would have to be eased.

For now, this is all conjecture and nothing is written in stone. It does seems though that this would be a viable direction for the central core. It would be a win-win for them and the movers and shakers should be able to sell that to their constituency.

The advantage to Ukraine as a participant would be decrease in unemployment.
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The poverty has been there. It was not created by the new Ukraine.

I blame the socialist system. It created the thieves and opportunists and the devil may care attitudes toward their helpless.

I saw it in early 1992, when I took my Mother to Ukraine after an absence of 60 yrs. We were in Kyiv, doing a mini-tour, when Mama spotted a half dozen old mendicant women sitting on a low wall in a church plaza. She asked me if I had any single dollars, so she could help them out a little. My Uncle, who had been chauffeuring us, immediately threw a fit. He turned beet red. How could we give away dollars that he would have to work so hard to earn. I was dumbfounded. There was no kindness and no goodness in his railing. He was pissed that he wasn't getting my money, but those shabby old souls sitting on that cold wall were.

With some minor exceptions, that overall attitude has not changed much to date.