While Americans are well aware of the financial burdens we face today, we seldom think about what is going on in other parts of the world. On April 13, an article was written by Yasuhiko Seki and Ben Levisohn detailing the rise of the Euro for the fourth day. The reasoning is that Greece’s debt will recover as the government sells bills.
Greece is being given a hand out from the European Union, "The financial aid will reduce the imminent risk of default by Greece, the euro will see a relief rally," said Norihiro Tsuruta, chief strategist in Tokyo at Shinko Research Institute Ltd.
Because Greece is the European Union’s biggest budget deficit, “Euro-region finance ministers said on April 11 they would offer Greece as much as 30 billion euros in three-year loans in 2010 at about 5 percent. “ This is in hopes to stimulate the troubles economy. “Another 15 billion euros would be provided by the International Monetary Fund. The yield of the ten-year Greek bond fell 0.48 percentage point to 6.67 percent yesterday.”
Rather bleak situation in any case for Greece; all the countries under EMU will suffer, starting with the weakest links and expecting a following domino effect; European asymmetrical economies offers no resilience to the new currency, it works artificially well in boom times but prove to be a want-to-be giant with an "Achile's heel" in rough times. The Euro is overvalued at best at the present time, at worst it can be in jeopardy of existence down the line if some countries are forced to go back to thier former currency to solve their specific economic-fiscal problems.
ReplyDeleteGermany, which is the big debtor of the group, stretched his capacity with East-Germany and is still chewing the big bite; it is not ready and willing to take another bite yet and moreover not for less organic countries to his.
Political rhetoric from France won't convince anybody but themselves.