http://www.forexconspiracyreport.com/insufficient-european-stability-mechanism/
Insufficient European Stability Mechanism
How much money is enough to prevent a wave of debt defaults across Europe in the wake of the impending Greek bankruptcy? €500 billion may be an insufficient European stability mechanism to pay debt and, more importantly, to calm markets. The possibility of an insufficient European stability mechanism has emerged again after the recent Greek elections. The vote in Greece is so widely split among various political parties that it may not be possible to form a government coalition. The result will be new elections in the second half of May. The problem with that is that the next installment of the Greek bailout package is due in June. Greece will only receive the money if it has completed a number of austerity measures that were part of the bailout deal. What currency traders and European investors suspect is that Greece will probably default on its debt. Thereafter, Spain, Portugal, Ireland, and even Italy will perhaps be at greater risk of default. It that turns out to be the case half a trillion Euros may be an insufficient European stability mechanism.
What Will Happen to the Euro?
The austerity measures in place throughout Europe are likely to lead to a Euro Zone economic contraction. Based on that likelihood the Euro has fallen. Now, as traders discount the likelihood of a Greek debt default the Euro has fallen farther along with Euro Zone stock markets. A prolonged debt crisis in Europe has already taken its toll on the Euro. An insufficient European stability mechanism in the case of the need for a bailout of Spain, Portugal, Ireland, or Italy could require more money. As voters in debt ridden countries vote against austerity and for growth voters in solvent countries might well vote for an end to subsidies. It may well be that voters across the continent will vote for growth and not austerity. That may well be the best choice, to grow out of a recession. However, if European nations follow the lead of the Bernanke Doctrine they will print money in order to buy bonds, keep interest rates low, and promote growth. A little of this medicine might be a really go thing right now but a lot of it will devalue the Euro over the long run.
Is a Cheap Euro All That Bad?
Europe has the same problem, to a degree, as the USA. Its Asian trading partners buy Euros as well as dollars in order to keep their (Asian) currencies cheap. By doing so these nations keep their export driven industries strong and drive the Euro and dollar higher. If Europe ends up with a cheaper currency its exports will be more cost effective and it may see a revitalization of its industry. The answer may not be a larger Euro Zone bailout fund but rather policies that lead to growth instead of recession and jobs instead of frugality.
2. How much money is enough to prevent a
wave of debt defaults across Europe in the
wake of the impending Greek
bankruptcy?
€500 billion may be an insufficient
European stability mechanism to pay debt
and, more importantly, to calm markets.
www.ForexConspiracyReport.com
3. The possibility of an insufficient European
stability mechanism has emerged again after
the recent Greek elections.
The vote in Greece is so widely split among
various political parties that it may not be
possible to form a government coalition.
www.ForexConspiracyReport.com
4. The result will be new elections in the
second half of May.
The problem with that is that the next
installment of the Greek bailout package is
due in June.
www.ForexConspiracyReport.com
5. Greece will only receive the money if it has
completed a number of austerity measures
that were part of the bailout deal.
What currency traders and European
investors suspect is that Greece will
probably default on its debt.
www.ForexConspiracyReport.com
6. Thereafter, Spain, Portugal, Ireland, and
even Italy will perhaps be at greater risk of
default. It that turns out to be the case half
a trillion Euros may be an insufficient
European stability mechanism.
www.ForexConspiracyReport.com
8. The austerity measures in place throughout
Europe are likely to lead to a Euro Zone
economic contraction.
Based on that likelihood the Euro has fallen.
Now, as traders discount the likelihood of a
Greek debt default the Euro has fallen farther
along with Euro Zone stock markets.
www.ForexConspiracyReport.com
9. A prolonged debt crisis in Europe has
already taken its toll on the Euro.
An insufficient European stability
mechanism in the case of the need for a
bailout of Spain, Portugal, Ireland, or Italy
could require more money.
www.ForexConspiracyReport.com
10. As voters in debt ridden countries vote
against austerity and for growth voters in
solvent countries might well vote for an
end to subsidies.
It may well be that voters across the
continent will vote for growth and not
austerity.
www.ForexConspiracyReport.com
11. That may well be the best choice, to grow
out of a recession.
However, if European nations follow the
lead of the Bernanke Doctrine they will
print money in order to buy bonds, keep
interest rates low, and promote growth.
www.ForexConspiracyReport.com
12. A little of this medicine might be a really
go thing right now but a lot of it will
devalue the Euro over the long run.
www.ForexConspiracyReport.com
13. Is a Cheap Euro All That Bad?
www.ForexConspiracyReport.com
14. Europe has the same problem, to a
degree, as the USA.
Its Asian trading partners buy Euros as well
as dollars in order to keep their (Asian)
currencies cheap.
www.ForexConspiracyReport.com
15. By doing so these nations keep their export
driven industries strong and drive the Euro
and dollar higher.
If Europe ends up with a cheaper currency
its exports will be more cost effective and
it may see a revitalization of its industry.
www.ForexConspiracyReport.com
16. Besides a cheaper Euro making European
products more attractive it will make Asian
products more expensive, driving
Europeans to buy homemade products.
www.ForexConspiracyReport.com
17. Both results could bring more jobs and
prosperity to the Euro Zone. Maybe
Europe ought to take a hint that an
insufficient European stability
mechanism needs to be tuned up to
bring back jobs, make Euro denominated
products more competitive, and
eventually bring down Euro Zone debt.
www.ForexConspiracyReport.com
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