[blackshoe]

Vampyr, on 2011-July-31, 05:31, said:

When I first moved to England I was very amused at the approach to distance! But anyway I used the United States as an example because it is a territory approximately the size of Western Europe, with a single currency, and where mobility is easy and even quite attractive to a majority of people.

Looking at this map, it appears the US is about twice the size of Western Europe. Agree with the rest of your post, though.

[Vampyr]

blackshoe, on 2011-July-31, 05:52, said:

Looking at this map, it appears the US is about twice the size of Western Europe. Agree with the rest of your post, though.

Well, specifying Western Europe was my mistake, since the EU covers almost all of Europe. Then the sizes might be closer!

[Aberlour10]

Vampyr, on 2011-July-31, 04:37, said:

A Portuguese job seeker, however, will not readily investigate positions in Austria or the Netherlands, even if information about them is easy to find. Leaving one's family in New York and moving to California is far easier and more comfortable than leaving one's family in Finland and moving to Greece, even though the latter involves a considerably shorter distance. And if, suddenly, a vast majority of people became more inclined to live in a foreign country, the language barriers alone would make mobility an illusion.

I have read an intersting study about job mobility in Europe. According to that this mobility is high only in top and low loan sectors. The "middle class" doesn't want to move and seek it only if they absolutely have to. Its not a matter of nationality and destinations.
I am sure the top manager from Portugal will move immediately if he get a better job offer in Austria or NL. The same with Portuguese low skilled workers. The language is not a big barrier in jobs they usually do.

[blackshoe]

Vampyr, on 2011-July-31, 06:31, said:

Well, specifying Western Europe was my mistake, since the EU covers almost all of Europe. Then the sizes might be closer!

Indeed.

Alaskan, to Texan: "if you don't shut up about how big Texas is, we'll cut Alaska in half, and make Texas the third largest state!"

[hotShot]

The Euro is now 1,43$, do we need a topic 'The future of the Dollar' ?

[helene_t]

1 U.S. dollar = 0.765597127 Swiss francs. The Euro is still above the CHF but that may be a matter of time.

[y66]

From a somewhat dated July 29 story in The Economist

Quote

The chart below shows movements in bond spreads over German Bunds since the July 21st summit in Brussels for the five euro-area economies most in the limelight (setting tiny Cyprus to one side). The three economies to have been bailed out already—Greece, Ireland and Portugal—have seen spreads drop on the promise of lower interest rates and longer debt maturities.

Quote

But the spreads for Italy and Spain, both far bigger economies, continued to go up this week. Spain’s sovereign-debt rating was put on negative review by Moody’s this morning. Adding to the uncertainty, José Luis Rodríguez Zapatero, the prime minister, today announced an early election, to take place in November.

Italy sold €8 billion ($11.4 billion) of ten-year bonds on July 28th but had to pay a yield of 5.77% to do so, the highest level at auction for 11 years. Making matters worse, European politicans have gone back to making unsettling comments after their brief show of discipline at the summit: Wolfgang Schäuble, Germany’s finance minister, said this week that he would not be writing any blank cheques to the euro area’s bail-out fund, the size of which is inadequate to ringfence Spain and Italy.

This week also saw the release of the first annual report of America’s Financial Stability Oversight Council (FSOC), a regulatory body that was set up by the Dodd-Frank act to monitor systemic risks to the country’s financial system. It has little to say about the risk of a self-harming government, but for a report that is supposed to identify threats to America, its main effect is to underline the vulnerability of Europe’s banking system.

America’s banking industry remains much less concentrated than Europe’s, and the size of the largest banks relative to GDP is lower, too. American banks have raised capital assiduously over the past two years as many European ones have dithered. American money-market funds are big funders of European banks, notably in the core countries; asset outflows from these funds may be prompted by worries over the American debt ceiling but will have an impact across the Atlantic.

The political impasse in Washington, DC, will be the big story of the coming days. Given enough dogmatism and stupidity, it might be an enormous financial one, too. But the bigger cause for concern lies in Europe.

[WellSpyder]

helene_t, on 2011-July-31, 05:05, said:

The EU should have given a very clear signal right at the beginning, when Greece joined the EUR: that non-Greek tax-payers will take zero responsibility for Greece's debt and that the fact that Greece is now an EUR country makes no difference in that respect.

That has always been my view of how this should have worked, and I think theoretically it is pretty clear that this makes sense. I think actually that those signals were to some extent given right at the beginning, but the problem was that no-one believed (correctly as it has turned out) that this would be the case in practice.

I don't think it is correct either to say that this approach couldn't work when governments borrow in the same currency. If two major UK companies both borrow in sterling and one defaults then that is a problem for its creditors not for the other company.

[Aberlour10]

helene_t, on 2011-August-03, 03:59, said:

1 U.S. dollar = 0.765597127 Swiss francs. The Euro is still above the CHF but that may be a matter of time.

This gives hundreds of thousends Poles a real headaches, They are trapped as their loans and mortages were taken in CHF / due to the low long-term interests /,And when they were taking it, the Swiss franc cost about 2 Polish zlotys. Current exchange rate = 3,65.

The credits were supplied in Polish zloty and denominated in CHF, what means that those, who took a mortgage worth 300.000 Polish zlotys, are more in debt after four-five years then they originally were. This is the real threat of bankruptcy.
Not only in Poland credits in CHF have been promoted without criticism and almost forcefully but also but also in Hungary, Slovakia, Romania and Bulgaria.
Alone in Poland is this situation of the gigantic scale. There are simulations saying that we talk about the amount of 170 billion zlotys denominated in Swiss franc.

[WellSpyder]

Aberlour10, on 2011-August-03, 05:22, said:

This gives hundreds of thousends Poles a real headaches, They are trapped as their loans and mortages were taken in CHF / due to the low long-term interests /,And when they were taking it, the Swiss franc cost about 2 Polish zlotys. Current exchange rate = 3,65.

Sounds like incredibly irresponsible action by the banks (why aren't I surprised by this?). It is common sense that you are taking a huge risk if the currency of your liabilities (ie borrowings) is different from the currency of your assets (in this case human capital, ie the ability to generate future earnings).

I remember a decade or more ago talking to a small UK housebuilder who said he was thinking of borrowing in yen because the Japanese interest rate was so low compared to sterling interest rates. I suggested that only made sense if he could afford to make a big loss if the exchange rate moved against him and perhaps there was a reason why most people left exchange rate speculation to the banks rather than betting their businesses on it.

[y66]

It seems to me that Europe's problems have way more to do with an out-of-control banking system than with the fiscal profligacy of Greece and the burdens imposed on German tax payers. But yeah, why face up to reality when you can just dust off your centuries old morality plays and pretend the guys running your banks know way more about finance than Icelandic fishermen.

[hotShot]

One of the main problem is, that the governments forced people into investing in retirement pension plans,
and forced the companies offering such plans to only invest in "save" papers
and made the rating agencies in charge to decide what is save.

So if Greece would default, banks and insurances that invested into "save" Greek, Italian, Spanish, Portuguese loans, will get into big trouble,
this would be a disaster to anyone getting a pension or who plans to retire in the next years.

Since many banks still suffer from the last crisis, that would open a second can of worms.

[Aberlour10]

hotShot, on 2011-August-03, 03:47, said:

The Euro is now 1,43$, do we need a topic 'The future of the Dollar'

The future of US Dollar depends more on psychology than on real economic facts.
For last six decades the whole world has been singing "In Dollar we trust".
Maybe one day they all ask themselves...Wait a minute! Have we all still basis to think this way? Should we still handle the world trade especially oil trade in Dollars?

[shintaro]

The sooner they get rid of the ruddy Euro and Disolve Europe the better

[Aberlour10]

No reason to get excited, there are still two A's to loose. Who would think 20 years ago that China instructs Washington what to do before they finally loose the patient as the biggest creditor.I am afraid that financing all these wars and wonderful tax cuts with foreign money will be harder and harder.

[y66]

Via Calculated Risk via Krugman

Quote

Aug 7 (Reuters) - The Euro system of central banks has decided to intervene decisively on markets to respond to the escalating debt crisis, a euro zone monetary source said after a European Central Bank conference call on Sunday.

Officials on the conference call carefully considered the situation in Italy and Spain, and took note of a statement by France and Germany which stressed their commitment to European financial reforms, the source said.

"The Euro system will intervene very significantly on markets and respond in a significant and cohesive way," the euro zone monetary source said, adding a statement by the ECB will be issued shortly. (Editing by Sophie Hares)

The ECB calls.

[mike777]

y66, on 2011-August-07, 17:14, said:

Via Calculated Risk via Krugman



The ECB calls.

Yes the next worry is the ECB hurting its balance sheet?

[y66]

mike777, on 2011-August-07, 18:28, said:

Yes the next worry is the ECB hurting its balance sheet?

The inflationistas will probably have something to say about the next worry. Don't cry for them Berlusconi.

[gwnn]

By the way, what do people here think of Nigel Farage? His speeches seem funny, but sometimes I think he has a point..

[Aberlour10]

The current Swiss franc exchange rates are pure poison for swiss exports, what to do?
The speaker of the National Bank says a few words about possible coupling of the CHF to the Euro.... and franc lost immediately 5% on finance markets. That was really a cheap and smart move.