Re: Re: Demise of the Euro closer? – Ignore this if it bores you


Eight reasons why the Euro is doomed:-

1) The new French government under Hollande does not intend to implement further austerity and plans to roll back Sarkozy’s efforts. He also plans to re-negotiate the Fiscal Treaty, and plans to breach it’s guide lines on deficits and borrow more.

2) It’s impossible for Spain to keep to the Fiscal Treaty on 4% deficit reduction of GDP, either this year, next year or in years to come or until the economy rebounds. Their deficit is ballooning as more of the work force become unemployed and tax receipts fall. Net borrowing will increase.

3) Italy which is the third largest economy in the EU and has the highest social spending per capita also will never be able to reign back it’s deficits by any meaningful margins.

4) Greece is dead in the water and will need further bailouts in the future.

5) Portugal as above.

6) The latest EU problem is the Dutch government has fallen yesterday because the coalition government cannot agree on austerity and budget reduction. The right wing is against it for political advantage and is likely to gain more seats in the parliament.

7) Germany’s economy, as well as the entire EZ is slowing dramatically because they remain non competitive with Asia and have yet to deal with their bad banks who cannot fuel their economies with much needed lending.

8) The Euro is overvalued and requires dramatic devaluation and interest rates need to be 0%. The ECB refuses to do it. Genuine quantitative easing on a massive scale is needed to kick start their economies. Germany refuses to change treaties to allow it.

With the noted exception of Ireland the current state of affairs are simply worsening without relief in sight. The Euro project will collapse, it’s just a question of who will blink first. 🙁