You fellows in the UK are still on the Pound, if the Euro crashes will this effect you lives very much? Do you ever exchange Euros in your day to day life? I have not been to the UK since 1994, just wondering.

OL

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I remember when we were free!

Hey oneal, yes they say it will impact terribly here if the Euro crashes because there are banks here that have a lot of debts and stuff from countries in the EU, so that would all go haywire.

Thank goodness we kept our own currency and never reverted to the Euro or it would be even worse!

There are also tons of business's who deal with those countries and so probably tons of people will also lose their jobs if it crashes.

Big mistake IMO was getting involved in it in the first place, we should have kept out of the EU but had friendly relations and trade with the countries involved, instead of being bound to them in this fiasco

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Luck won't do it and ignorance can't

George Van Eps.

If the EUR crashes, lots of banks will go bankrupt. Countries will have to bail out their banks, economy will come to a sudden stop, unemployment rates will soar up, people will be hungry.

No, it's nothing that anyone can want to happen.

Cheers

David

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"Humans think they are smarter than dolphins because we build cars and buildings and start wars etc...and all that dolphins do is swim in the water, eat fish and play around. Dolphins believe that they are smarter for exactly the same reasons."

Hi Oneal: the UK is not in the Euro but we are in the European Union. The EU is the largest economy in the world and over half of our trade is with Europe. Of the 27 countries of the EU 17 are in the Euro: if it were to go down the repercussions would be beyond imagination.

Conservative estimates are that in the UK our economy would contract by about seven percent; more gloomy predictions say ten percent. So yes, it would hurt us massively, regardless of it not being our primary currency.

And by the way, it would hurt you vastly too. America has huge exposure to European markets. Just the other day I read (in the Economist) that US exposure just to tiny Ireland with their population of five million is around $780 billion. The population of the EU as a whole is about 502 million and the US is a gigantic investor in its economy - as we are in yours. If the Euro goes under it would make the collapse of Lehman Brothers and all that followed look like a kindergarten party by comparison.

So I hope you're all paying good attention to the daily pronouncements of Angela Merkel and Nicolas Sarkozy. All of our shirts are riding on them pulling through.

Cheers - C

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Ceri, to be sure we would all be effected. I imagine it like a bomb going off. The epicenter, that would be the continent, would be hit the hardest, and the rest of us would certainly be wounded, but less so.

I was just curious about the situation with the UK being part of the European Union, but not on the Euro, and how that would play out. Will the Pound shield you all from some of the pain. How might it be different for you; than say, someone in France or Germany.

I am always curious about such things, and I have always had a love for your nation. I think most older Americans, the ones that were taught history, understand the special relationship between the UK and the USA. I have been there only once for a 3 week backback tour in 1994. Hoping to get back one day.

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I remember when we were free!

Hi again oneal: frankly, if the Euro collapses we'll all be a lot more than merely wounded, and neither the English Channel nor the Atlantic Ocean will be saving anyone. Look at the international disaster caused by Lehman Brothers going under: and that was just one investment bank. With the interconnectedness of world banking if there are a series of national defaults in Europe (which is really what we're talking about: the Euro is just the monetary symbol) banks around the globe would fail like dominoes. Even the ones less directly exposed are still invested indirectly: there would be no side-stepping it.

Some here in the UK hold to a notion that because we are not in the Euro we can therefore just sit by and watch. They hold up our untarnished Triple A credit rating as evidence that we're doing all right. However, this is a fantasy. We are a trading nation and half of our total trade is with Europe. Moreover, London is the financial centre of the continent and a large section of its business is in the form of Euro deals. Financial services are ten percent of our economy (or a lot more, depending what you're counting): anything that hurts that hurts us all. Trade, business, finance: cumulatively, the damage would be horrendous.

Read up on the Wall Street Crash of 1929 and then imagine it multiplied many-fold. We all have to keep our fingers crossed. The last three years may just have been the curtain raiser.

Cheers - C

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And David Cameron didn't make any new friends over the weekend at the euro summit. Did he come off well at home?

The euro impacts the US, almost as much as the UK. Every negative sentiment in euro land cause the Dow Jones and S&P 500 to fall 1% to 2%, and every perceived positive sentiment causes them to go up. Problem in europe have and will jump the pond.

The euro won't simply collapse, it could decline against the USD over time, but the USD has its own problems. It wasn't that long ago the USD was above par versus the euro.

The germans probably would appauld a lower euro, since they are are large exporting country, even more so than china. Can you imagine buying a benz, beemer or audi for less than the price of a ford, or a hughs and kettner tube amp for the price of a frontman.

Now, if war breaks out or some other form of stupidity, all bets are off.

Hi inbalance: you have it exactly. And that is why Germany has been spending and spending to prop up the bankrupt Greek economy: because having the poorer countries inside the Euro keeps it lower than it otherwise would be against other currencies and so hugely benefits German exports.

If a comparison is useful, this was precisely the same reason the North went to such extreme lengths to keep the South in the Union in the American Civil War: because it is so enormously advantageous to an economically rich area to have a much poorer one within the same monetary zone.

However, Germany will not be going to war over this thing. Perhaps the scariest developement of the last few days is the revelation that Germany has been secretly printing D-marks. They think the collapse of the Euro and all that will follow is that real a possibility. That is truly frightening.

Cheers - C

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Inbalance,

Yes, I am all to aware of this trend. Watching it every day, as I am trying to replug my retirement money back into the market lows.

I had not thought of this possibility. Who is most likely to initiate and what whould they gain?

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I remember when we were free!

Please keep in mind that sentiments have absolutely nothing to do with the markets rising or falling as they once did decades ago.
Computers are now and have been for quite some time running maddeningly complex logarythms a million times faster than a human brain could ingest, digest comprehend and then perhaps reach a decision.
The result is instant as the number of global transactions completed in 30 seconds is greater than what a whole Bank would complete in One Day.

Why would you think that a War would break out, there is absolutely no gain to be had, since the European Community's various currencies are so intermingled.
I also don't believe the Euro itself will crash anymore than we believed the Dollar would.
Which is not to say that an adjustment in the value of both the Euro as well as the US Dollar is not needed.

As far as the printing of Deutsmarks.... I'm highly skeptical since the value of a deutschmark may not be practical...In other words the Devaluation of the D...
It is kind of amusing to think that the solution is to print more of that currency when inflation and other factors have devalued that particular currency, or if you have a 1000 gallons of water for 1000 persons than each gallon has a certain intrisic value...
But if the person ratio increase or decreases, then so does the value of a Gallon.
It is a zero sum game.....
The problem with Greece, Ireland, Mexico and China is that they all want to play the game, but have separate rules that apply only to themselves, not that the Euro countries and the US are immune, it's all on perception and probably who is going to be left without a chair when the music stops....
Predict that and you can write your own ticket.....

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"C'est parti mon Kiki "

Not really. If you create an inflation, the value of the money decreases. You still have the same amount of money, but you can buy less with it. At the same time, debts are also lowered, because also the value of the debts is less.

This game is being played right now with the USD. And if I see it correctly, the Brits are printing money right now. Therefore, the same will happen with the Pound.

Cheers

David

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"Humans think they are smarter than dolphins because we build cars and buildings and start wars etc...and all that dolphins do is swim in the water, eat fish and play around. Dolphins believe that they are smarter for exactly the same reasons."

That's right.

And printing money ("quantitative easing") is exactly what countries locked within the Euro can't do, because they don't have their own currency - which is a part of the reason Greece and the others can't get out of their spiral of difficulties.

Printing money devalues a currency: good for exports and therefore growth. And, as Amerigo says, it shrinks the real value of the debt, easing that problem. However, it leads to inflation: bad in multiple ways. Which is why it is supposed to be a last resort and a short term measure. Supposed to be...



Well... the Deutschemark doesn't actually exist at the moment: Germany has the Euro. However, if the Euro ends (ultimately, because Germany decides it is not worth the cost of keeping it afloat any longer) then countries will have to revert to national currencies. The rumour that Germany is printing D-marks would suggest that they are preparing for the possibility of the Euro ending.

Nobody on this planet is better placed than Angela Merkel to know whether the Euro ceasing is a likelihood; since if it does it will be her that pulls the trigger on it. So if she is quietly preparing a Plan B it is a deeply worrying indicator of how things are being viewed behind the scenes.

Anyway. Here's a useful article from a couple of weeks ago:

http://www.economist.com/blogs/charlema ... o-crisis-0

Cheers - C

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Nice read, somewhat lengthy, my version.

Spend less than you earn.
If you don't your creditors will eventually make you.
Family, friends, neighbours can help a little, for a little while.
Eventually you will spend less than you earn.

It's already too late. Standards of living will decline, for some more than others. Even those who have saved will get hit, earning 0, 1 or 2% on savings doesn't provide much retirement income. Pension plans are under funded, more because future returns are so low. Germany will get hit, not many benz's, beemers, audi's will get shipped to Greese, or Spain, or Portugal etc.

Politicians need to manage expectations downward.
Ten years from now hopefully things will be overall better.

Many people are getting into that position nowadays. Where previously they had a decent level of interest, from savings, to sustain them and keep them going, they're finding now that due to the interest rate they're getting nothing in effect.

Some people who took early retirement kinda thing are finding now that the rate has shrunk so pitifully low that their savings have dwindled to such an extent they need to get a job again.

Bad situation all round and gross mismanagement of the economy that has led to this.

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Luck won't do it and ignorance can't

George Van Eps.

Yes but the mismanagement of the economy is both at the personal and governmental levels.
Regardless of the issues behind Iraq and Afghanistan, the US did not have the resources to enter One let alone Two armed conflicts...especially in view of the US's infrastructure decaying and that has been going on for decades.. I'm not going to get into a political position debate..
I'm just speaking about the Economic Effect....As far as personal, you cannot tell me that someone who earns less than $60,000 a year can afford to mortgage a $400,000 to $600,000 house, the numbers never added up, because sooner or later even if you can keep up with the Mortgage Payments ( temporarily that is ), the upkeep costs are neglected.....

Just pointing out that we all had a role in the current economic downturn, you cannot say you live in a Democracy/Capitalist country and then point the finger at everyone else when the warnings were well sounded for quite some time and everyone wanted to believe that the Bullish life was going to keep going.....

Everyone has to think about solutions, not be pointing fingers or running for the cliffs like a bunch of Lemmings. On the personal level, that may mean finding a part time job in addition to the main job, it also means for people to start realizing that One has to get up to speed with the 21st Century, which means figuring out what is the needed qualifications to be succesful today....That may mean for a lot of people ( myself included ) back to night school or Online to upgrade the educational base.

It's rather simple...Adapt or fall so far behind that the only alternative is failure...
I'm definitely not having fun working 7 days a week with an occasional day off, but that is the requirement for getting back on track.....

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"C'est parti mon Kiki "