If the EURO is so crap

if the euro is so crap
why is it trading at 1.37 to the Dollar and 0.85 to sterling

why is it trading at parity with the dollar and 0.6 with sterling

not a clue about FX trading but it is something that is really puzzling me?

They all have similar issues. Check the trends of those currencies against AUD / CHF for the last 3 or 4 years

You’re comparing one dying patient to another.
Compare the euro against gold, silver or the swiss franc to see how healthy it really is.

and oil & food.

Who cares what it is trading against ? The markets are made up of idiot pension funds , people who seem to be the last to know and a bunch of short sellers who would sell their own Mothers for even a slight profit .

Meanwhile the Eurozone is made up of a one country that saves and exports its ass off while its southern neighbours sit around drinking wine and coffee in the shade wondering what the proplem is . When a crisis hits , you have 17 differnet Finance Ministers ( some of whom are controlled by the IMF ) running around in circles in pure panic about what to do .

The Euro is hardly something to be held up as an example .

we should care as we trade mainly with the US and UK.

As you say the euro shold not be held up as an example - with 17 countries and 17 different opinions we are still only as fcked as the US and UK?

To be fair, the Eurozone has more than one member that is properly governed. Austria, Slovenia, the Netherlands and Luxembourg are arguably well-governed countries. None of these countries is perfect. Luxembourg seems to have a terrifyingly-large financial sector, and Austrian banks have lost a whole lot of money in central and eastern Europe. But these are generally clean, well-governed places where the trains run on time, and life is pretty dull.

The Finns also seem to believe that their country is well governed, although their own record of boom and bust suggest that they’re not much better than the rest of us.


No we don’t.

Not unless you add the two of them together, but then they are different currencies…

We trade mostly with the eurozone.

Its quite simple.

The euro is not crap. There are good bits (Germany, Holland, Scandi) in it and crap bits (Italy, Spain et al).

For an American hedge fund trader who wants to short the ‘euro’, because of a potential break up…he/she doesn’t know what they will be left with…with the good bits (which he doesn’t want to short) or the bad bits (which he does want to short).

So instead of shorting the Euro; that trader shorts Bank shares and government debt of those countries which are perceived as the crap bits.

This topic has been well covered in the Financial Times.

Maybe the Finns are focussing on the relative honesty of their governance rather than the competency? They consistently perform near the top of the class when it comes to (lack of) corruption. And their recent record of boom and bust was nowhere near as bad as our own and was at least partially explainable by the economic meltdown of a superpower on their doorstep rather than entirely due to internal factors.

Except none of the Scandinavian countries are actually in it. Only the Danish Krone has a close peg to the Euro and the other two seem to be happy enough with wide fluctuations.

thanks yorkie

This is essentially very similar to the US. There are good states in the US that are working within their budget and there are states that are being propped up be federal government. The difference here is that the so called good bits of Europe don’t want to take that last step of making the ECB are real central bank like the US has because they would then have to official support the bad bits whether they liked it or not (although they would still be free to bitch about it all they wanted).

The yields on Italy and Spain indicate that there will need to be a solution decided upon and the status quo will not suffice .Either the EFSF is increased in size draining the resources of Germany or the ECB changes its mandate to become lender of last resort. Either scenario is not good for the euro currency in relation to its peers.

Yet presumably the current exchange rate reflects the probabilities of the bond market fix and yet there is no dramatic revaluation of the Euro’s worth in dollar terms. Do people believe this market is fully pricing in the news?

Why bother with analysis when a sweeping generalization will do.

Had you ever spent anytime working in any of the countries you allude to, you would be aware that you’re talking nonsense.

Your average German worker is fed, watered and with his feet up watching the box at the same time as your average Portuguese worker is picking up his kids from the creche. This evening I watched the office staff of my German client start to saunter out the door at 16h30. Try that in Spain or Portugal (private sector) and you’ll not have a job for long.

The low productivity of Iberian workers is in the main due to their economies being dominated by small scale family run businesses producing low value added products and services, using outdated management methods and poorly deployed technology. Add this with a bloated and relatively pampered public service and a culture of keeping your head down when the boss is around. Then compare and contrast with the large scale, high tech, inovation driven nature of the big German concerns and you will start to get a more accurate idea of why the various countries line up as they do in the pecking order.