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The Euro-zone

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Ovah posted on Sun, Apr 12 2009 4:46 AM

The general opinion among Austrian Economists is that the Dollar will collapse in a few years (right?). On the other hand, Asia looks strong with high saving rates, but what about the European countries? UK I guess got many of the same problems as the US, but have already seen a depreciation of the pound relative to the $ and the Euro. But what about the Euro? My immediately throughts on the Euro-zone is that it is difficult to have the same currency in so many different countries with different economic conditions and huge gaps in budget deficits.

How do the austrians view the future of the euro-zone?

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The Eurozone will probably benefit from the pound's downfall. This and the fact that several new EU members will be switching to the Euro might mean that it will appreciate relative to other currencies. The AUD is still the safest, IMO.

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Ovah:
How do the austrians view the future of the euro-zone?

According to a leaked European Commission document, Euro banks are sitting on £16.3 trillion of toxic debt. There was an article in the Telegraph that was quickly edited to remove the following paragraphs:

European Commission officials have estimated that impaired assets may amount to 44pc of EU bank balance sheets. The Commission estimates that so-called financial instruments in the trading book total £12.3 trillion (13.7 trillion euros), equivalent to about 33pc of EU bank balance sheets.

In addition, so-called 'available for sale instruments' worth £4trillion (4.5 trillion euros), or 11pc of balance sheets, are also added by the Commission to arrive at the headline figure of £16.3 trillion.

The ECB, like any other central bank has one option: Inflation.

Base model cars of the world unite! You have nothing to lose but quarter-mile races.

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Ovah replied on Mon, Apr 13 2009 4:20 AM

Would ECB just allow the depreciation of the dollar, og would they in the next years try to buy treausuries from the US?

 

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