http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down Will Problems in Greece Drive the Euro Down? It has been more than three years since we first started writing about the Greek debt crisis. In the years following the start of a worldwide recession Greece was one of the European nations in danger of defaulting on its sovereign debt. There was talk of Greece leaving the European Union followed by the rest of the so called PIIGS nations (Portugal, Ireland, Italy, Greece and Spain). The nightmare scenario many envisioned was a collapse of economies along the southern tier of the Euro zone. The issue was finally resolved with multiple loans from the European Central Bank and a new government in Greece instituting strict controls on spending. Riots subsided and Greece started on a road to recovery. Now there is political instability in Greece. Elections could lead to a new government that will tear up previous agreements with the EU. According to Reuters The euro fell broadly on Wednesday amid growing concerns over the political situation in Greece that could increase the chances of monetary policy easing early next year by the European Central Bank. The euro was down 0.5 percent against the yen at 147.40 and gave up early gains against the dollar to trade slightly lower on the day at $1.2370. The common currency had risen to a high of $1.2448 on Tuesday as investors trimmed long dollar positions, booking profits ahead of the year-end. The Greek government has brought forward to next week a presidential vote that will force nearly two dozen independent lawmakers to decide whether to side with Prime Minister Antonis Samaras’ pro-bailout cabinet or with leftist radicals who have vowed to tear up the bailout. The concern at this point is not that Greece will leave the EU but that the price of repeated bailouts will drive down the value of the Euro just as the region is threatening to sink back into recession. Political Uncertainty According to sources such as Morningstar it is the political uncertainty in Greece that is locally hurting stocks and driving up bond interest rates as well as threatening the value of the Euro. Earlier in the week, the Greek government announced that parliament would vote on a new president on Dec. 17–two months ahead of schedule–to replace Karolos Papoulias, whose five-year term was slated to end in March. That sparked fears that Greece’s radical left opposition Syriza party could win national elections if presidential voting rounds fail to find a solution acceptable to all. The latest opinion polls suggest that Syriza, which has threatened to tear up the economic overhaul and austerity program that has accompanied the country’s international bailout, would win national elections by a three-to-six percentage-point margin, and could precipitate a new crisis with Greece’s creditors.The argument about fiscal responsibility versus fiscal stimulus measures

1. By www.TheForexNittyGritty.com

2. It has been more than three years since
we first started writing about
the Greek debt crisis.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

3. In the years following the start of a
worldwide recession Greece was one of
the European nations in danger of
defaulting on its sovereign debt.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

4. Before We Continue…
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http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

5. There was talk of Greece leaving the
European Union followed by the rest of
the so called PIIGS nations (Portugal,
Ireland, Italy, Greece and Spain).
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

6. The nightmare scenario many
envisioned was a collapse of economies
along the southern tier of the Euro
zone.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

7. The issue was finally resolved with
multiple loans from the European
Central Bank and a new government in
Greece instituting strict controls on
spending.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

8. Riots subsided and Greece started on a
road to recovery.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

9. Now there is political instability in
Greece.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

10. Elections could lead to a new
government that will tear up previous
agreements with the EU. According
to Reuters
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

11. The euro fell broadly on Wednesday
amid growing concerns over the
political situation in Greece that could
increase the chances of monetary policy
easing early next year by the European
Central Bank.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

12. The euro was down 0.5 percent against
the yen at 147.40 and gave up early gains
against the dollar to trade slightly lower
on the day at $1.2370.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

13. The euro was down 0.5 percent against
the yen at 147.40 and gave up early gains
against the dollar to trade slightly lower
on the day at $1.2370.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

14. The common currency had risen to a
high of $1.2448 on Tuesday as investors
trimmed long dollar positions, booking
profits ahead of the year-end.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

15. The Greek government has brought
forward to next week a presidential vote
that will force nearly two dozen
independent lawmakers to decide
whether to side with Prime Minister
Antonis Samaras’ pro-bailout cabinet or
with leftist radicals who have vowed to
tear up the bailout.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

16. The concern at this point is not that
Greece will leave the EU but that the
price of repeated bailouts will drive
down the value of the Euro just as the
region is threatening to sink back into
recession.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

17. Political Uncertainty
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

18. According to sources such as
Morningstar it is the political
uncertainty in Greece that is locally
hurting stocks and driving up bond
interest rates as well as threatening the
value of the Euro.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

19. Earlier in the week, the Greek
government announced that parliament
would vote on a new president on Dec.
17–two months ahead of schedule–to
replace Karolos Papoulias, whose five-year
term was slated to end in March.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

20. That sparked fears that Greece’s radical
left opposition Syriza party could win
national elections if presidential voting
rounds fail to find a solution acceptable
to all.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

21. The latest opinion polls suggest that
Syriza, which has threatened to tear up
the economic overhaul and austerity
program that has accompanied the
country’s international bailout
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

22. would win national elections by a three-to-
six percentage-point margin, and
could precipitate a new crisis with
Greece’s creditors.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

23. The argument about fiscal
responsibility versus fiscal stimulus
measures has gone on in Europe for
years.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

24. Led by Fed chairman Bernanke the US
Federal Reserve carried out a more than
trillion dollar quantitative easing
program to stimulate the economy and
keep lines of credit open.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

25. This approach has been tried recently
in Europe but without the resolve that
the US Federal Reserve used.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

26. How Will This Work Out?
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

27. Greek problems or not the EU is
probably going to opt for stronger
stimulus measures which will drive the
Euro down.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

28. For Greece there are, according to
MarketWatch, 2 ways out of their debt
dilemma.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

29. The debt crisis has become chronic and
so has economic stagnation. What are
the solutions?
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

30. What better way to mark the
anniversary than by actually fixing the
problem – either by the Greeks getting
out of the eurozone, or else by
restructuring the country’s debts so it
actually has a chance to grow again.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

31. Either would surely be better than a
grinding recession which, despite a
modest upturn this year, shows little
sign of ending.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

32. In order for Greece to emerge from
their eternal debt problems and
economic stagnation
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

33. The EU either needs to ramp up
stimulus measures to get the economies
going again along its southern tier
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

34. Or it needs to clean house and find
other political and economic ties within
the EU that allow countries like Greece
to devalue their debt and get a fresh
start.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down

35. In the meantime traders are confronted
with the dilemma of how far the Euro
might fall as this crisis continues.
http://www.theforexnittygritty.com/forex/will-problems-in-greece-drive-the-euro-down