http://www.forexconspiracyreport.com/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.
2. It has been more than three
years since we first started
writing about the Greek debt
crisis.
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.
4. Before We Continue…
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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).
6. The nightmare scenario many
envisioned was a collapse of
economies along the southern
tier of the Euro zone.
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.
10. Elections could lead to a new
government that will tear up
previous agreements with the
EU. According to Reuters
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.
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.
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.
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.
16. 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.
17. 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.
19. 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.
20. 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.
21. 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.
22. 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
23. would win national elections by
a three-to-six percentage-point
margin, and could precipitate a
new crisis with Greece’s
creditors.
24. The argument about fiscal
responsibility versus fiscal
stimulus measures has gone on in
Europe for years.
25. 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.
26. This approach has been tried
recently in Europe but without
the resolve that the US Federal
Reserve used.
28. Greek problems or not the EU is
probably going to opt for
stronger stimulus measures which
will drive the Euro down.
29. For Greece there are, according
to MarketWatch, 2 ways out of
their debt dilemma.
30. The debt crisis has become
chronic and so has economic
stagnation. What are the
solutions?
31. 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.
32. Either would surely be better
than a grinding recession which,
despite a modest upturn this
year, shows little sign of ending.
33. In order for Greece to emerge
from their eternal debt problems
and economic stagnation
34. The EU either needs to ramp up
stimulus measures to get the
economies going again along its
southern tier
35. 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.
36. In the meantime traders are
confronted with the dilemma of
how far the Euro might fall as
this crisis continues.
