What's happening to the Euro

[anon022]

It would be great if Russia, or Iran or Venezuela started trading oil and gas in Euros instead of in dollars. And there you have it. This only can save the Euro and trash the dollar. It's that simple. Pray Russia will take this step. Iraq and Libya tried, and you know the story. Invading Russia however is out of the question.

[Daniel Boon]

It's called 'Quantitive Easing' and comprises of the ECB buying its own bonds and those of private investors to stimulate the EU economy. That negatively affects interest rates and the value of the Euro.

The theory is that if interest rates are negative, or close to that figure, consumers will start to spend more since there's no point in keeping your savings in the bank if they aren't earning a reasonable return. That creates demand which in turn creates inflation which is now viewed as a good thing provided it doesn't exceed the EU's 2% limit.

Without QE, the EU risks deflation which in turn causes job losses due to the lack of demand.

What Xircal is saying (indirectly and perhaps unintentionally) is that EU is going to do what the Americans have done, pretend their currency is worth something, keep printing until its worthless ... keep borrowing and sucking lower feeding investors ...

I don't agree with the hypothesis of low interest rates driving demand, people aren't buying because they do not have disposable income; if they did, the interest rate is a minor consideration, because higher demand drives up prices as well as embodied energy costs ...

[anon022]

We are seeing the inevitable demise of socialism. Everyone finally ran out of other peoples money. The last gasp is that unelected rable they call the uropean Union. Fasten your seat belts. It will be a long ride.

Yes Socialism is dying. Socialism is the last safety net for the poor and down trodden so what will happen to them?. We do not all have a Bill Gates or Warren Buffett mentality. Maybe we could enslave them more like lobotomize them all to do the bidding of the 85 people that control half the worlds wealth(in another 50 years all of it oops the world will not last another 50 years my mistake). Maybe we could make them into a fuel to fill up our monster cars with or fuel our rockets to Mars. After robotics and 3D printing and all the medical marvels (that make us live longer for what?) further reduces the working masses by 50% or more what will these poor unfortunates do? Yes we are moving towards a Soylent Green way of life only the little cakes will be made from the living not the deceased and yes it will be a long ride to the bottom.

Yes, Soylent Green, it pops up in my mind more often lately. There's no doubt the writer was spot on with the story. Probably found a crystal ball in a cellar somewhere.

[johnmcc6]

We are seeing the inevitable demise of socialism. Everyone finally ran out of other peoples money. The last gasp is that unelected rable they call the uropean Union. Fasten your seat belts. It will be a long ride.

Yes Socialism is dying. Socialism is the last safety net for the poor and down trodden so what will happen to them?. We do not all have a Bill Gates or Warren Buffett mentality. Maybe we could enslave them more like lobotomize them all to do the bidding of the 85 people that control half the worlds wealth(in another 50 years all of it oops the world will not last another 50 years my mistake). Maybe we could make them into a fuel to fill up our monster cars with or fuel our rockets to Mars. After robotics and 3D printing and all the medical marvels (that make us live longer for what?) further reduces the working masses by 50% or more what will these poor unfortunates do? Yes we are moving towards a Soylent Green way of life only the little cakes will be made from the living not the deceased and yes it will be a long ride to the bottom.

The downtrodden is now getting into the middle class big time. The number of people on varios handouts cannot be sustained even including pensions unless a different approach is taken. When governments are broke they raise tax's thus taking money out of the economy equals less for you and I to spend much less save. No one is going to borrow money just because interest rates are low. Sure as hell they will go up again without notice along with the ever greedy government charges. There is plenty of money to go around for the real poor if governments stop wasting billions on vote buying pork barreling projects, letting millions onto food stamps in the U S for example far exceeding any of the past years.There is always millions to spend on sport parks, millions to ever failing green schemes just to make some groups happy at the cost to everyone. For goverments to thrive they need to encourage the doers with lower tax and less red tape in order to create jobs thus leaving more for the needy. Socialism does not work. Get used to it. All those advocating more tax from the rich in attepts to keep the current hand out mentality going are attacking the only people able to invest. If what is happening in Europe doesn't convince you that it does not work then nothing will

[pattayasnowman]

It is my understanding, and someone please correct me if I am wrong, that the Thai Baht is not openly traded but pegged against a basket of currenies the primary ones being the $US, Euro, and Pound Sterling. I think the weighting is primarily with th $US. The $US has risen considerable against all other curriencies over the past 4 months which accounts for the appreciation of the Baht against the Euro and Pound and only a small depreciation against the $US.

With that in mind this may be building to a situation with the Thai Baht that is the reverse of the SwFr. That is the Baht is unrealistically valued against the $US .If that currency ($US) continues to rise it may result in the Baht having to be forced to be revalued down. A more realiistic value for the Baht at the current value of the dollar is more like 37.00 (as opposed to 32.5)

As to why the ECB has started QE - well it appears to have worked in both the US and UK. Though why this has not caused massive or even hyperinflation is a mystery to me.

But the fact that gold has been going up, even against a rising $US, and despite the fall in OIL prices might be an indication of some pending econonmic crises

Edited January 30, 2015 by pattayasnowman

[Diplomatico]

It is my understanding, and someone please correct me if I am wrong, that the Thai Baht is not openly traded but pegged against a basket of currenies the primary ones being the $US, Euro, and Pound Sterling.

Incorrect.

"Since 2 July 1997, Thailand has adopted the managed-float exchange rate regime, of which the value of the Baht is determined by market forces. The Bank of Thailand would intervene in the market only when necessary, in order to prevent excessive volatilities and achieve economic policy targets. The floating regime enhances flexibility and efficiency in monetary policy implementation and increases confidence of domestic and international investors."

http://intl.econ.cuhk.edu.hk/exchange_rate_regime/index.php?cid=2

[thurien]

<I see that the Euro has dropped to 36 baht. Does anybody know why or how long it's going to stay that low. When will it go up again or will it sink even

lower>

these are 4 questions and I could attend to all of them expertly if only I was given the Green Light for this by my peers; in our neat currency cubicle we know exactly where all this will inadvertently lead to - still we have to be dead- mum (ímportant part of my work contract)

Edited January 30, 2015 by thurien

[PattayaPhom]

Sterling, $US both took a battering after QE and the Aussie $ has declined due to their economy. The Euro has come out rather unscathed the past 7 years so guess it is now their turn. Its anyones guess but with the start of QE and all that's happening with Greece and Spain about to follow don't be surprised at less than 30...most saw at least 25% shaved off after QE so that brings the Euro to 27 if history is anything to judge by.

You might also ask what's happening to sterling? It has been dropping steadily, 1 baht at a time, for some months now - see:

http://www.x-rates.com/graph/?from=GBP&to=THB

Sterling is 12% higher than 18 months ago, Euro has fallen in the same period

[Myshkin]

Switzerland is suffering from a strong currency and would love to see the CHF at lower levels.

[SheungWan]

Switzerland is suffering from a strong currency and would love to see the CHF at lower levels.

I am certainly upset at the thought of the price of Gruyere and Toblerone going up.

[falang07]

Well, this forum is full of experts, as usual "The weak euro is damned, and the great great dollar is the king, long live the US dollar". Was not it vice versa a year or so ago? Yeah, who cares, now it is dollar and tomorrow? We will see.

[Aforek]

Always funny to see experts who know nothing but guess everything

[zierf1]

I know you Euromen are sweating bullets right now. Tough. I was also sweating bullets back in 2008 & 2011 but nobody came to my aid. Those days were grim indeed for USD holders.

[manarak]

Europe is going bankrupt.

They even have new EU VAT rules concerning companies outside the EU (Thailand). If a Thai website sells digital goods to a European customer, the Thai website has to pay taxes to the EU country where their customer is based.

The law applies to “broadcasting, telecommunications, and e-services that are electronically supplied”. The e-services definition applies to a surprising number of things, including…

• images or text, such as photos, screensavers, e-books and other digitised documents e.g. PDF files
• music, films and games, including games of chance and gambling games, and of programmes on demand
• online magazines
• website supply or web hosting services
• distance maintenance of programmes and equipment
• supplies of software and software updates
• advertising space on a website

The rules apply to all sellers providing digital services to customers within the EU, no matter where in the world the seller is located.

Quite how this will be enforced is unclear, but we are hearing noise that other countries will follow suit if this is successful – so unless we stop this now, expect selling outside your own borders to get even more complicated in years to come!

More info:

http://euvataction.org/key-facts

http://www.ecwid.com/blog/how-the-new-value-added-tax-guidelines-for-selling-digital-goods-affect-your-online-store.html

I wonder how they will enforce this. My companies aren't planning to pay one penny / cent

same here.

I had an argument with EU VAT authorities - they wanted VAT from my sales.

Luckily I had already almost totally scaled back my use of European payment platforms, so they collected a very small token amount for these sales, and for the future I sold them to stuff it.

If they want to collect tax, they will have to get tax from their citizens, not from me, I'm not a EU tax collector and I don't collect addresses from my customers.

All this will achieve is that EU payment platforms will just lose their non-EU clients.

[manarak]

I know you Euromen are sweating bullets right now. Tough. I was also sweating bullets back in 2008 & 2011 but nobody came to my aid. Those days were grim indeed for USD holders.

Well, you could have helped yourself by shorting USD and going long on CHF.

[Anthony5]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

It's called 'Quantitive Easing' and comprises of the ECB buying its own bonds and those of private investors to stimulate the EU economy. That negatively affects interest rates and the value of the Euro.

The theory is that if interest rates are negative, or close to that figure, consumers will start to spend more since there's no point in keeping your savings in the bank if they aren't earning a reasonable return. That creates demand which in turn creates inflation which is now viewed as a good thing provided it doesn't exceed the EU's 2% limit.

Without QE, the EU risks deflation which in turn causes job losses due to the lack of demand.

Ok, what is QE?

QE is when you take a worthless blank paper in your left hand, write 1.1 Trillion on it, and then put it in your right hand while at the same time announcing to the world that you just sold 1.1 Trillion Euros of bonds.

There is a more complicated explanation, but at the end of the day it comes to the same.

[manarak]

With QE its only going to get weaker. A lot weaker. The Thai baht is no going down any time soon, They just maintained 2% interest rate that created more strength in the Thai baht.

Not looking good for EURO.

The Euro seems to be heading north again: http://www.ecb.europa.eu/stats/exchange/eurofxref/html/eurofxref-graph-thb.en.html

I think it largely depends on what kind of deal is struck with Syriza. I can't see the troika backing down on the debt repayment issue, but they could give the Greeks more time to pay.

In any event, if Tsipras wants the country to remain in the Eurozone, his only choice will be to stay on the beaten path. Either that or get the printing press's rolling to churn out large quantities of drachmas fast.

just a technical rebound.

actually, I'm not too worried about Greece, mainly because they now got oil as an export.

see my post: http://www.thaivisa.com/forum/topic/796081-greece-eyes-mutual-acceptable-solution-to-debt-through-dialogue/#entry9006237

the falling EUR is not a bad thing for the EUR.

Together with the low oil prices, it should give a good boost to EU exports and therefore significantly improve EU economy through growth.

Of course, Germany, as the world's second or third exporting country will again greatly benefit from it.

During ECB QE I expect the EUR to fall. I expect to see it at around 30 baht for 1 EUR and at around parity with the USD, maybe even below, since the FED wants to raise USD rates.

My personal strategies for the next months are to invest in stocks of successful EU exporting companies (mainly German) and to sell EUR to buy USD.

[mpyre]

It's called 'Quantitive Easing' and comprises of the ECB buying its own bonds and those of private investors to stimulate the EU economy. That negatively affects interest rates and the value of the Euro.

The theory is that if interest rates are negative, or close to that figure, consumers will start to spend more since there's no point in keeping your savings in the bank if they aren't earning a reasonable return. That creates demand which in turn creates inflation which is now viewed as a good thing provided it doesn't exceed the EU's 2% limit.

Without QE, the EU risks deflation which in turn causes job losses due to the lack of demand.

This is what central banks tell you QE will accomplish, but the fact is that what artificially low interest rates over any period of time (now over 20 years in Japan) really cause is massive mal-investment that results in over-supply of many goods and commodities, one of the chief reasons oil, copper, iron and many other raw materials are dropping rapidly in price...creating the very "deflation" the central banks claim they are trying to fight.

What these overly clever central banks have engineered is a 10 year cure for a 6 month cold...they should have just let the markets correct and reset 7 years ago. Now when this funny-money house of cards comes down, it won't be pretty.

The Euro should bounce in the near term but over the next year it goes to par with the dollar, or even lower. Sorry.

Edited January 30, 2015 by mpyre

[MrY]

With QE its only going to get weaker. A lot weaker. The Thai baht is no going down any time soon, They just maintained 2% interest rate that created more strength in the Thai baht.

Not looking good for EURO.

The Euro seems to be heading north again: http://www.ecb.europa.eu/stats/exchange/eurofxref/html/eurofxref-graph-thb.en.html

I think it largely depends on what kind of deal is struck with Syriza. I can't see the troika backing down on the debt repayment issue, but they could give the Greeks more time to pay.

In any event, if Tsipras wants the country to remain in the Eurozone, his only choice will be to stay on the beaten path. Either that or get the printing press's rolling to churn out large quantities of drachmas fast.

North? I see a tiny bounce but recovering two days worth of losses does not a recovery make. Direction still looks like SSE.

[DonaldBattles]

Hats of to MYPRE as he seems to have an excellent understanding of the Euro situation. We should read his post again.

[micmichd]

It's called 'Quantitive Easing' and comprises of the ECB buying its own bonds and those of private investors to stimulate the EU economy. That negatively affects interest rates and the value of the Euro.

The theory is that if interest rates are negative, or close to that figure, consumers will start to spend more since there's no point in keeping your savings in the bank if they aren't earning a reasonable return. That creates demand which in turn creates inflation which is now viewed as a good thing provided it doesn't exceed the EU's 2% limit.

Without QE, the EU risks deflation which in turn causes job losses due to the lack of demand.

[micmichd]

I would advise Farangs to leave their assets in their banks because it's good for Euro economy, and my pensions unfortunately come in Euro.

For the rest, I give a f***.

The majority of my folks never wanted any Euro, anyway, and nobody was ever asked if they want buerocratic dictatorship from a Troika, Euro scam economy was just forced upon us.

Edited January 31, 2015 by micmichd

[mrdome]

<I see that the Euro has dropped to 36 baht. Does anybody know why or how long it's going to stay that low. When will it go up again or will it sink even

lower>

these are 4 questions and I could attend to all of them expertly if only I was given the Green Light for this by my peers; in our neat currency cubicle we know exactly where all this will inadvertently lead to - still we have to be dead- mum (ímportant part of my work contract)

Nominated for BS post of the year,

Not enough conspiracy theory nutters out there, so you now fabricate your own lies?

... and so amateurishly done, unless it was meant as bad satire,,, still irresponsible then.

[micmichd]

Pardon me, dear Lady or Gentleman.

Do you know what a self-fulfilling propecy is?

Sometimes it may not be so very responsibility to tell the truth (bankruptcy of the Euro zone) in public, but that still does not make it a lie.

So many here like to post about Scam, to me it sounds like the word of the year 2014.

Did it ever come into your mind that "scam" maybe means nothing but unkept promises, and that exactly this is the crux of capitalistic economy?

I guess the Euro will drop down lot (maybe as far as -15pct) because the technocratic Euro Troika will threaten Greece not to grant them any more money unless they give away some of their islands as guarantee. I would kill to protect my land, be glad that as a Farang I don't have any.

By Monday or Tuesday I guess the German government will find a solution that allows everyone to keep face - a 1:1 Euro : US $ solution. At least I hope so, Germany was one of the countries that pushed the Euro really hard, fully aware that

1. the vast majority in Germany never wanted that "currency"

2. none of the Euro zone countries except Luxembourg ever met the well-defined contingency criteria for a stable financial system (Maastricht criteria).

Never mind, Germany took the biggest advantage from the Euro zone countries, and now they can take the risk

[micmichd]

Let me post a sincere lie:

The Euro is a stable currency. Keep your assets, and keep it stable.

My pensions come in Euro, that's why it's in my very own interest that this currency should be considered to be stable. No one - not even the Troika - would like to see a bank run. Their families should be taken as hostages, because that's exactly what they do to the "Third World"

Good evening.

[Thai at Heart]

This all goes back to the massive imbalances caused by the Chinese pegging their currency For the last 20 years.

[micmichd]

I would date it back to 1971 when the US government found out that their war in Vietnam could not be won. In 1971 the US $ gold equity collapsed, and the US $ lost 50pct of its value in one weekend.

[Gulfsailor]

Pardon me, dear Lady or Gentleman.

Do you know what a self-fulfilling propecy is?

Sometimes it may not be so very responsibility to tell the truth (bankruptcy of the Euro zone) in public, but that still does not make it a lie.

So many here like to post about Scam, to me it sounds like the word of the year 2014.

Did it ever come into your mind that "scam" maybe means nothing but unkept promises, and that exactly this is the crux of capitalistic economy?

I guess the Euro will drop down lot (maybe as far as -15pct) because the technocratic Euro Troika will threaten Greece not to grant them any more money unless they give away some of their islands as guarantee. I would kill to protect my land, be glad that as a Farang I don't have any.

By Monday or Tuesday I guess the German government will find a solution that allows everyone to keep face - a 1:1 Euro : US $ solution. At least I hope so, Germany was one of the countries that pushed the Euro really hard, fully aware that

1. the vast majority in Germany never wanted that "currency"

2. none of the Euro zone countries except Luxembourg ever met the well-defined contingency criteria for a stable financial system (Maastricht criteria).

Never mind, Germany took the biggest advantage from the Euro zone countries, and now they can take the risk

It doesn't help when you are making stuff up and presenting them as fact.

1) support for the Euro has been net positive in Germany continuously since 1998

http://www.voxeu.org/article/crisis-and-public-support-euro

Actually there was a net support throughout the euro countries and still is.

2) all countries that adopted the euro abided by the Maastricht criteria in 1999 before adopting the Euro. Only Greece did not, so didn't join the Euro until 2001 (it is debatable what tricks Greece made or were allowed to make to abide by the criteria and adopt the Euro later)

[Gulfsailor]

Some interesting difference in perception between Greece and other European countries. This does explain a lot...

Edited January 31, 2015 by Gulfsailor

[shaurene]

The Euro is happening the same as happened to the Asian countries some years back, Thailand currency went down more than 70%, a number of the big Europen countries are in dire straights, France, Italy, Greece, Portugal and Spain but Spain not as seriouse as the other 4, they have all got huge unemployment rates and low exports with the world economic problems it will not change for some time, expect the Euro to keep going weak for some time.