Forecast exchange rate euro: survive or go into hiding?

What will happen in the future exchange rate euro

In brief: Euro is the weakest currency in 2010, even the Russian ruble, not to mention the U.S. dollar, grasps the single European currency in a vise.

The exchange rate euro set another historical low. Will the single currency to exist in 10 years? Now the question is even harder to answer than three months ago, when the leaders of the European Union gathered in Brussels for the first time to make threatening gestures with his finger and give the markets of Greece dim promise of “unity” in the event of financial difficulties. Exchange rate euro falls faster and faster. Do not underestimate the political will to preserve the single currency. Indeed, since February, the EU restores power. But the domestic crisis is growing even faster.

Brussels displeased that eurozone members have provided real money only 2 May: Greece get? 80 billion ($ 105 billion) in loans and £ 30 billion from the IMF. Officials blamed the delay in Germany. They argue that the obstacles built Chancellor Angela Merkel: Greece would never have agreed to such a tough economy, if help had come sooner. It seems that officials are only too glad, however, saved at the last moment before the default of increased costs billions of dollars. In Brussels, a lot of talk about selfishness and even nationalism of Germany. When the question is raised about the existence of the euro, the answer is a traditional European wisdom: the single currency faced either with “integration, either dezyntegratsiey. Thus the EU has meant that national governments need to make a choice between the death and the rejection of an independent budget management. Euro-optimists argue that the salvation of Greece – is the first step of the financial union, in which more stringent budgetary control, and painful sanctions will be compensated through increased transfer of funds from rich to poor. Euro-pessimists have been told that Ms. Merkel is more interested in how to punish a spendthrift than in European unity. As evidence they point to her call to deprive wasteful countries the right to vote and the inability to pay egregious violators. With the argument “Integration vs dezyntegratsiya is difficult to argue. But he is wrong. Or, rather, a crisis the EU as a struggle between clinging to their national interests, and those that are ready to pass the EU most of its functions. In essence, the friction within the euro area related to the conflicting social contract and democratic concepts. After the war the authorities in Germany have the consent of the voters, inviting them to thrift and sustainability of the exchange rate (consolation for the Germans, who remember how all of their savings were absorbed by hyperinflation), as well as universal capitalism. Greek authorities have instead year after year and spend public money on maintaining social order, giving voters generous pensions, tax benefits, salaries European level and lifetime employment. Such a social contract in conjunction with massive corruption and sluggish enforcement seems to have started to like the country, recovering after a brutal civil war and long years of dictatorship, which lacked consensus. Unfortunately, the Greek model proved to be untenable.

So now the partners of Greece in the euro area, led by Germany, require huge loans in the name of EU unity and peace in the streets of Athens. But it is really difficult. German voters, instigated xenophobic headlines in the tabloids do not want to pay for the social contract in Greece. Moreover, helping wasteful neighbor, the German government violates the promise made to their own voters: that the euro will be as reliable as the mark. Germany forced to choose between two principles that underpin its own agreement with the citizens: economic stability and European integration. Echoing the disaffected voters, Josef Proell, Vice-Chancellor and Minister of Finance of Austria, said that Europe is already almost “lost patience” because of street protests in Greece against the austerity. Prime Minister of Slovakia Robert Fico said that he believes in thrift Greeks only when she sees her own eyes, he said, “Greeks not to be trusted.” Some ordinary Greeks, too, it seems that developed by the IMF austerity program violates the social contract. Reduction of salaries of civil servants seem to officials, earning a pittance, unfair. The key can play higher taxes, but has been enraged the Greeks, who have to rely on poor-quality public services, to pay bribes for a decent hospital care and to shell out for private teachers to give children an education that they receive in weak schools. The coming weeks will show whether Greece to change its social contract, that he has made up its economy more resilient. If not, the Greek Rush would come along to other countries. Above all, EU officials fear the contamination of Spain, where the larger economy.

Anrey Torbinski
2010-05-16 09:21, Currency news.

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