I kind of pointed out a couple months back that it looked like Europe was heading for trouble, especially Germany with the relative inaction of the ECB in slashing interest rates. At any rate it looks like my fears might be realised as Four EU countries are in recession now (Germany, Italy, Switzerland, and the Netherlands) and it looks like France's economy may be in trouble now as well.

http://news.bbc.co.uk/2/hi/business/3165999.stm

As a result, currency traders have reacted and the previously strong Euro has been dropping dramatically.

http://news.bbc.co.uk/2/hi/business/3174153.stm

And if anyone has been following reuters over the past month, the leading economic indicators of the US economy have been improving indicating that the rebound of the US economy might be imminent. Do you guys think that the lower value of the Euro and the pickup of the American economy can help the Eurozone ease out of recession? Or do you think the trend will continue and Europe will remain sluggish?

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quote:

Originally posted by occrider I kind of pointed out a couple months back that it looked like Europe was heading for trouble, especially Germany with the relative inaction of the ECB in slashing interest rates. At any rate it looks like my fears might be realised as Four EU countries are in recession now (Germany, Italy, Switzerland, and the Netherlands) and it looks like France's economy may be in trouble now as well.

Switzerland is not a euro country =)

quote:

And if anyone has been following reuters over the past month, the leading economic indicators of the US economy have been improving indicating that the rebound of the US economy might be imminent. Do you guys think that the lower value of the Euro and the pickup of the American economy can help the Eurozone ease out of recession? Or do you think the trend will continue and Europe will remain sluggish?

Europe's econmy is by far too dependent of the US eceonmy... and now when europe's main economic wheel (germany) is going bad we can only hope you will help us out of this... in about a month we will have a referendum in sweden about joining the euro or not? and right now the "no" side has a big lead much thanks to this... really bad!

quote:

And if anyone has been following reuters over the past month, the leading economic indicators of the US economy have been improving indicating that the rebound of the US economy might be imminent. Do you guys think that the lower value of the Euro and the pickup of the American economy can help the Eurozone ease out of recession? Or do you think the trend will continue and Europe will remain sluggish?

There will be no real recovery in the US economy and there will be no real recovery in Europe. If you are looking at short term trends then yes, the unemployment or inflation rates might improve but in the long term the future for the west is very bleak but especially in america because of the massive personal, government and corporate debt.

Eventually a time will come when the Japanese and Chinese who have fighting tooth and nail to keep the value of the US dollar up will give up and this will cause a major disruption to the global financial system. The entire global economy is rests on one thing US dollar debt. All the world wants a strong US economy so that americans can buy their exports and the only way they can do it is to go further into debt.

There a whole range of demographic, political, financial, economic and other reasons which preclude any real sustainable economic recovery. The best free advice that I can give is to get out of any debt and sell any asset whose price is demoninated in US dollars.

I'd say this is just a temporary slowdown, and I think decreasing the value of euro together with rising american economy should be enough to stop the recession. Still, this is just my guess on the issue, we'll see what really happens.

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While I am no economist, I am interested to see how the Eurozone reacts to a slowdown.

As I see it though, a lot of this slowdown can be connected to the recent troubles with the US economy. The US dollar in recent months has become weaker and weaker vs the Euro, making it more expensive for Americans to buy things from Europe. While this is outweighed somewhat by the ability of Europeans to buy US goods cheaper, the United States has for a long time had a trade deficit with the rest of the world, so the lack of American purchases would be the determining factor. Add into that the loss of American tourism to Europe due to the economic slowdown, the fear of terrorism, SARS, and the whole Iraq thing and you have a major loss of revenue that cannot be ignored.

I am not an economist, but it will be interesting to see what unfolds.

MrS

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quote:

Originally posted by rupert There will be no real recovery in the US economy and there will be no real recovery in Europe. If you are looking at short term trends then yes, the unemployment or inflation rates might improve but in the long term the future for the west is very bleak but especially in america because of the massive personal, government and corporate debt. Eventually a time will come when the Japanese and Chinese who have fighting tooth and nail to keep the value of the US dollar up will give up and this will cause a major disruption to the global financial system. The entire global economy is rests on one thing US dollar debt. All the world wants a strong US economy so that americans can buy their exports and the only way they can do it is to go further into debt. There a whole range of demographic, political, financial, economic and other reasons which preclude any real sustainable economic recovery. The best free advice that I can give is to get out of any debt and sell any asset whose price is demoninated in US dollars.

My favorite doom & gloom economist! Don't worry, I've sold all my assets, exchanged itinto gold bars and beer, and I have them all buried under my mattress in my bomb shelter. Bring on the economic holocaust!

But really, one thing I noticed as the value of the Euro was rapidly appreciating was that the German manufacturing sector was experiencing some serious contraction as demand for exports decreased. So perhaps with the rise of the dollar once again, the German manufacturing sector will pick up and kickstart the rest of the Eurozone. Temporarily of course rupert

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Retro ...

[enters the casino]

Place your bets:

I put 100, on the pass line.

[Rolls the dice]

Come on lucky 7!...

Yes lucky 7! good call.

[picks up 200 and leaves]

That summarizes how I do my financial predictions and investing, it seems more accurate

Taken from the Australian Financial Review by David Bassanese:

"Judging by the data, the United States unilateral push for growth is on borrowed time and money. And, having failed to learn the lessons of 1997, Asia is exporting the "asian disease" westward by too easily helping fund the US addiction to foreign capital in a vain effort to stop their currencies rising. Its a new US bubble thats sure to burst. Slowly but surely, Asia is helping set up the US dollar for an almightly fall...

"This time around, few countries are yet prepared to countenance a weaker US dollar, Asia and Europe still excessively rely on external demand from the US to support their growth."

"According to data compiled by ABN Amro chief economist Kieran Davies, Chinese and Japanese buying of US Treasury bonds alone financed almost one-third of the US fiscal deficit in the past year. Adding purchases of agency debt, their combined buying financed half of the US trade Deficit. Its no surprise that these two countries run the largest trade surpluses with the US. But other Asian countries are also underwriting US profligacy, as are herd-like global fund managers seeking safety in numbers by buying American at inflated prices. Helped by such complicity, the US dollar is failing to correct in the fact of swelling trade and fiscal deficits. The US real exchange is still 7 per cent above its long-run average, and has fallen only 7 per cent from its peak in March last year"

I personally think that Germany's recession is merely a short term problem, as a result of converting to the euro.
What we've seen with the introduction of the euro is the merging of the whole european economy into "one" economy (well duh).. With this reduction in barriers of trade we've noticed that the Germany markets have become more susceptable to foreign competition, particuatly that of the Spanish and Portugese markets.
Especially with the manufacturing markets in Spain being so much cheaper than those in Germany (since German labour is amongst the most expensive in the world) we see many of these labour intensive manufacturing firms move offshore out of Germany.
Obviously these massive shifts in capital expenditure we're going to incounter some big problems with structual unemployment. However, this increase in unemployment will be (eventually) offset buy German companies making bigger profits, and exporting larger quantities of cheaper goods. This will bring the jobs back to the people and will bring an end to the structual unemployment that we see now.

In this case we will see a German market that is much more efficient and productive as a result of this mere market correction, and has less to do with the US economy than many people think.
Obviously there is a recession to worry about too, but i believe that this is on the mend, and this improved Germany will do a lot to boost Europes economy.

I just hope the Euro devalues some before I go to Spain for the Spring Semester.. I would like to splurge A LITTLE while I am over there...

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