The high Euro and low Renminbi led to the financial crisis via petroleum
and other commodity prices.

USA states are free to default. Bonds of USA states have different
(face) interest rates, (effective) yields and ratings. Most USA states
have rules against having deficits, but not all. No one kicks them off
the dollar when they default.

- = -
Vasos Panagiotopoulos, Columbia'81+, Reagan, Mozart, Pindus, BioStrategist
http://www.panix.com/~vjp2/vasos.htm
---{Nothing herein constitutes advice. Everything fully disclaimed.}---
[Homeland Security means private firearms not lazy obstructive guards]
[Urb sprawl confounds terror] [Phooey on GUI: Windows for subprime Bimbos]

On May 22, 11:19*am, wrote:
The high Euro and low Renminbi led to the financial crisis via petroleum
and other commodity prices.

USA states are free to default. Bonds of USA states have different
(face) interest rates, (effective) yields and ratings. Most USA states
have rules against having deficits, but not all. No one kicks them off
the dollar when they default.

European states are also free to default and default does not move
anybody automatically of the Euro. In fact, currently there is no
mechanism for this at all.

I hate to ask but how did a high euro cause a crisis in commodities
market? It is the low dollar that may have caused them, not the high
Euro. Oil is traded in dollars so a low dollar will spark increases
in price

An excellent article that appeared in the New York Times

http://www.nytimes.com/2010/05/23/bu...al/23view.html

The article highlights very much what I was saying:

- The Greek economy has serious weaknesses and structural issues
- The Euro has undermined the competitiveness of the Greek economy
- The Euro allows major economies (French, German) to run artificially
high trade surpluses with Greece
- Borrowing more money is not a solution, it is the avoidance of a
solution

(ADR) wrote:

- The Greek economy has serious weaknesses and structural issues

I'm partially surprised Greece hasn't been "invited" to leave the eurozone. After
all, it seems certain now they only got there under false pretences.

I suspect they serve a purpose though, as a kind of circuit breaker stopping
attention turning to Ireland, Spain, Portugal, etc., which the euro would
definitely struggle to defend.

I do hope the euro manages to survive though. I listen to a lot of US financial
podcasts and there's far too much "we told you so" going on at the moment. As if
the States wasn't exactly the same in many ways, only they have dysfunctional
States instead of nations. I mean, Italy and Belgium probably have more in common
with each other than Washington and South Dakota!

- Borrowing more money is not a solution, it is
the avoidance of a solution

But it's the only game in town. And maybe if they all agree to keep playing, global
financial momentum will continue for long enough for someone to come up with a good
plague or a proper war to reset the global economy in traditional fashion.

My money's on peak oil providing the excuse, so they probably only have four or
five years at most (assuming China & India keep buying cars and scooters) to keep
the illusion of wealth going.

Instinctively I feel it'll be tough to maintain. But with Ben Bernanke and the
Keynesian Ubermench at the helm of the world's reserve currency, they might just
manage it, in the process making bond brokers like Goldman & Morgan Stanley rich
beyond the dream of Croesus... or even the average Euromillions winner.

Fascinating times though, whatever happens.... though I can't help feeling that's
what some folk used to say in 1930.

Andrew McP

This article explains everything. Great read, thanks a lot for sharing this with us. I never knew Greek economy had anything to do with it before reading this article.

I do achievement the euro manages to survive though. I accept to a lot of US banking podcasts and there's far too abundant we told you so traveling on at the moment. As if the States wasn't absolutely the aforementioned in abounding ways, alone they accept abortive States instead of nations.