Economic storm this weekend?
 

Will Spain decide to go for the big bailout ?

Will they decide to leave the Euro?

Will the falling value of the Euro save the Eurozone as their exports become more attractive to the rest of the world?

Or will the Eurozone collapse?

It's reminding me of that Chinese curse "may you live in interesting times"

Re: Economic storm this weekend?
 

It very well could. All Spain's pandering to Brussels and Germany has been to try and reduce the "prima de riesgo" i.e. how much more they have to pay to refinance debt than the Germans do

It hasnt worked - the markets are having none of it

So Spain will be trying to convince the EU than the ECB needs to buy Spanish debt cheaply (in effect QE, but with net flow from Germany to Spain)

If they dont get that, then their only other option is pulling out of the Euro

Euro has been losing value against GBP ober the past few days due to the uncertainty, now touching 1.29.

I'm worried, so much so that my savings have gradually moved out of Euros over the past year or so.

Re: Economic storm this weekend?
 

If I was in charge of a newspaper I'd have a whole team shadowing Rajoy at the moment, to see what he's up to. And possibly post someone in a bar close to the Spanish mint to observe any abnormal activity... http://en.wikipedia.org/wiki/Royal_Mint_%28Spain%29

Re: Economic storm this weekend?
 

Pretty much covers everything I think....

Re: Economic storm this weekend?
 

I think the falling value of the Euro will not please Mr Osborne Or Mr King, there is no way they want the £ strong. To me this is another problem with the set up, we are not in the Euro obviously they the EU will put their interests first an sod the UK. I am not complaining though but wish this could have happened last year. Obviously Spain will do what is in the best interest of Spain no one else. Only thing is with the devaluation or re setting of the Euro what happens when Germany starts overheating?

Re: Economic storm this weekend?
 

Actually, that would solve all the problems

It means they could get the printing presses in motion and start printing serious quantities of Euros :)

Would mean serious Euro devaluation of course

Re: Economic storm this weekend?
 

Hopefully. Increasing competitiveness with the rest of the world would be refreshing.

Re: Economic storm this weekend?
 

About a month ago I read a very erudite paper written by an eminent American Economist who said his view was that Spain would leave the Euro of her own accord and backed it up with facts about the differences between Spain and the other pigs. Spain has industry, exports and a large South American market to sell to so it could well happen.

Re: Economic storm this weekend?
 

I read if not that article a similar one putting the same view. However I think Spain and the other struggling Countries are too tied to getting money from the Germans (no one else seems to be giving them much). I think the fear of the initial collapse after leaving the Euro outweighs at this time the possible benefits. This off course may change or the German public could just get sick of propping up the EU. As Cricketman says though opening up the printing presses? although not done a great deal for the UK so far!

Re: Economic storm this weekend?
 

Makes sense to me - so long as Spanish products aren't so expensive that nobody can afford them (e.g., overinflated Euro).

Re: Economic storm this weekend?
 

Will Spain need to leave the Euro if it keeps falling, already at £1.25-1.30 to the Euro prices are attractive again for British tourists (other than some bars where they try to charge you double!) and it must be making Spanish agro products attractive. The government cuts have also been huge without causing mass riots and the country is generally very attractive with good infrastructure (you can at least see where some of the billions have been invested) compared to say the UK. Really what they need to do is swap all their high priced debt for German backed Euro bonds at ultra low interest rates... think they will stay in the Euro anyway.

Re: Economic storm this weekend?
 

Like many, our town has just had a local fiesta spanning two days (not Moors & Christians). Fireworks, loud rock music to 5am etc: etc. It must have cost thousands of Euros.
OK, it's their culture and I accept that, but what I find difficult to accept is that all this is being done when the nation has no money, its banks are bust, the health & education services are starved of funds and unemployment is the worst in Europe. The Spanish government has been bailed out and now Valencia has become the first (of many) regions to seek a bail-out from the government (for that read from the Germans!)
It's all being done on borrowed money.

Re: Economic storm this weekend?
 

http://in.reuters.com/article/2012/0...86J0EG20120720

Valencia in big trouble.


Bond rate at record 7.29

Re: Economic storm this weekend?
 

It's tempting to say that deeply indebted countries in the Eurozone can simply leave, revert to their old currency and start all over again. But it's not as simple as that.

The debt cycle means that all countries continually borrow from others simply to pay their people. If that borrowing facility is withdrawn, then at first, nobody gets paid. A country like Spain can almost be self-sufficient (feed itself), but to divert the export bound fish and vegetable containers to the home market will take time.

All eyes will be on Greece when it leaves.

Re: Economic storm this weekend?
 

Bread and circuses. It's a time honoured way (been going on since the days of the Roman Empire) to keep the masses happy and divert their attention from serious problems. Theory is it reduces the risk of revolution, and even today in most countries people are stupid enough to fall for it.