Love in the time of debt

They say the greatest romance novels are written in times of despair. It is only when one yearns so strongly for a better reality that one is able to express feelings of love and desire so elegantly.

And if that is the case expect some best sellers coming out of Europe in the next few years. And, believe you me, they need the sales. The Euro fell to it’s lowest point ever against the USD on May 17th.

EUR-to-USD

The FT.com is reporting that the ECB has flexed its bond buying muscles and has purchased 16.5 billion euro’s worth of bonds as part of the rescue plan amid concern from international investors that 1.1 trillion just isn’t enough.

The ECB’s intervention was toward the lower end of analysts’ expectations but the action has gained traction and is widely supported as a necessary move to try and stabilise the euro, the FT.com reported.

Will it be enough to stop the rot? Perhaps. But most likely not. The fundamentals of production, debt, employment and taxation aren’t fully working.

As previously written here, market participants aren’t stupid. They can do the maths, and they know that heaping more debt on countries that can’t afford the current – and lower – amounts they currently have, while instigating measures which give the population less money to spend and, ergo, less tax revenue is not a good thing.

That, coupled with Germany’s call to other European nations to cut their deficits and start producing surpluses (where many nations simply can’t do it) reveals a fractious and fraught Europe – not a unified one lock-stepping its was down a path to recovery.

World-currencies-against-USD-17-May

Global view courtesy of money.cnn.com

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About Ed.

Digital, Search, Social leader.
This entry was posted in EUR falls to new low against USD and tagged , , , , . Bookmark the permalink.

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