Post by Oz-T on Jan 6, 2015 4:05:15 GMT
Some things never seem to change and the Eurozone remains one of them. I've been saying for many years that the mess never went away; it just gets wallpapered for awhile and partially forgotten, even though enormous problems hang around like a bad smell.
The Euro has copped a hammering against most currencies in recent months, as the following comparisons show:
US$ - The Euro has steadily fallen against the greenback since last April when a dollar bought €0.72. It now buys €84.0 - that's a 16.7% boost to your travel cash if you're an American.
Canadian travellers have seen something similar: The C$ bought €0.655 last April and now it's around 8% better at €0.71.
The Australian dollar had a different journey during the year, rising against the euro until mid August, then falling back again. The current rate of €0.72 is roughly where it was last April.
Since April, the NZ$ rose nearly 5% against the Euro and now fetches around €0.65.
And behind all this happy news for Europe-bound tourists is a pretty sorry state for Europe itself. The Eurozone economies continue to splutter with the hope of growth until they sag yet again under a mountain of debt. And as I've said so many times, Debt Central is Greece: the problems never went away; we merely got bored hearing about them. Greece continues to be smothered by its debt burden - now 177% of GDP. When you have 25% unemployment and families struggling to feed and educate their kids, it must be galling to see your own government paying billions of euros each year on interest. That money could sure do a lot to improve living standards had Greece not blundered its way into the debt mess.
Amid all these problems, Greece now has an election happening on 25 January and some people are getting worried that a leftist government might emerge and be unwilling to continue the austerity programs that have satisfied lenders up to now. So once again we're hearing about 'Grexit' - a Greek exit from the Eurozone. Whilst I continually say that everyone would be better off with Greece adopting its own currency, the problem will always be whether the mechanism to do so would create so much chaos that the cure would be worse than the disease. Interestingly though, senior people seem to be hinting that a Grexit is feasible - the French president said it was a matter for Greece to decide, and the German Economics minister appeared to be contemplating a possible Eurozone without Greece.
And separate to the Greek matters, the European Central Bank has just hinted that it'll embark on some quantitative easing of its own in 2015. In rough terms, QE involves the central bank buying bonds and therefore putting huge loads of cash into the economy. Of course, they don't have any such money to do this with, so they simply get the mint to print more cash. Short-term this can work to overcome deflation, but it's no long-term fix to structural problems. Their main concern is that inflation has been falling since 2011 and dramatically so in the past few months, mainly due to falling oil prices. All of this seems to be pressuring the Euro to stay low.
The Euro has copped a hammering against most currencies in recent months, as the following comparisons show:
US$ - The Euro has steadily fallen against the greenback since last April when a dollar bought €0.72. It now buys €84.0 - that's a 16.7% boost to your travel cash if you're an American.
Canadian travellers have seen something similar: The C$ bought €0.655 last April and now it's around 8% better at €0.71.
The Australian dollar had a different journey during the year, rising against the euro until mid August, then falling back again. The current rate of €0.72 is roughly where it was last April.
Since April, the NZ$ rose nearly 5% against the Euro and now fetches around €0.65.
And behind all this happy news for Europe-bound tourists is a pretty sorry state for Europe itself. The Eurozone economies continue to splutter with the hope of growth until they sag yet again under a mountain of debt. And as I've said so many times, Debt Central is Greece: the problems never went away; we merely got bored hearing about them. Greece continues to be smothered by its debt burden - now 177% of GDP. When you have 25% unemployment and families struggling to feed and educate their kids, it must be galling to see your own government paying billions of euros each year on interest. That money could sure do a lot to improve living standards had Greece not blundered its way into the debt mess.
Amid all these problems, Greece now has an election happening on 25 January and some people are getting worried that a leftist government might emerge and be unwilling to continue the austerity programs that have satisfied lenders up to now. So once again we're hearing about 'Grexit' - a Greek exit from the Eurozone. Whilst I continually say that everyone would be better off with Greece adopting its own currency, the problem will always be whether the mechanism to do so would create so much chaos that the cure would be worse than the disease. Interestingly though, senior people seem to be hinting that a Grexit is feasible - the French president said it was a matter for Greece to decide, and the German Economics minister appeared to be contemplating a possible Eurozone without Greece.
And separate to the Greek matters, the European Central Bank has just hinted that it'll embark on some quantitative easing of its own in 2015. In rough terms, QE involves the central bank buying bonds and therefore putting huge loads of cash into the economy. Of course, they don't have any such money to do this with, so they simply get the mint to print more cash. Short-term this can work to overcome deflation, but it's no long-term fix to structural problems. Their main concern is that inflation has been falling since 2011 and dramatically so in the past few months, mainly due to falling oil prices. All of this seems to be pressuring the Euro to stay low.