[Medium FormatPro]

The Euro was almost cursed not to work with items such as... Adding in economies from places such as Italy (anyone remember the former Italy currency exchange rates - over two thousand to one), the reunification of places such as Germany, etc... And then adding them to places such as France.

[jolepp]

related: Eurozone crisis is now about Germany - The Drum Opinion (Australian Broadcasting Corporation)

[Raffwal]

I'm not an economist and certainly fail to understand many of the factors affecting the situation. But to me it looks that in the long run, EU must choose between forming the United States of Europe or returning to national currencies and making EU a looser pact of countries. Both solutions have huge problems.

[jolepp]

related, NYT: Borrowing by Banks Plagues Europe Despite Aid for Spain

[jolepp]

related: NYT/Krugman: Another Bank Bailout

[GeneV]

At some point no country can go on with 50% of its young people unemployed, but stable banks.

[jeffkrol]

I'm not an economist and certainly fail to understand many of the factors affecting the situation. But to me it looks that in the long run, EU must choose between forming the United States of Europe or returning to national currencies and making EU a looser pact of countries. Both solutions have huge problems.

You understand economics a lot better than most "economists" (more likely bankers leveraged to the hilt)...........

[jolepp]

Spain's borrowing costs have risen to the highest rate since the launch of the euro in 1999.


The benchmark 10-year bond yield hit 6.81%, as optimism about the weekend's Spanish bank bailout continued to evaporate.
...

BBC News - Spain borrowing costs hit euro-era record high

The effect of that 100 billion € apparently didn't last very long.

[traderdrew]

The articles remind me of when Mr. Soros basically stated he cannot control the markets but rather he and his fund are among speculators reacting to the fundamentals.

Soros Breaking Bank of England - Order Flow Forex

Based on the repeated lie from the mainstream media that speculators are to blame; I am here to reiterate that "no speculator" in his/her right mind would bet against the markets under the correct reasoning whether it be the currency, stock, or petroleum markets.

[Nesster]

Based on the repeated lie from the mainstream media that speculators are to blame; I am here to reiterate that "no speculator" in his/her right mind would bet against the markets under the correct reasoning whether it be the currency, stock, or petroleum markets.

Which leads to the interesting question: just who is on the other side of all these 'with the market' trades?

[traderdrew]

Which leads to the interesting question: just who is on the other side of all these 'with the market' trades?

There are a lot of people in the markets for a lot of different reasons. The main reason the markets are there is for hedging by commercial buyers and sellers. These parties hold positions for relatively long periods of time. They pretty much lock prices in for a specific time in the future when they hedge. You have people in and out within minutes and others who hold positions for months.

Hedging probably shouldn't be confused with hedge funds. Hedge funds seem to do everything but hedge.

[stanislav]

1. Personaly I do not have anything against free markets. I would rather see more free markets with less subventions. More than half of EU budget is going into subventions of food industry (farming and so on), thus destroying the "free" farming market from non-EU countries. Thus far EU is geting away with it. USA tried to do similar thing in steel industry by imposing high customs to steel imported from China. It resulted in death of once so proud american steel industry.

2. I do not have anything against gambling (or speculations) either, as long as people are gambling with their own money and as long as they now what they are doing. When they gamble with other people's money then everyone involved should know exactly what is going on. Nowadays we have all kinds of financial institutes, funds, banks, funds and so on effectivly gambling with other people's money (they call it investments). So when these fonds generate some revenue, then people in charge get well payed in form of bonusues. When they loose money, then it is someone elses money. The global problem is when these institutions became too big thus threataning the whole global financial system. So if you let one bank shut down then all others are going to have problems. So the only way out is to "bail" them out! ... or NOT. If you do bail them out then they know that all losses are going to be covered time and time again (it all hapened already) and there is noone to blame. If you just let them down then those responsible still have stash of money (board directors, executives and alike) that they are still going to be fairly unaffected.

3. So my only solution is to severely regulate "gambling" market. Or just let those responsible for gambling be there with their own assets with options to loose everything (and I really mean everything) once their gambling leads to necesity of bailouts. Moreover force them by law to put their own assets as security when they are on some key positions. Hopefully we'll get some more responsible people on high positions then.

[Nesster]

There are a lot of people in the markets for a lot of different reasons. The main reason the markets are there is for hedging by commercial buyers and sellers. These parties hold positions for relatively long periods of time. They pretty much lock prices in for a specific time in the future when they hedge. You have people in and out within minutes and others who hold positions for months.

However a good portion these people in the markets for different reasons will be on the other side of the 'bets with the market', i.e. sitting on potentially massive losses. For every purchase there is a seller, for every seller there eventually is a purchaser.

[Nesster]

...also, net-net, if the markets overall crash, the losses outweigh any gains by those taking the other side.

[traderdrew]

1. Personaly I do not have anything against free markets. I would rather see more free markets with less subventions. More than half of EU budget is going into subventions of food industry (farming and so on), thus destroying the "free" farming market from non-EU countries. Thus far EU is geting away with it. USA tried to do similar thing in steel industry by imposing high customs to steel imported from China. It resulted in death of once so proud american steel industry.

If I am not mistaken European governments own land and it is not in possession of their food industry. Is this right? This makes me question their business structure and if it is really a free market. Without owning land it would seem to me there would be much less incentive to invest in it. Thus subventions could be inevitable when governments constantly have their hands in it such as excessive ownership, regulation and taxes.

As far as what is going on with banks and these huge sums of money that has been gambled away or even lost, I am in no position to comment on what has become complicated. There are those in power who love to tinker with the economic machine but they don't like or understand it in the first place.

Nesster doens't know while hedgers do lose money, it is money they don't mind losing because it is offset by their physical assets.