Category: Europe

European Economic Crisis?

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There is a lot of very important news out there today, but perhaps nothing is really more important than this:

The completely unexpected decision of the Swiss National Bank (SNB) to remove the 1.20 floor on the Swiss franc against the euro [last week] was one of the biggest currency shocks since the collapse of the Bretton Woods system in 1971.

Then yesterday, the Danish central bank “cut its interest rates to dampen investor interest in the Danish krone ahead of a closely watched European Central Bank meeting Thursday.” The Wall Street Journal quotes an analyst’s opinion:

“This is all part of the currency war in which the ECB has become a big player last week. The weakness of the euro became too much for them. On the back of the SNB move, there was speculation that the eurodenmark peg could come under speculative pressure. Obvious difference is that Denmark does not have to cope with safe-haven flows, like the SNB does. There is not the same degree of pressure than on Swiss. Another difference is that the krone is not overvalued by many measures.”

Honestly, my knowledge of the situation is too meager to be able to say what this means, but it is possible — I emphasize, merely possible — that this is one of those signs of an impending economic crisis. The underperforming European economies (PIGS = Portugal, Italy, Greece and Spain) have been a drag on the Euro for several years, dependent on the ability of the stronger economies (especially Germany) to patch up the related currency problems. But these were always patchwork fixes, and the underlying problems are too deep to be permanently fixed, no matter how much cash the Germans could provide, no matter how strict the austerity measures imposed on the fiscally disastrous Mediterranean governments.

Maybe the ECB will be able to find another patch, but if the Swiss and Danes are hedging their bets . . .? I don’t know what this means, but if I were a major investor, I might be worried. Any readers with extensive knowledge of the European financial situation are invited to offer their analysis in the comments.

(via Memeorandum.)

 

Gold Price Jumps — Unexpectedly! — as Cyprus Tries to Halt Capital Flight

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Nothing like a debt crisis to spur a run on security, and gold prices — which had lost more than 200 points off the October peak of $1,794 an ounce — have spiked up about $30 in March, as Cyprus has become the latest tip of the Euro-debt iceberg to break the surface.

Yesterday, the “good” news was an EU official saying that deposits in other countries would be raided if necessary to bail out Cyprus. Today, the “good” news is that officials are trying to prevent a run on deposits when banks reopen Thursday in Cyprus:

Cyprus is set to restrict the flow of cash from the island and may curb the use of Cypriot credit cards abroad as it tries to avert a run on its banks after agreeing a tough rescue package with international lenders.
A Greek newspaper published details of what officials told Reuters was as yet only a draft government decree to restrict outward payments to documented imports and limit how much people could take abroad in banknotes or spend on credit cards.
With banks due to reopen on Thursday after nearly two weeks, Finance Minister Michael Sarris said capital controls would be “within the realms of reason”. But Cypriots, fearing for their savings and angered by the bailout deal struck on Monday in Brussels, are expected to besiege lenders in the morning.

This is the kind of coercive anti-market measure that desperate governments enact in an attempt to defy the maxim that capital has no nationality. Investors will put their money wherever they see the best prospect of profit and the best guarantee of security. Only governments that have wrecked their own economies ever try to limit overseas transfers.

Don’t you think people in other EU countries, seeing how officials are dealing with this Cyprus crisis, are shifting more of their assets to gold?

UPDATE: Welcome, Instapundit readers!

 


Yes

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by Smitty

“Is America Becoming Europe?”

The question remains whether our domestic idiots will completely destroy the economy before such, and whether the whole EU/US mess implodes into something still uglier.
I don’t think crap stacks that high, but I’ve been show quite wrong across the board of late.

via Insty

EUSSR?

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by Smitty

Insty reminded me to write a post on this, via Hannan:

I guess you’re not supposed to note that they put the hammer and sickle atop the cross, at the same level as the muslim crescent, all of which, along with the yin-yang, superior to the star of David. And the notion that the symbols are distributed randomly within a five-pointed star shape (itself associated, inter alia, with Communism).

If the hammer and sickle are fit for this sort of thing, why are the Hindus not allowed a swastika in there? You can’t help but juxtapose this religious farce with the EU being awarded the Nobel Peace Prize.

The Nobel committee in Oslo chose to ignore the multiple crises threatening the EU. Instead, it took the longer and bigger view, praising the EU’s historical role in promoting reconciliation and peace, and warning its collapse would see an ominous return to “extremism and nationalism”.
Announcing the decision, Thorbjørn Jagland, head of the Nobel committee, said: “The main message is that we need to keep in mind what we have achieved on this continent, and not let the continent go into disintegration again.” The alternative was “awful wars”, he warned bluntly.

What is it with Scandinavia and Quislings? When war does come, and these EUnuchs are feckless to halt it, I do hope they wave their Nobel Prize as they are offered on the altar of Ares.

Update: thank you, Instapundit.

‘[Mario Draghi] Will Fight To The Last German Taxpayer To Keep The Mediterranean Countries That Should Never Have Joined The Euro In There’

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by Smitty

Hold on to the end, as another MEP asks a fascinating question, which I’ll paraphrase:

<spicolli>Mr. Hand, you’re like this epic buzzkill. You have been sounding like the Pet Shop Boys played backward since around the sixth season of South Park. Can’t you just quit harshing our mellow and say something different?</spicolli>

The mighty Daniel Hannan:

Update: Daily Pundit inquires, “”

Exposing The Ideological Roots Of The EU

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by Smitty

Mario “Three Card” Monti, the Prime Minister of Italy, figures the EU is AFU:

In an interview with Germany’s Der Spiegel magazine on Sunday, Italian Prime Minister Mario Monti warned of the “psychological break-up” of Europe if the euro crisis is not soon resolved.

. . .

The fact that Monti chose to deliver his message in a German magazine is no coincidence. The German–Italian relationship has long been on the rocks. Germans have little experience of Italians outside their annual vacations and sometimes refer to Italy as a “nation of waiters.” Furthermore, Germans are getting increasingly restive over the apparently unending requests for Germany to finance the EU’s faltering southern economies, a resentment voiced with growing frustration by Chancellor Angela Merkel.
For their part, Italians don’t like being badgered by Merkel and European Central Bank officials about necessary belt-tightening and fiscal responsibility before the ECB will consider a bailout of the Italian economy.

The PIIGS countries and the EU itself draw their ideology from this brief video manifesto:And the voice of much-maligned reason on the far side of the pond remains Nigel Farage:
That #OccupyResoluteDesk admires the EU is, at least, in character.

Nigel Farage Sugarcoats The Euro Situation UPDATE: Daniel Hannan Also Has Vague Pleasantries On Offer

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by Smitty

Here, watch this. See if you can figure out Farage’s real opinion of Brussels under all of the whitewash and indirection:

Via American Power.

UPDATE, via Zero Hedge, that other famous British MEP also seems unwilling to commit to any tangible opinion on the Euro:

I just wish these Brits could somehow communicate what it is they’re on about a little better.

Update II: welcome, Instapundit readers!

Update III: transcript of Nigel and more at AoSHQ.