Quote:
Originally Posted by PrashantS
How soon do we face a crisis? And what about Nifty, is it definitely going to see the 4000 mark?
|
Eurozone is already in a crisis and from how I see it, it's going to end in a big disaster (in which levels won't matter).
In my opinion, the only solution to the crisis is printing Euros, but that is unacceptable to the Germans (so far).
I don't think any other solution can work in the long-term.
-------------------------------------------------
This data shows current account balances of various countries in the world.
List of sovereign states by current account balance - Wikipedia, the free encyclopedia
Germany is right at the top, whereas 4 of the 5 PIIGS are right at the bottom.
Quote:
2 Germany 188.400
167 Ireland –3.191
180 Greece –17.100
181 Portugal –19.030
189 Italy –61.980
190 Spain –66.740
|
By accepting the Euro, the PIIGS have committed an economic harakiri.
These nations are constantly losing Euros and Germany is constantly accumulating Euros.
Irrespective of how much wealth Germany sucks out from the PIIGS, the PIIGS can't lower their currencies and rebalance their trade accounts.
That's Eurozone biggest flaw - a flaw that cannot be corrected by any means.
Germany's trade relation with other Eurozone members works along the same lines as China's trade relation with the US.
By keeping its currency artificially low, Germany is slowly sucking out wealth for other Eurozone nations.
Germany's relation with the PIIGS is not mutualistic, but parasitic. The PIIGS gain little by being a part of the Eurozone.
Quote:
|
Germany continues to benefit massively from the Eurozone, as without it, it would be faced with swift loss of customers (all the countries around it), competitiveness problem (the Deutsche mark would likely surge in value) and removal of safe-haven banking flows. For this benefit, it's not at all ridiculous that the Germans -- through a combo of taxes and willingness to let the ECB print more money -- help bail out everyone else.
|
Why German Taxpayers Should Be Forced To Bail Out Italians And Greeks - Business Insider