The potential for real trouble in Europe is that a failure to adequately address crisis in Greece may tip a financial system that is still very wobbly back into panic. I dont know why the core European powers are letting this Greece, Portugal, Spain situation to evolve, why they do not stamp out before it becomes seriously distabilizing and people starts to stampede towards safety?
Feb. 9 (Bloomberg) -- The euro traded near an eight-month low against the dollar on concern a European Union summit this week will fail to address Greece’s fiscal crisis, damping demand for assets in the region.Follow Up: I didnt know my blog had such power :-) ! Only two hours after publishing the above note, a senior German ruling coalition source called a press conference and said that euro zone governments have decided to help debt-burdened Greece. Wall Street is rocketing.
“Investors won’t be willing to take the risk to buy higher-yielding currencies unless organizations such as the European Central Bank and EU speak up to rescue Greece,” said Masahide Tanaka, a senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s second-largest bank. “If investors switch their attention to the fragility of Europe’s economy, euro weakness may accelerate.”
Europe’s currency dropped 1.3 percent last week against the dollar as Greece struggled to deal with its budget shortfall, the largest in the European Union. The country is trying to convince investors that the deficit, now at 12.7 percent of gross domestic product, can be brought down to the bloc’s 3 percent limit.