Is the pound set to make a comeback against the Euro?

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dazza
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Postby dazza » Sat Nov 19, 2011 5:32 pm

Bulgaria's exposure to the Greek crisis cannot be underestimated 25% of BG bank assets are in Greek hands, if the Greeks sell off here the effects will be disastrous.

The burden of personal debt is also high as are the interest rates charged here.This however does not affect the Euro-Pound debate.I agree with the one before last posters view but I think he is far too sanguine about the UK's position.The only EU economy that has performed at all well is the Polish one which has never entered recession.

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Postby qwerty » Sat Nov 19, 2011 5:45 pm

The ECB is prevented by law from going down the road of QE but if the new idea being floated about of the ECB printing and giving truck loads more Euros to the IMF, then that could be EURO QE by the back door which could have either a positive or negative interpretation by markets, certainly positive short term because QE coupled with a little inflation shrinks debts away.

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Postby qwerty » Sat Nov 19, 2011 5:53 pm

dazza wrote:Bulgaria's exposure to the Greek crisis cannot be underestimated 25% of BG bank assets are in Greek hands, if the Greeks sell off here the effects will be disastrous.


Indeed, if any Greek corporations need to unwind their positions here quickly, it wont be pretty, I read the figure was higher than 25% but non the less 25% would cause enough problems.

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Postby gimlet » Sat Nov 19, 2011 6:01 pm

if the Greeks sell off here the effects will be disastrous.


I don't see why. It's quite likely that the Greek banks will be nationalised and then their Bulgarian subsidiaries sold off for the benefit of those Greek Banks. The worst case surely would be that they aren't sold, they stay in Greek hands and reduce their lending to remit more capital to Greece.

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Postby dazza » Sat Nov 19, 2011 6:09 pm

Disastrous in Bulgaria if the Greeks liquidate their assets then there will be a sharp fall in Bank asset values, possibly leading to a run on the banks.Even worse is that 25% of debt in BG is in Greek hands.If short term loans are called in then it gets even worse.

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Postby Hippyboy » Sat Nov 19, 2011 7:05 pm

dazza , I think that you'll find that , although its small , Estonia has the best performing economy in the EU , and is predicted to continue doing well , although clearly Poland has been strong . As for the pound it will probably be down to the money markets and speculators as to whether it rises or falls . Tim .

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Postby Pascalcho » Sat Nov 19, 2011 7:09 pm

dazza wrote:I read a story about this in the Independent this morning.The continuing volatility of the Euro would on the face of it help the pound, however that may only be in the short term.If Greece falls out of the Euro, followed by the Italians it would leave a smaller more stable eurozone willing to pursue closer fiscal union.This should actually make the Euro stronger but it seems the Greek and Italian situation may be stabilising.The British economic situation is itself poor with rising unemployment and inflation.The prognosis is probably no great movement either way unless a country drops out of the Euro.


So the Greek and Italian crisis is stabilising?
Really?

Why do you think they are stabilising? Because they will get a bailout of minimum 50-60% from Western banks. UK banks for example.
What do you think happens with banks who only have a buffer of max 10% (Bulgarian banks 25%)?

Do you think Belgium(who are almost at the point losing their 3rd last big bank KBC) and Spain are stabilising too?
Or France, you think France is still ok after they nationalised the Dexia bank which is the lender to France governments (from villages to ...)

Me thinks you do not understand much about the situation.

Why do you think Germany is not keen on Greece going bankrupt?
Maybe because they will have a few banks (Deutsche Bank for example) they need to bailout then?

Pascalcho

Postby Pascalcho » Sat Nov 19, 2011 7:14 pm

booboo wrote:
bigbulg wrote:The problems with the Southern European countries is not only the amount of debt, the biggest issue is that they have to repay loans and Bonds which are due imminently. Luckily for the UK, altho we also have huge debts, our bonds, loans and debts are repayable a long way in the future, 9-10 years in fact, at low interest rates, and we have a sovereign currency (£) which can de-value (and has) with the ability to print money. With all the bad news around the Euro you would expect the £ to be a lot higher and i imagine it would have been if we didn't use our "Quantative Easing".
We still have our AAA rating too, our Bonds are in great demand, its not all doom and gloom just yet.
I must add, I do now think Bulgaria is in an envious position (from a Greek/Italian/Spanish/Portugese/Irish and Hungarian prospective) it has lots going for it. Already Greek companies are coming over in droves, attracted possibly by the 10% tax rate tho more than likely the future tax regime of their home country.


Bulgaria will announce a hole in funds within the next 3 months (but if the delay takes it to 6 I'll still bump this). I can't explain much, but expect the enviable position to become somewhat less enviable. ONLY less, not unenviable BTW :arrow:


I would not be surprised. But then again, compared with most other EU countries (including UK) it will not be that bad. That is, when they actually start doing something to get out of the crisis instead of doing everything possible to stay in it.

Pascalcho

Postby Pascalcho » Sat Nov 19, 2011 7:25 pm

gimlet wrote:I think private debt (non-performing) is Bulgaria's biggest problem, along with the usual lack of real growth.

Hungary seems to be falling apart, though it differs in that it's been an IMF case for some considerable time. Nobody bought the bonds it offered a few days ago.


Hungaria's forinth IS NOT paired with the euro.
One of the reasons why they got in trouble. (lots of loans in Swiss Francs and euro's while the forinth dived very very deep)

Reason why South European banks are in trouble => Because the big Westrn banks needed to expand to have more profit and they never counted in any risks and only took the big profits and big bonusses for the managers of those banks.
Only one problem for the Western banks, if South goes bankrupt, their house of air is gone. So is the trust in fiat money then.

Hungary followed the route of most European countries to fight the crisis. Get more loans to build more roads and much more. (And those roads were still in perfect condition imho).
So now they have the problems from before (the effect of the new loans is gone) and they have the new loans on top of it.

Also Germany invested (read loaned) a lot of money to build infrastructure. That effect on their economy is slowly working out and growth figures are disappearing again.

Pascalcho

Postby Pascalcho » Sat Nov 19, 2011 7:31 pm

dazza wrote:Bulgaria's exposure to the Greek crisis cannot be underestimated 25% of BG bank assets are in Greek hands, if the Greeks sell off here the effects will be disastrous.

The burden of personal debt is also high as are the interest rates charged here.This however does not affect the Euro-Pound debate.I agree with the one before last posters view but I think he is far too sanguine about the UK's position.The only EU economy that has performed at all well is the Polish one which has never entered recession.


Tell me, why would Chinese, Turkish and other banks in the world not be interested in buying healthy banks in Europe.
With buffers of 25% and more; nowhere to find with big Western banks.

Bulgarian banks have the problem they cannot loan out enough.
Bulgaria is also a country where a very big part of all the savings is in the hands of very few people.
Those people cannot go anywhere with their money because their banks are the most trustable and the % is the best.
With at the same time Greeks and Romanians trying to bring their money to a save Bulgarian bank because both countries are under IMF curratele.

One more question, if Greece defaults, which banks would go fastest bankrupt?
Greek Alpha, Deutsche bank or Raiffeisen Austria?
It will be very close, i can tell you that!


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