Panic in Brussels as Greece warns it is one step from being unable to borrow

[disgruntledcitizen]

<snip>
Assume I am in the market for migrating my company over to SAP from some lesser, non-German product.

This is a lousy economy (we're a US company in this example, by the by). Orders are being cancelled left and right, customers are late paying their invoices.

Odds are that, despite my pleas as head of IT, the higher-ups are telling me "sorry, but the money just isn't there for the SAP project. We've haggled as much as we can, but the final quote from SAP is just too far for us to bridge. It has to be a no, even though it was a close run thing"

Then, one of Merkel's acolytes goes onto the FT website, and says something pungently racist about Southern Europeans to the swindlers who constitute its readership; as a response, the currency traders wet themselves and suddenly the Euro is two cents cheaper!

Suddenly the quote from SAP has crossed into the zone where the company has the budget to purchase, the sale is on!

It's never EVER totally irrelevant what the price of anything is. Price is always relevant.

sorry but almost all US companies accounting (GAAP) practices are to use currency hedge rates, either monthly or more often quarterly, so the fact that the euro v dollar rate changed by such a small margin on the back of a comment by Merkel or any other politician is largely irrelevant to such decision making esp when you consider that

1. the rate will have changed again within hours or days

2. depending on the standard payment terms your likely to be paying for such a product months from now and the rates will have changed again

3. given that products such as SAP are a strategic IT direction that take months / years to fully integrate and fully obtain the ROI expected

any company that decides between SAP and another product based on small and frequent currency variations is either extremely poorly managed or very short term sighted and makes poor decisions.....

frankly if what you say is true i'd worry about the longer term viability of such a company under its current leadership at the least

[Fantasia]

Open letter from the European Parliament to the Turkish ambassador to the EU-

we are concerned for our Euro and know how you would like to join our Union- would your country, by chance, be interested in running our failed state Greece..

[hiding behind a poster]

We could do with a weaker Euro anyway to boost Irish exports. On the other hand it would eventually mean inflation - particularly in our own country which probably buys half its imports from the US and UK. And with inflation comes higher interest rates from the ECB. Is our recent economic history about to repeat itself? Will the elites never learn?

You mean the elites whose suicidal pro-cyclical fiscal policy YOU were a cheerleader for, or different elites?

[feargach]

What was the average EUR-USD rate in the last quarter and what is it now?

I think we can be very, very confident that when this quarter is over and tallied up, the quarterly average will mean a significantly cheaper EUR, largely due to carefully publicised racist blustering from highly-placed Germans.

[disgruntledcitizen]

What was the average EUR-USD rate in the last quarter and what is it now?

I think we can be very, very confident that when this quarter is over and tallied up, the quarterly average will mean a significantly cheaper EUR, largely due to carefully publicised racist blustering from highly-placed Germans.

average interbank rate for the last 1/4 of 09 was 1USD =0.70EUR, for the 82 days of this quarter so far its 1USD = 0.719EUR a deviation of 0.019Euro rounded its 2 cents, or a decrease in value of 2.7%.

not sure if we would call 2.7% a significantly cheaper euro, though it is broadly a good thing to have the euro cost less against the dollar, it helps with Germany and other eurozone exports, though some of the benefit of same is counter acted with increased costs of imports esp key imports such as oil, however when balanced with the reduction of internal eurozone cost reductions the net effect on inflation should be minimal, thus allowing the ECB to maintain lower rates without breaching one of their core requirements on keeping inflation in check

[Oreo Livermore]

ehhh? Are the crazies forming some sort of mutual support group or something??

Your IQ is what again.

Talking about crazy. Can you explain one more time how Eamon Gilmore, who never had a job in his entire life, is going to create hundreds of thousands of jobs.

Bring in the coalition of clowns as soon as possible


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[FutureTaoiseach]

You mean the elites whose suicidal pro-cyclical fiscal policy YOU were a cheerleader for, or different elites?

I was not a cheerleader for the opening of the labour-market in 2004, nor the ECB's one-size-fits-all interest rates. Those are the most at fault. I didn't hear FG criticising either. Fair play to George Lee for recognising the shortcomings of ECB policy with respect to Ireland.

[feargach]

average interbank rate for the last 1/4 of 09 was 1USD =0.70EUR, for the 82 days of this quarter so far its 1USD = 0.719EUR a deviation of 0.019Euro rounded its 2 cents, or a decrease in value of 2.7%.

not sure if we would call 2.7% a significantly cheaper euro, though it is broadly a good thing to have the euro cost less against the dollar, it helps with Germany and other eurozone exports, though some of the benefit of same is counter acted with increased costs of imports esp key imports such as oil, however when balanced with the reduction of internal eurozone cost reductions the net effect on inflation should be minimal, thus allowing the ECB to maintain lower rates without breaching one of their core requirements on keeping inflation in check

No, it is certainly significant. If a German technology vendor has cut its price as far as it can, but it's almost but not quite enough for the US prospective buyer, then that 2.7% drop is enough to turn a transaction value of €0 into a transaction value of €10,000,000. Provided that the gap in question was €270,000 or less.

There's a reason that Asian nations devalue their currencies like mad: it's a fantastic way of drumming up business.

BTW: Germans care less about imports than any other developed nation. They're savers, they spend buckets less than they earn, so imports don't matter to them.

[hiker]

Exactly.

And the Germans also appreciate the point that a reasonably strong Euro keeps a lid on inflation, and a continued impetus to compete with cheaper manufacturers in other parts of the world. The last thing the Eurozone needs is conditions which cause wages to go up substantially. The Eurozone economies should be encouraging measures which keep wages in check for the next decade and, if necessary, beyond.

Remember, Germany is a country which knows what it takes to compete internationally. Unlike countries like Ireland, Spain etc. which reckon borrowing cheap money because it's there is an economic fundamental.

Before I begin you should know I'm a federalist and have been for about 25 years.

I have always read about the different economic cycles of the EU states not allowing them to act in a cohesive manner within the Eurozone.
Politics has always dictated that compromises and thus a fudge was required to keep the various political egos happy.
With the depression in full swing for 2 years now, these egos are no longer being tolerated. The main economic powerhouses of France and Germany seem to be finally weilding the big stick.
Is it surprising?
This is the most opertune time to bash all the pegs into the EU star-shaped hole. Politically the nations in greatest economic debt are almost powerless to resist.

Is it pretty? No

Is it necassary? Yes

IF your a Federalist.

[McDave]

Before I begin you should know I'm a federalist and have been for about 25 years.

I have always read about the different economic cycles of the EU states not allowing them to act in a cohesive manner within the Eurozone.
Politics has always dictated that compromises and thus a fudge was required to keep the various political egos happy.
With the depression in full swing for 2 years now, these egos are no longer being tolerated. The main economic powerhouses of France and Germany seem to be finally weilding the big stick.
Is it surprising?
This is the most opertune time to bash all the pegs into the EU star-shaped hole. Politically the nations in greatest economic debt are almost powerless to resist.

Is it pretty? No

Is it necassary? Yes

IF your a Federalist.

Interesting points. While I'm pro-EU integration, I'm not a federalist and still see national sovereignty as essentially still the basis for the "ever closer union of the peoples".

I agree with your point about the wielding of the big stick. My interpretation of it is that the more responsible member states are not prepared to bail out the less responsible ones. Greece is in an awful situation. But basically of its own making. It has compromised its own sovereignty by its own acts. Whether it were in the Eurozone, the EU or none, it would still have compromised its sovereignty.

So as I see it, Eurozone countries which take on their own solutions for their own problems will still retain their effective sovereignty.

Whether the current crisis kickstarts another round of treaty amendments is another issue. Such a revision will be necessary to move towards a more federal arrangement. That would be a quantum leap for the EU, and I have my doubts if even, say, the Germans have the stomach for that. For one, they'd have to have a actual referendum on the requisite transfer of sovereignty to the EU.