We all know that Sterling has taken a pounding over the last few months, but with the Euro having risen against all currencies, does anyone else believe that it is being deliberately being overvalued with a view to a future run on the markets? As the ECB has been printing money just as rapidly as the Fed, the Euro must be set for a fall as well?

Yes I agree, short term we might see the Euro increase abit. I predict that by late 2008 it will be under extreme pressure to justify its worth.
I think the Euro will colapse from within the ECB is not able to balance the economic differentials of member states and I predict that weakness in Italy and Spain amongst others will force the ECB to change its position and some nations will withdraw that would kill the Euro dead.
The Euro has one master and one mistress naimly Germany and France no one else has a say and the currency is unstable.
Whilst Germany and France have strong economics the vast majority of the other euro states do not, indeed they are very exposed to the problems of a strong common currency.
My advice keep your sterling and your nerve as the $ will rebound bringing the £ with it the Euro is a danger zone.

Who knows? It's all a bit mysterious.

$ should stabilize, but I can't see it rebounding as the Fed goes to ZIRP.

Government finances and balances in the eurozone are generally much better than US and UK. The differentials within the zone are difficult, but are they really any greater than those experienced in the US? I suppose national politics could cause enough upheaval to force a break up, but it's just as likely that nation states will break up and stay within the zone (Belgium, Italy, maybe even Spain) or even enter the zone (Scotland, NI).

The real problem € has is with undervalued Asian currencies - they were bleating on about it in Brussels only last week, not about $ - and god knows what the Chinese are going to do.

I think £ is fcuked: banking sector will be hit really hard, and the country has ridiculous levels of debt. No way out of that bind.

Doesn't mean the £ is entirely stuffed; if interest rates are held & everybody keeps paying their debts on the nose, then the government will continue to be able to issue bonds & more money will keep coming in.

The downside risk is bad though, I agree.

The € is going to come under huge internal stress as Italy, Spain and Ireland's economies buckle under the weight of interest rates set by the Bundesbank. Will the Germans be willing to bail out all three countries in order to save the Euro? It's not as if the French can afford it...

The Deutsch Franc would be a better name for it indeed. I do think that the Euro's value is being deliberately inflated with a view to a future run. Germany has a strong economy and for obvious historic reasons - the Weimar Republic - the Bundesbank has always tried to avoid boom 'n' bust policies, however the ECB is now bailing out Spanish and Irish banks. I see the Euro surviving in another form as the currency of Germany, France and Benelux, but unless the weaker economies pull out and re-establish their own currencies, I think it is in for a fall, which will be engineered as these things always are by the George Soroses of this world. When it happens it will be sudden and most punters will be caught unaware.

Incidentally I think the Scots and the Northern Irish should they become independent will look at the Republic's experience and decide to stay out. Personally I think that the best answer for RoI would be to re-establish the punt at parity with Sterling. They depend on agricultural exports to us and the strong Euro will kill their economy. I don't believe that the £ is fcuked. I see the long term future for these islands as similar to Scandinavia: English, Scots and Irish pounds being like Norwegian, Swedish and Danish Kroner in their inter-relationships.

Jeez - it's very hopeful to expect debts in this country to be paid on the nose. I deal with a lot of charging orders in court - properties having CC/auto debt added to the existing charges - and those applications are rocketing. Ultimately, I can't see anything but first charges being paid off (if even that), so the whole process looks like going through the motions - literally. There's a big black hole opening up in the middle of the road.


Very difficult to find sensible predictions about the eurozone, especially in US/UK publications. Americans seem to be content in saying "If it's bad for us, it'll be worse for them". And British views are ... just weird.

Here's the short version of a 04 Feb 08 UBS client analysis on the coming storm for Ireland and Spain - relatively positive:

I don't have the corresponding views on the UK - not so positive, I'd guess.