According to American analysts, troubled countries, including Portugal, Greece, Spain and, recently, Ireland should come to an independent decision to leave the Eurozone. They should do this as soon as possible because, otherwise, there might be a real threat of global crisis around the entire European banking system.
The report by one of the leading economists of the American Enterprise Institute, D. Lachman, points out that these countries cannot avoid such measures because currently a default by any EU country will trigger a domino effect at the periphery which may result in disastrous consequences.
According to the expert, these countries’ debt has been ‘chronic’ for a long time. It is the life buoy of bailout that stops their economies and the entire European banking system from crumbling down. Nevertheless, as soon as the stream of finance dries out the consequences are absolutely obvious.
Drastically restricted by the single currency space, these countries cannot resort to currency devaluation, a natural step in the current situation, as a way to reduce a sizable part of losses. They cannot expand exports, either, as a shock-absorber that cushions negative impact of the spending cut programs.
Enabling the troubled four to restructure their debt is out of the question – this is what both the European Union and the International Monetary Fund will fully take care of. So, what Portugal, Ireland, Greece and Spain have left is only a few options in the near future. They might even start negotiating secession from the single Euro space quite soon…
After an unsuccessful attempt to find support above the current week’s volume of 9,200 lots at 1.3286, the Euro (6E) futures broke at local low at 1.3166.
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1 comment:
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