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One Possible Explanation For The Plunging Euro: Pension Accounting Change To Impact European Deficit Calculations
The EUR is in full plunge mode as of an hour ago.
There has been no explanation for this sudden weakness, although a reader proposes a very troubling explanation:
As you might have heard 9 mainly EU-newbies sent a letter to the EC demanding to change the current system of account deficit calculation. They argue their pension reforms should be accounted for in the calculation. The letter was obtained by dpa-afx. Could be a reason for the dropping Euro.
Of course, should this "reform" be enacted, Europe's deficits are likely to surge materially overnight, extinguishing any optimism that Europe has managed to avoid the crash. We can't wait until this hits the major newsstreams.
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and the verdict....? Is euro going down more? and how fast?
"You have this girl in front of you that seems to have a killing body and you are completely excited... "ready for her"... the girl gets naked and guess what...surprise, surprise... is not a girl!!! .... How long does your "ready for her" is going to last??? How fast does the "ready for her" is going to lets see.... "shrink"?????"
xoxo Pam
Well, if you work for the SEC...
More evidence for the "Hindenburg Omen". The indicator may suggest “a savage equity downturn is imminent,” said Albert Edwards, a London-based strategist at Societe Generale SA
we know its imminent...but the timing is what matters......and nobody has a clue about it
come on, 60 pips is hardly a plunge: sometimes i feel there is a bit of 'reckless exagerating' streak in some of the headlines;
and if someone cared to check properly, this supposedly accounting change was itself a topic in here a few days ago so i doubt very much it is the reason for this earth shattering cum end-of-the-world euro drop;
I like the headlines. Of course they exaggerate often enough. But, it's easy to read through. It's a blog, not a newspaper. Makes it more fun to read.
Where's Cramer today? I miss his ugly mug.
It might be 60-80 today (its 76 as I type), but don't forget, its been a few hundred the past few days.......big difference!
My Dear Frog,
you seem to missunderstand the basic concepts of economics. A pharisaic reaction as yours wont yield any reward, it only demonstrates your inability to reflect complex backgrounds. There is a state called irony out there, sometimes it strikes on late friday afternoons. Some people get it, others dont.
Is the Euro plunging or is Trichet just being more successful at currency debasement than Benron today? :P
The boom in "paper assets" continues unabated....
They are dumping gold and buying dollars and bonds.
One of the articles yesterday (Bruce?) said something to the effect "The dollar is the worst currency, except for all the others."
No that is total bullshit
The dollar just happens to be the currency that was backed by gold. Fundamentally ut is the worst fiat currency.
US financial system, bad as it is, is still much better than EU's. Their vulnerability to shocks dwarfs ours. There was a great chart in a prior ZH post (probably months ago) that showed reliance on overnight and ST funding by US and EU banks. Ours learned something from the last major liquidity crunch. Not so for the EU banks. Maybe things have improved since then, but I'm not holding my breath. Also, look at/compare exposure to Dubai, Eastern Europe, PIIGs, etc.
If that fractional decline in the value of gold is enough to propel BOTH the USD and the 30yr to that extent, then the gold market must be truly massive.
Robo, a move of 0.01% is dumping??
double post deleted
Yeah jump in, just before the hyperinflation(dollar/bond crash)
There is currency inflation in the Euro zone as we speak. It will be no different for the dollar.
I think we have some kind of system to balance. When US needs to export they rapidly plunge dollars, than we we let Euro plunge for EU exports.
Some kind of game of patterns.
Here's another explanation. The entire western world is BANKRUPT!
winesorbet- you are so damn negative. You ought to be posting on..., oh wait a minute... this is zerohedge.
Sorry, but He/She appears to be 50% optimistic, what about the Eastern World?
From IrishTimes:
it's more a case of USD rallying.
Other euro pairs (aud, chf, jpy, gbp) would disagree...
Dumb as a box of Rocks - much as I hate to insult rocks...
A VERY GOOD EXAMPLE OF THE KIND OF REPRESENTATION WE HAVE IN CONGRESS,
A noted psychiatrist was a guest speaker at an academic function where Nancy Pelosi happened to appear. Ms Pelosi took the opportunity to schmooze the good doctor a bit and asked him a question with which he was most at ease.
'Would you mind telling me, Doctor,' she asked, 'how you detect a mental deficiency in somebody who appears completely normal?'
'Nothing is easier,' he replied. 'You ask a simple question which anyone should answer with no trouble. If the person hesitates, that puts you on the track.'
'What sort of question?' asked Pelosi.
Well, you might ask, 'Captain Cook made three trips around the world and died during one of them. Which one?''
Pelosi thought a moment, and then said with a nervous laugh, 'You wouldn't happen to have another example would you? I must confess I don't know much about history.'
I can't believe this happened, but funny nonetheless.
Even if it is a joke that dates back to when dirt was new, it's still humorous.
Pelosi said "are you serious?" to a reporter who asked her about the constitutionality of Obamacare and the mandate.
Change in accounting rules changes numbers but not real debt levels or the possibility to service the debt.
Why should this trigger a big move in the Euro?
If there is something like a bear market in currencies, this erratic action is a typical bear market action. A big player got a margin call and the position was liquidated. Nobody outside knows why.
Cosmetics are everything here, most aren't smart enough to go behind a headline.
Supposedly the 'big' guys are smarter; an entity able to move the USDX two units should know better. Did a central bank intervene to support the USD at 80?
Barry has already proclaimed that the USA Recovery Summer would have been in full swing if not for the dumshits in Europe. Maybe the currency markets fell for it. Don't underestimate his influence..... he talked a hell of a lot of people into voting for him.
Wha? They bought ipaduhs, didn't they?
Fear drives these moves - your choice what is most scary at the moment.
http://www.bbc.co.uk/news/world-asia-pacific-10925061
A Chinese military response to US Naval exercises in the Yellow Sea. Truly a Black Swan IMHO...
http://bit.ly/93m3Bf
Italian bond auctions weak today - low bid to cover:
http://sfgate.ldc.bloomberg.wallst.com/SFChronicle/Story?docId=1376-L737...
Liquidity measures seem to be deteriorating in Europe. I wonder (with Tyler) what happens when Sept and Oct rolls around and traders/investors come back from vacation. And start fearing an October crash of some sort. Becomes a self-fulfulling prophecy?
That right, so where is all the deflation then ?
EUROPE IS INFLATING, NOT DEFLATING.
Eurostat is currently playing very hard line with Irish fiscal accounts - not allowing much bullshit accounting in our fiscal deficits.
My feeling is there is a very forceful policey from Brussels/Frankfurt to force down the euro - especially as the ECB seems to be funding the periphery now.
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You can list 1000s of possible reasons. Here's a real reason:
Look where the giant rally in 09 started in May. We couldn't clear that level. Also same level couldn't hold May 2010. Price action tested it, and it immediately got sold off, this was consistent with momentum getting weaker from the AUG 2, 2010 acceleration candle to clear 1.3024 level. This was very well telegraphed.
Here, I made some images to help clear up this for you.
Weekly: http://i.imgur.com/fQqnk.png
Daily: http://i.imgur.com/pUiBY.png
Remember, anytime someone tells you that some price action X occured due to News Y they are full of shit! Traders don't react to news, traders react to price levels and momentum.
Nice job with the charts. Broadening ascending wedges often have bearish outcomes.
The tide is out.
Got your speedo on?
I ask this in all seriousness. Can we assess the likelihood of this reform being enacted?