Euroland bourses recover, but for how long?

Tuesday, 19 April 2011 11:11

Most Euroland exchanges are slightly up in early trading, FTSE, DAX and CAC are all positive. It seems Greece is finally starting to realize they will have to restructure and so the markets are a little less jittery, yet they should be.

The simple point is restructuring the debt will not really do anything about reducing the debt, in most cases the restructuring will only be window dressing and cause more worries for debt holders.

If there are any offers of "haircuts" on the debt which would then reduce the debt this would have dramatic effects on those defaulting nations. Giving a "Haircut" is really just another way of saying default so it is not going to be a fix to the issue.

Huge austerity cuts have to go in place of any haircut offers, Greece has to recognize that its economy cannot grow fast enough to service a burden that is set to swell to 160 percent of national output in the coming years.

Yet these nations (Ireland, Greece, Portugal) all think that they have somehow been wronged when it was years of out of control spending government spending and corruption that got them to where they are today and the stronger Euro nations have to bail them out. The Euro is not a soverign currency as it is a currency of numerous countries and it was destined to be a disaster from the beginning.

You could never have a single Asian currency and even with talks of a common BRIC currency each nation would have a weighting which is the only way to do it, rather than saying all the countries have the same weighting. Good example Germany vrs Greece, one powerhouse and the other a ????