EURUSD

I believe 3817 is the top for now. Shorted at 3811.

ive had it since the summer *L*

Feldstein Sees Greece Euro-Exit Pressures as Deficit Plan Fails

March 17 (Bloomberg) -- Harvard University Professor Martin Feldstein, who warned almost two decades ago that the euro would prove an “economic liability,” said Greece’s austerity plan will fail and the country may quit the single currency to fix its fiscal crisis.
Under pressure from investors and fellow policy makers, Prime Minister George Papandreou’s government is striving to knock four percentage points off its budget gap this year from 12.7 percent of gross domestic product and has vowed to meet the EU’s 3 percent limit in 2012 for the first time since 2006.
“The idea that Greece can go from a 12 percent deficit now to a 3 percent deficit two years from now seems fantasy,” Feldstein, an adviser to U.S. presidents since Ronald Reagan, said in a March 13 interview in Geneva. “The alternatives are to default in some way or to leave, or both.”
His diagnosis clashes with that of European Central Bank President Jean-Claude Trichet, who calls Greece’s strategy “convincing” and rejects as “absurd” any speculation it might leave the euro zone. Investors nevertheless aren’t ruling out Feldstein’s analysis. Billionaire George Soros said last month that the euro “may not survive,” and credit default swaps indicate a 22 percent chance Greece will default within five years, up from 16 percent a year ago.
The judgment of Feldstein, 70, a former contender to chair the Federal Reserve, marks his latest broadside against the single currency five years after he said its rules generated a “very strong bias toward large chronic fiscal deficits” and more than a year since he first suggested the 16-nation bloc may splinter.
‘Absolutely’ Won’t Break Up
He “has more reason to think he’s right than five years ago, and it’s natural to talk about limitations,” said Philip Lane, an economics professor at Trinity College Dublin. “But the euro area will absolutely not break up.”
Greek workers disrupted transportation services and tried to storm parliament on March 5 as lawmakers passed 4.8 billion euros ($6.6 billion) of extra deficit reductions, including lower wages for public employees. Such cutbacks will continue to run into resistance as unemployment is propelled above December’s 10.2 percent and recent declines in the country’s bond yields are tied to cheerleading by European policy makers, Feldstein said.
Greece’s 10-year bond yielded 6.16 percent as of 4:57 p.m. yesterday in London, a percentage point lower than Jan. 28. The premium investors demand to hold the bonds over their German equivalents narrowed to 297 basis points from 396 basis points.
‘Polite Way’
Greece will ultimately need to mull alternative ways to tackle its crisis, possibly by finding a “polite way” to default, Feldstein said. That might include persuading investors to swap maturing bonds for longer-term assets at lower interest rates. Another option would be leaving the euro area to devalue and then returning once the fiscal weaknesses are solved.
“I don’t know that there’s a good solution to this problem,” Feldstein said.
Pulling out and re-entering is impractical and gives other countries an excuse not to restrain deficits and improve their competitiveness within the euro zone, said Charles Wyplosz, a former student of Feldstein’s and director of the International Center for Monetary and Banking Studies in Geneva.
While leaving the bloc and devaluing its currency would likely enable Greece to boost exports, the so-called holiday strategy would also require spending cuts, lower real wages and tax increases, Feldstein said.
“Put all that together, and it doesn’t look like countries are going to eagerly line up to do it,” he said.
Belt-Tightening
European governments this week laid the groundwork for a financial lifeline to Greece that would provide emergency loans if needed, breaking a taboo against aid to cash-strapped nations to avert a deeper crisis for the euro. Standard & Poor’s yesterday removed Greece from “creditwatch negative,” lowering the threat of a further credit-rating cut. Greece has a BBB+ rating after S&P downgraded it from A- in December.
While a bailout would be a “relatively painless solution,” Feldstein said it would generate opposition among voters and risk other nations demanding similar assistance.
Feldstein’s opinions command attention because of his career at the hearts of both academia and politics. This experience catapulted him to the brink of the Fed chairmanship five years ago before President George W. Bush picked Ben S. Bernanke.
Feldstein received the John Bates Clark Medal in 1977 as the U.S. economist under the age of 40 who made the most significant contribution to economic thought and knowledge, then ran the National Bureau of Economic Research, arbiter of U.S. business cycles, for most of the next 30 years until 2008.
Former Students
He chaired Reagan’s Council of Economic Advisers, counseled Bush’s White House campaign and now sits on President Barack Obama’s Economic Recovery Advisory Board. Among his former students are Lawrence Summers and Lawrence Lindsey, the current and former directors of the White House’s National Economic Council.
“Marty’s a very important economist,” said Glenn Hubbard, dean of Columbia University’s Graduate School of Business in New York, who was also taught by Feldstein and chaired Bush’s Council of Economic Advisers. “He’s a great scholar, but what distinguishes him is that his ideas have practical impact, too.”
As long ago as June 1992, Feldstein wrote in the Economist that “economic analysis” didn’t justify a single European currency. In his most-famous contribution to the debate, he wrote in Foreign Affairs in 1997 that “war within Europe itself would be abhorrent but not impossible” under the euro.
‘EMU and War’
Many economists read his comment ahead of the birth of Economic and Monetary Union as a forecast that war would break out. Feldstein denies that, saying an editor wrote the headline -- “EMU and War” -- and he was arguing that the euro wasn’t a guarantee against such a conflict and might fan cross-border political differences.
While Feldstein says he likes Trichet “a lot and I think it’s mutual,” he notes the ECB president often points out that skeptics doubted the euro would exist or last. “You don’t find any of that in my writings,” he said.
Even so, Lars Jonung, an adviser to the European Commission in Brussels and co-author of a January paper on how American economists viewed the euro through the 1990s, says Feldstein is a “consistent pessimist, and so far he’s been proved wrong.”
Well-Established
The currency is well-established and hasn’t sparked political turmoil, trade has increased and inflation differentials in the euro area are similar to those for U.S. states, Jonung said in his Econ Journal Watch study. Greece’s measures and the response of EU governments will eventually strengthen monetary union, he added.
Feldstein counters that global growth during the currency’s first decade helped mask its flaws, such as the mismatch of spreading uniform interest and exchange rates over diverse economies that lack fiscal discipline. His criticism doesn’t stop him from predicting the euro will appreciate against the dollar as investors punish the U.S. trade imbalance. The euro has fallen about 4 percent against the U.S. currency this year and traded at $1.37 yesterday.
Feldstein turned his attention to the implications of the euro for budgets in 2005, when he said a decision by the euro’s members to ease fiscal curbs left the “way open to much larger sustained deficits.” By November 2008, he was writing that diverging bond yields within the region signaled investors “regard a breakup as a real possibility.”
Two months later, as the euro marked its 10th anniversary, Feldstein told the American Economic Association the currency faced an “important testing time” and countries may ultimately leave it to regain control of their economies.
‘Proved Wrong’
“American economists such as Marty have been proved wrong for a decade and will be proved wrong for the next decade,” said Wyplosz, who predicts that a Greece exit would trigger a “total collapse of the Greek economy.”
Feldstein stands by his analysis that it’s not “unthinkable” some countries may choose life outside the euro area. Leaving is “certainly possible, and in part it can happen even if all the economic advice to a government is, ‘You shouldn’t do this,’” he said. “Politicians don’t always listen to their economists.”
To contact the reporter on this story: Simon Kennedy in Paris at [email protected]

i burned those charts. all the manipulation from the swiss pissed me off. i have to start over

well... 1.05 was previous support, as u know. as i remember u saying it bounce of previous resistance/ now support, text book example...

it would be to greeces advantge. they could be the cheapest in europe for vacations. they could have their own currency and still take euros. the best of both worlds. i said this a few weeks back.. problems solved for greece.

give me a few.. ill figure something out as new support..

i did find a mid at 0557.. we may hover around it.. but i dont trust since swiss crap

in gu , sell signal confirmed in H4,m30,m5 but h1 buy setup perfection & cd on where price again to fall at or below 1.5209 before buy signal after min 5 or more hrs if to buy there . resistant below 1.5195 & if break then next support 1.5036 may play.upside still considering 1.5272 ,may be spike up.
fontu

it would be a disaster for all the Greeks left holding the bag on their euro denominated debts - the reintroduced drachma wouldn't be worth shit in the euro world. the fuckin lawyers would do alright but eveywhere else it would be a generational loss of wealth. It would be a disaster and a shit stain on the remaining EU and the germans will never let it happen - they own big chunks of Greece anyway.

Very unconvincing attempted break above 1.3800. Sell bias not confirmed though until clearing 1.3791 back to the downside.

G-Man

hello guys, stilling with the short-term from my side, with small target, 3680 EU and 5145 GU, what do you think about that ?

Looks like sell to me. Stochs says so. What do you see. In a sell at 3794.

I'm not so sure dude.....people have short memories when it comes to "what's in it for me".......

Why would Greece leave the euro now that the ECB has committed as a lender of last resort? They could peg the Drachma aritficially to the euro now get out, devalue the Drachma and get back in at a discount. This is one solution that actually may benefit them and the rest of euro land. The only problem is that in todays economic climate can Greece really be assured that it will be better off on its own? Tourism and shipping are in the dumps, two of the mainstays of their economy.

It will take some drastic political measures to leave the euro, is their government strong enough to weather the storm?

imagine that

As eu showing the bulls checking when next bout coming . In h1 buy cd on where price to come at ot below 1.3777 ( sr 1.3765/49 break 1.3674) by 2 or more h1 candles & so down before next bull may be coming.
fontu

lol....words fail me....roflmao....

im going wait till end of week before i say it over for Eu longs, but right now, i short EU, AU, and long UChf, like my original plan

If u ask me the single currency for the whole region is never right for from the first place. They should have created a Trio-Euro. 3 types of euro with High interest, Med-interest rate and low interest rate with pegging each other to allow countries with diff economic size to choose themselves. You cant unitfy economy of eurozone in 1 shot.

It is very difficult to adjust the correct interest/lend rate that fit the whole region.