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Author`s name Dmitry Sudakov

Euro Doomed To Collapse

The European Union still has no coordinated approach to the current events in Greece. The transatlantic financial politics may split and result in the collapse of the European currency. The euro has already plunged below the level of $1.35. Experts say that the euro has fallen under the strong influence of political discrepancy between EU leaders in connection with Greek events.

Investors have to strengthen their pressure on the governments of Greece, Spain, Portugal and Ireland forcing them to cut budget spending at all costs. As a result, the countries have to cut stimulating programs, which previously allowed them to overcome the economic crisis.

The current state of affairs in Europe may trigger another wave of economic recession, which would in its turn affect the fate of the euro.

The joint European currency may find itself between two traps formed by the policy of the European Central Bank and decisive actions taken by the USA’s Federal Reserve System.

Two leading economies of the world follow different principles in forming their financial policies. Therefore, the euro will continue declining in the near future and may soon reach the level of $1.20 per one euro, experts of BlueGold Capital Management said in their report.

European countries have no single approach to the problems of the crisis in Greece and the support of the euro. Germany is said to be the adversary of any decisive measures at this point.

Experts say that the German government is interested in the reduction of the euro rate, because the cheaper euro would expand the nation’s exporting capabilities. China has recently become the world’s No.1 exporter instead of Germany, which raised serious concerns in the European country. Germany would like to retrieve its export status to euro’s detriment, specialists say.

Such a position contradicts to general interests of the European Union. Many EU states are not so dependent on export as Germany is. Analysts say that another European country – Spain - may near the edge of default very soon in the event Germany does not provide direct financial assistance to Greece.

Spain’s budget deficit in 2009 made up 11.2 percent, which is very close to Greek numbers.

For the time being, no one knows how the EU is going to solve its problems, and what is eventually going to happen to the euro. Time will show.

Utro

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