UK says the Euro currency cannot survive

Happy new year Eurozone, the United Kingdom would like to send you something: a greeting card telling you that your currency may not survive.

UK: Euro stands just 20% chance of survival in next decade

The UK-based economic think tank CEBR (Center for Economics and Business Research) warned that Europes common currency, Euro, battered for more than a year by sovereign debt crisis, is unlikely to survive the next decade in its current form.

CEBR gave the euro a slim one-in-five b[/b] chance of being preserved in its present incarnation as the legal tender for the 17 nation currency bloc, in other word, it has 80% possibilities of breaking up.

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Euro is very likely to break up, says UK’s CEBR

The group Chief executive Douglas McWilliams said living standards would have to fall by about 15 per cent in the weaker economies and Government spending slashed by 10 per cent if the single currency was to survive. He however, added, there is no modern history of falling living standards in peacetime, this can only be achieved in wartime. That is why I think there is at best a one-in-five chance the euro will survive as it is.

Public discontent among citizens of other European nations is rising after their tax money was used to bailout the Euro-using Greek and Irish economic crisis in 2010, to maintain the stability of the single currency. Confidence in Euro among member states is now at new low.

What is particularly concerning is the brewing debt problems in Spain and Italy, which might serve as the catalyst for a new downturn. While economists have long warned that Spain and Portugal are two of the most vulnerable economies in the euro zone, Italys heavy debt load approximately 115% of GDP and sluggish growth have made some analysts wary about the countrys long-term prospects.

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A cartoon depicting Euro PIGS (Portugal, Italy, Greece and Spain), whose economy are currently very vulnerable

“Spain and Italy have to refinance more than 400 billion euros (US$532 billion) of bonds payments within the next few months. This is the amount of money they would have difficulties taking out. Euro citizens have expressed outrage 110 billion has been used to bailout Greece and 85 billion for Ireland. There are already protests across Europe for these. What’s more the 400 billion to bailout Spain and Italy? That may be the breaking point.”

Even as Germany would be the economic superstar of the Western hemisphere in 2011, McWilliams added a grim prediction that this could be the year when [the euro] weakens substantially towards parity with the dollar.

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European budget deficit getting worse

Political will in France and Germany, however, is strong to preserve the Euro. French President Nicolas Sarkozy said on new year he would fight to shield the euro, and that ‘the end of the euro would be the end of Europe.’

German chancellor Angela Merkel gave a similar tone, saying in the new year that she vows to protect the Euro as ‘foundation’ of German economy. The Euro however, begins to gain widespread unpopularity among German populace, “Germany is Europe most dynamic, industrially advanced, and robust economy. The single one country Germany alone, exports more products than the entire 57 Muslim states combined. Germany surpassed the US to be the world’s largest exporter in 2003, and now it lost this title to China. It all happened because Germany is shackled to a group of dead corpses (Eurozone).” Germany is the country footing the biggest share of the 860 billion euros ($1.1 trillion) in loans and pledges to prevent the exacerbation of European crisis.

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Economy of Germany has recovered to pre-crisis level, other EU nations haven’t

Meanwhile, the year of 2011 is looking grim for Japan. Japan national debt now stands at 200% of GDP, an unsustainable level. Zero organic growth, lagging monetary policy, and highly overvalued currency are making things worse for the third largest economy. Japan needs to borrow 350 billion, mostly to pay back (or roll over) existing debt. Unlike the EU, Japan has a national reserves worth up to $1 trillion, however, its reserves is not liquid (not readily convertible to cash), and the risks of meltdown is still there.

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Will Japan be the next to fall?

The EU, USA, China, Japan, India and Russia are the 6 most important economies of the world, together accounted for 67.7% of planet Earth economy. The other 6, Brazil, Mexico, South Korea, Canada, Australia and Taiwan occupied 11% of world’s economy. EU & Japan make up 26.6% of global economy, a crisis in both would have serious impact on the world.

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Euro against the more stable Swiss Franc in 2010

“Economies of Middle East and Africa, who are so intertwined with Western oil demands and capital inflow, may go down together in event of crisis. Economies of China and India who are experiencing strong domestic growth, have shown resilience and the abilities to withstand another global crisis. American recent QE2 policy and its currency war against the world might hurt the rest, but actually do good to the USA. The US economy is expected to make gradual recovery in 2011.”

If euro falls,the country bankrupt?

nope, but these countries will revert back using their own currencies.

all past efforts in promoting euro and european monetary union and common market would be wasted. this is very damaging for france & germany, both considered the leaders of eurozone.

[quote=“mevotex”]nope, but these countries will revert back using their own currencies.

all past efforts in promoting euro and european monetary union and common market would be wasted. this is very damaging for france & germany, both considered the leaders of eurozone.[/quote]

Ooo…Okey…i get the picture now…
i doesn’t really understand how all these economy stuff works…
i had many things to learn from you people.