Forex Notes

Euro Zone Is falling Apart?

According to Societe Generale strategist Albert Edwards, creating the situation in the euro zone, threatening the collapse of the monetary unit, as the south European countries have fallen into the trap of overvaluation and low competitiveness.

In his statement today, Edwards explained that the problem in such countries as Portugal, Spain and Greece, is that "the years of unreasonably low interest rates led to overheating and the economy and the rapid growth of inflation." Even if governments can reduce their budget deficits, lack of competitiveness within the euro area will require years of relative (and perhaps, given the widespread vision, and absolute) of deflation. Any help Greece only delay the inevitable collapse of the euro zone. "

Edwards adds that "in contrast to Japan and the United States, Europe, being exposed to strong economic shocks, shows the sad trend of massive civil unrest." According to him, "an extended period of deflation in the countries of Southern Europe, other than the most precarious financial situation, will surely become too severe a test for these states.