Comments on: “Crash the Euro” and Profit with a 5-Letter Code

By: Doug

Doug — Thu, 17 Sep 2009 21:49:38 +0000

No Carl, I wasn’t kidding. The national unemployment rate in CZ is 8.5% and in Prague (where 10% of the population resides) it’s 3.4%. Granted, there are pockets in the country that top 20% unemployment, but you’ll find those same pockets in much larger urban areas in the U.S. with the same or even higher number. Exports here are down, but the trade deficit is still in positive territory. The CZ banks are still solid due to the fact they didn’t leverage or take on excessive risk anywhere near what the U.S banks did (and are still doing). It still takes a hefty down payment, a good job, and full verified documentation to buy property in CZ. Consumer credit interest rates are prohibitively high which, along with strict bank guidelines, has kept consumer debt to a minimum. So far that sounds very different from the U.S. The budget deficit and current political climate are a problme right now but I see the caretaker goverment and the finance minister talking realistically and moving in the right direction (can’t say that for the U.S.). The current exchange rate is 17.0 and has been falling a tenth or more a day for about 2 weeks now. The low was in July 2008 at 14.5, the recent high in March 2009 was 23.3 (and that was merely risk aversion and a flight to safety, it has been falling ever since). I see the DXY almost broke below 76 today, when was the last time we saw that? The conclusion is that the dollar is toast based on too much debt. That simply didn’t happen here in Europe and that’s why the Euro and the Koruna and going to continue to strenghten against the dollar. BTW – I have lived full time in Mala Strana for almost 3 years. My wife is also Czech and the Polish clothing business she manages (11 stores in CZ) has seen sales increase 2 months running. Anecdotedly I also notice that the malls and shops are generally full of people spending money here in the city, doesn’t seem like folks are hurting too badly. My mother-in-law lives in a small town near Ostrava and we visit often. I have spent a great deal of time in the villages and I just don’t hear the worry like I do from friends and business associates in the states. As far as the WSJ, I don’t have a donkey to feed so I really have no use for it.

By: Carl

Carl — Wed, 16 Sep 2009 01:42:37 +0000

Doug;

You have got to be kidding? Take E-50 west, and head to the Country, where more then 50% of most EU Countrie’s population live. In Villages. Where Gardens aren’t hobbies, but a way of life. The Wall Street Journal does come in an European Edition. Unemployment? 20%-30% in most Counrties, which I consider twice as bad, as the 10% back at home. There is a reason why Czech’s people don’t care for the Euro, even though you can use it at many places. The seasonal rate exchange occurs every summer. Where last year the rate was 15/1, which got up to 23/1 this past winter, and now at 17.5/1. Please, my wife of 8 years is Czech, and I refer to Central Europe as the 40s, even though I havn’t yet reached 40. WOW!!!

By: Carl

Carl — Wed, 16 Sep 2009 01:33:05 +0000

Doug; You have got to be kidding? The Wall Street Journal does come in European Edition. I guess you havn’t seen the unemployment, which is over 20%,not just in the Czech Rep., but in a few of the EU countries. I guess you spend summers here. Try visiting a village, outside of Prague. Take E-50 and head West. More then half the Population of most EU countries live in the country. Which I love driving down those roads!! Gardens here, are not for hobby, they support life!! Market speaking? The exchange rate was 15/1 last summer, with it topping out this past winter at 23/1. It has fell to 17.5/1 recently, which is seasonal. While you can pay at many places in Czech, with the Euro, many of it’s people don’t want the Euro. There is a reason for that. England didn’t care for it either, as the difference of what it can buy, per country, is plain sick. Not to mention the difference in pay scales per country. My wife, of 8 years, is Czech. When medical students coming out of college, start at a salary equal to $1,500 a month, something is very wrong!! Corruption? I wont even go there!! Please Doug, I refer to Central Europe, as living in the 40s, even though, I haven’t yet reached 40!

By: faustkern

faustkern — Tue, 15 Sep 2009 16:17:20 +0000

The issue with this “crash the euro” is that is assumes global players have stopped diversifying out of the dollar. To the contrary this move has just started; and the only reserve grade currency left is not the GBP or the YEN (both of these countries have the same deficit spending and horrendous track records on taking tough austerity decisions). The EU is the largest economic block and the ECB stance is regarded as fairly consequential (if we say A we mean A and we do A) by the powers that be. Besides that most EU countries have already announced tax hikes and concrete cuts in gvt spending starting in 2010.

By: Doug

Doug — Tue, 15 Sep 2009 16:16:11 +0000

@Carl I’ve also been living in Prague for some time now. I’m still living on dollars though, and the exchange rate is killing me. Not as bad as last summer, but not good. What makes you think the economy here is worse than in the states? I’ve seen the Czech deficit but I don’t see it as being worse than the U.S. The market is speaking and the Kc is getting stronger.