$277 billion into stock funds so far this year; highest since 2000

[specuvestor]

I don't have thoughts about the has-been GBP

IMHO, contrary to common perceptions, the Maastricht treaty structured the EUR sandbox very well. People blame it on lack of fiscal union, lack of penalties etc. For sure fiscal union would be preferred but IMHO is not a prerequisite as monetary policies can be independent from politics, just as the US states and the Federal Govt but with a difference. Texans will bail out New Yorkers because they are Americans. Europeans yet to reach this enlightened self-interest stage yet.

If we look back, the primary problem was 2 folds: Germany merger and end of Warsaw Pact. The huge fiscal deficit in Germany set a precedent that the Maastricht treaty can be breached. The over zealous expansion of Eurozone into ex Warsaw states was for political reasons even when the economic prerequisites were not met yet. The catalyst turn out to be Greece who fudged their numbers via GS structuring, just to join the EU.

With the stabilisation of the crisis and a more pragmatic ECB president Draghi vs the idealistic Trichet, I think Eurozone will recover. The structural issues of welfare state is there and I think Eurozone will continue to be the old man of the world with old money who sucks on execution. Definitely very painful for the young people now looking for job. But for the greater good which the forefathers of the Eurozone envisoned, together they will be a formidable force in the global economy to balance up USD and RMB.

Thanks Specuvestor.

What are your thoughts on EUR and GBP?
Frankly, I am having some reservation on EUR, being itself a supranational currency, which enjoys monetary union but no fiscal union.

Ultimately, I can't see its future without fiscal union having one Monetary Central Bank setting limits for all EU countries.

Having some European friends who are still lambasting the socialist policies of their nations, I doubt Europe will get out of this crisis as fast as they proclaimed.
Some Europeans are calling this a lost generation for their youngsters. Young graduates who can't find a job. No experience, can't migrate. Sad but true.

[sgd]

The demand for usd is link to the demand for oil. In 1973 kissinger hatched an agreement with the saudis. The saudis would sell their oil priced in usd. And the americans would give protection to the saudis.

So as the demand for oil grew so did the demand for usd

Today even if everybody agreed to replace the usd is not enough. They have to look to the security interest of the arabs. And even if the arabs agree there's still a problem to deal with and that is the military might of the Americans.

Everybody that has tried to switch from using usd has met an unfortunate end. Iraq, syria, libya

So to replace the usd dollar with another country currency you need another military super power strong enough to resist the Americans or the oil runs out then nobody would need to buy dollars anymore. I think oil will run out faster before another new super power emerges.



interesting read.
http://www.thepeopleshistory.net/2013/06...means.html

[specuvestor]

That is the story of petro$ recycling and the establishment of LIBOR market. It was important to stabilise the US$ with the breakdown of Bretton Woods.

Middle East Relations with US has soured since Osama. The Arab spring and the fate of Mubarak makes them even more wary of US. The recent phone tapping scandal does not help either.

US will not give up without a fight. IMHO there is a chance we are at the inflexion point but the inertia of global trade settlements and stickiness of USD will mean this is a slow but not impossible process.

[sgd]

if is true iran would be next as they too repeatedly called for moving away from usd. Maybe under Jeb Bush administration.