Euro Zone Booming !

[Nexus6]

Originally Posted by austin356

Within ten years the European Union will be the worlds 2nd possibly 3rd largest union.

You severely underestimate how long it takes for nations to be willing to give up more and more of their souvereignity. The population has to get used to the thought first. Such a process takes many decades.

[SHiRO]

But the EU already is the world's largest true union!

[austin356]

Originally Posted by Nexus6

You severely underestimate how long it takes for nations to be willing to give up more and more of their souvereignity. The population has to get used to the thought first. Such a process takes many decades.

OH I did not mean to nearly the extent of the EU. All I am talking about is currency and trade. Nothing more.
For Example. NA already has 1/2 of what I was talking about, which is practically open trade.

[Nexus6]

Originally Posted by austin356

OH I did not mean to nearly the extent of the EU. All I am talking about is currency and trade. Nothing more.
For Example. NA already has 1/2 of what I was talking about, which is practically open trade.

"Free trade zone" is a vague term which can resemble anything from merely lowered import/export tariffs (like NAFTA) to such a complex and wide ranging construct like the EU's "common market" is.

It seems to me that you once again underestimate what it takes to build a true free trade zone like the EU resembles. You for instance need common bodies which set product standards, you need common laws and a common court to uphold these laws, you need aspects of a common citizenship to enable true movement of labour, etc...

Talking about a common currency, even within the EU you find many countries which are not willing to cede souvereignity to a common central bank. And the current operating policies of the fed are quite incompatible with a common currency as the fed also concerns itself with controlling money supply according to US internal factors like growth, unemployment, investments and not just price stability. However, you can't control money supply according to internal demands by certain interest groups anymore if you have other countries with other interests in the same currency zone. Are US citizens and interest groups really willing to give that up? I don't have that impression.

To sum it up: If you don't have all the ingredients that I mentioned, you create insecurity and inefficiencies for companies and individuals operating in your trade zone which cripples its effectiveness and doesn't make it true competitor to the EU. And let's not forget that the EU has NAFTA style "tariff abolishment agreements" with many countries outside of the EU, i.e. with Mexico, which makes the European free trade zone much larger than the EU itself:

http://www.mexperience.com/business/fta/bc_fta.htm

"The Free Trade Agreement between Mexico and the European Union, although not widely reported about, will have a significant impact on the relationship between Mexico and the European Union in years to come. Mexico's President wanted to lessen his country's reliance on NAFTA and the USA, and open Mexico up to more of the world. The agreement that was negotiated between Mexico and the EU is significant, in that Mexico is the only NAFTA member that will have free access to EU Markets in the coming years - and the EU trading block is bigger than that of NAFTA."

[Joka]

Does anyone have some sort of list with all the countries the EU has/is planning to have a free trade agreement with?
I remember talks of Russia, India, entire South America.. .

[Fabb]

German govt to raise its 2007 GDP growth forecast to 1.5-2.0 pct vs 1.4 - report
12.21.06, 5:05 AM ET


FRANKFURT (AFX) - The German government is to raise its 2007 GDP growth forecast to between 1.5-2.0 pct from 1.4 pct, according to a report in German magazine Der Spiegel, citing sources.

The federal government's previous forecast of 1.4 pct was too cautious, reported Spiegel, citing the source.

Although the planned VAT increases are expected to trigger a dip in the economy during the first quarter of 2007, this will be ironed out in the remaining quarters, due to a forecast increase in employment rates, which will boost consumption, added the report.

Dynamic growth in investments is also predicted in 2007, said Spiegel, citing its source.

The Federal government will present its full-year economic forecast for 2007 at the end of January, added the report.

krysia.diver@afxnews.com

[Mercutio]

@Fabb
You were right when you forecast that France's Q3 GDP growth figure would be revised. But did you expect it to be revised downwards to -0.1%? Is this the world's first "boom" characterised by shrinking economies?

[Fabb]

Originally Posted by Mercutio

@Fabb
You were right when you forecast that France's Q3 GDP growth figure would be revised. But did you expect it to be revised downwards to -0.1%? Is this the world's first "boom" characterised by shrinking economies?

At least, you seem to be making yourself laugh.

The downward revision is by only 0.025 percent. It's compensated by the performance of the germany. By far.

"The German economy is experiencing a very strong economic boom, as last observed in 1990," Ifo said in a statement.

Why don't you comment this statement ?

[Mercutio]

^ It's -0.1% at the annualised rate. What makes me laugh is your determined insistence that modest growth is a boom. But it's not a boom. It's just a modest recovery.

[The Dear Leader]

This is a boom:

[Fabb]

PARIS, Dec 22 (Reuters) - French consumers spent more than expected in November, official data showed on Friday, providing a ray of hope for growth at the end of the year after the economy ground to a halt in the third quarter.

Consumer spending, the key driver of the euro zone's second largest economy, climbed 0.9 percent in November, national statistics office INSEE said.

The number beat analyst expectations for a rise of 0.4 percent and followed a revised rise of 0.8 percent in October.

Shoppers splashed out on household equipment, textiles and leather goods, in an encouraging sign for the economy after a dismal third quarter.

French finance minister Thierry Breton has said the economy would rebound in the fourth quarter, predicting growth of between 0.6 and 0.8 percent. But the Bank of France is only expecting growth of 0.6 percent, the bottom end of his range.

The government has made boosting economic confidence, increasing purchasing power and reducing unemployment a priority ahead of next year's presidential elections.

© Reuters 2006.

[Marcu]

Good news about the positive economic situation in Europe. I think we're finally reaching a point where there is world-wide consensus that expanding trade and reducing barriers is good for everyone.

[Fabb]

France's unemployment rate down 0.1 percent in November to 8.7 percent
The Associated Press
Published: December 28, 2006

PARIS: France's jobless rate was down 0.1 percent in November to 8.7 percent, the lowest level in five years, according to data released Thursday by the Labor Ministry.

The ministry said there were 2.11 million jobseekers on the books at the end of November, down 17,400 compared to a month earlier. In October, the unemployment rate held stable at 8.8 percent, interrupting a steady downward trend.

Still, France's unemployment rate remains stubbornly above the euro-zone average that stood at 7.7 percent in October, a 5 1/2-year low.

France's national statistics institute predicted the jobless rate will fall to 8.6 percent by the end of this year and to 8.2 percent by mid-2007, with inflation-adjusted growth likely to remain at an annual rate above 2 percent. The institute projected growth rates of 0.5 percent in both the first and second quarters of 2007.

[Nexus6]

http://www.irishexaminer.com/irishex...639-qqqx=1.asp

Euro to surpass US dollar as world’s currency of choice

THE five-year-old euro is set to replace the US dollar as the currency which represents more wealth than any other currency.

It is expected the value of euro notes in circulation this month will exceed the value of dollar notes in the global economy.The figures highlight the rapid acceptance of the euro as a global form of exchange, according to a Financial Times survey. Figures recently released by the European Commission confirm the currency is well established and reveal that by the end of this year the amount of cash in circulation has grown steadily among EU residents to over €600 billion....Since the end of October the euro has climbed significantly against the dollar and the total number of euro notes in circulation is worth over €610bn or $800bn based on current exchange rates, marginally ahead of the $759bn worth of US dollar notes in circulation.

The rise in the popularity of the euro is partly due to the fall in the dollar’s value, but its rapid expansion has surprised the EU which has not promoted the international use of the euro. However the dollar is still the top choice internationally as a reserve currency and is not likely to lose that status anytime soon. And the euro’s popularity may be double edged. It is suspected that the surge in demand for the €500 note has raised suspicions that these have become the preferred note of the criminal classes engaged in money laundering and other illegal activities, a suggestion played down by the European Central Bank.

...

[Fabb]

The Associated Press
Published: January 1, 2007


BRUSSELS: Slovenia converted to the euro Monday, officially becoming the 13th member of the euro zone — and the first among the newest EU members to qualify to use the currency.

But at least half a dozen other European mini-states and territories are using the currency as legal tender — without approval from the European Central Bank.

The euro was introduced five years ago to provide economic cohesion among EU countries. But euros also are in circulation in dozens of countries and overseas territories from the North Atlantic to the Pacific.

In Europe, Montenegro, Vatican City, San Marino and the principalities of Andorra and Monaco have used the euro since its inception.

In the province of Kosovo — administered by the United Nations, but technically still part of Serbia — the euro circulates alongside the Serbian dinar.

The European Central Bank has not opposed "unilateral euroization" by mini-states that historically have been linked to the French franc, Spanish peseta or German mark as legal tender.

"The ECB does not either encourage nor deter third countries from using the euro," the ECB president, Jean-Claude Trichet, said recently.

Joaquín Almunia, the EU economic and monetary affairs commissioner, has encouraged nations to adopt the euro as a means of achieving economic stability.

"The adoption of the euro creates the right conditions for economic prosperity by providing low inflation and low interest rates," he said.

It is not uncommon for small countries in Africa, Latin America and Asia to use the currency of a major nation — typically, the U.S. dollar.

When newly independent East Timor adopted the dollar after seceding from Indonesia in 1999, the U.S. Treasury dispatched planeloads of paper money and tons of coins to the impoverished Pacific nation.

However, the euro has made inroads into the international dominance of the dollar. Montenegro, for example, switched to the euro after having adopted the German mark in the 1990s.

At the time, the tiny nation — along with Serbia — was still part of Yugoslavia.

But Montenegro opposed the hard- line policies of the late Serbian strongman, Slobodan Milosevic, and feared that he would use his control over the Yugoslav currency to economically destabilize the small state of 600,000 people.

With Western help, the German mark was introduced in Montenegro to replace the dinar.

When the mark was replaced by the euro in Germany five years ago, Montenegro did the same.

Montenegro — which aspires to EU membership but is not even close to starting entry talks — now relies only on euros already in circulation, said Nikola Fabris, chief economist at the Montenegro Central Bank.

"Montenegro does not have any special deal with the ECB," he said.

Kosovo, whose ethnic Albanian majority is seeking independence for the province, also is a "passive" member of the euro zone.

"The euro allowed Kosovo to have a stable currency and almost zero-percent inflation, and made foreign trade easier," said Mechthild Henneke, a UN spokeswoman.

Representation on the ECB is restricted to the EU members using the euro: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain, and now Slovenia.

Fourteen West African nations tied to the euro club through the CFA franc, a joint currency set up by France after the countries' independence in the 1960s, also are not represented on the ECB.

Some European overseas territories and regions are represented in the ECB decision-making process through their parent countries, including the French departments of Guadeloupe, French Guyana, Martinique and Réunion; the Portuguese Madeira and Azores islands; and the Spanish Canary Islands.

Dozens of other entities — including the French islands of St. Pierre and Miquelon; Mayotte; French Polynesia; New Caledonia; and Wallis and Futuna — are linked to the euro via peg arrangements or by managed floating rates.

Slovenia becomes the first to use the euro among the 10 nations — most of them ex-communist countries — that joined the EU in 2004.

Cyprus and Malta are slated to adopt the currency in 2008

[Swede]

Originally Posted by The Associated Press

Some European overseas territories and regions are represented in the ECB decision-making process through their parent countries, including the French departments of Guadeloupe, French Guyana, Martinique and Réunion; the Portuguese Madeira and Azores islands; and the Spanish Canary Islands.

Maybe that's because they're integral parts of those counties with the same lagal status as departments on the mainland?

[Cave Canem]

Slovenia Adopts Euro As New Currency

By ALI H. ZERDIN
The Associated Press
Monday, January 1, 2007; 11:14 AM

LJUBLJANA, Slovenia -- Slovenia adopted the euro on Monday, becoming the 13th EU nation to use the single European currency.

Minister of Finance Andrej Bajuk was the first to use a cash machine to withdraw Slovenian euros.

Slovenia adopted Europe's single currency on Monday and became the 13th European country in the Euro monetary union.

"We are extremely happy and proud. We took this as a national project and we have indeed achieved and fulfilled all the criteria to make this a reality. It's extremely important for us", said Bajuk.

Slovenes adopted the currency at a rate of 239.640 tolars to one euro as of Jan 1.

The Slovene tolar and the euro will be in dual use until Jan. 15, when the euro will officially take over as the country's sole legal tender.

Prime Minister Janez Jansa called the switch the "biggest national achievement" since the tiny Alpine country of 2 million joined the European Union in 2004.

Slovenia, a former Yugoslav republic, is alone among the 10 nations that joined the EU at that time to have fulfilled the rigorous economic criteria needed to join the euro zone.

More than two-thirds of the country's cash machines were fully operating in euros by late morning, while gas stations and highway toll booths switched immediately as the New Year kicked off. There were no reports of any glitches.

A recent EU survey showed more than 70 percent of Slovenes happy to embrace the euro, with many saying they see it as further proof they are part of mainstream Europe.

But some remained sentimental about the tolars, introduced when the country declared independence in 1991.

"Saying farewell is usually not very nice. But this time it is about good memories and the hope that we are adopting a currency that is as good or even better," said central bank governor Mitja Gaspari.

"It makes life a lot simpler," said Renata Kovac, who works in a kiosk at Ljubljana's central rail station. "I have lots of foreign customers and I always had to send them to the exchange office for small change as they didn't have any tolars."

To preserve its national identity in the uniform euro zone, Slovenia used its right to display its national symbols on the euro coins it mints in the country.

The addition of Slovenia expands the euro zone to a population of 316.6 million.

Although some analysts feared price hikes or complications in accounting, invoicing or payroll systems, few expect any real problems during the conversion in Slovenia.

About 97 percent of businesses said they were ready for the euro in a poll conducted by Eurobarometer in September.

[Swede]

Originally Posted by Cave Canem

"It makes life a lot simpler," said Renata Kovac, who works in a kiosk at Ljubljana's central rail station. "I have lots of foreign customers and I always had to send them to the exchange office for small change as they didn't have any tolars."

Considering how small Slovenia is and how many visitors it gets from other €-zone countries, it is kinda obvious it'll make things easier for a lot of people.

/We would probably have started using the € too if the referendum had turned out better...

[Fabb]

BRUSSELS, Jan 5 (Reuters) - Business morale in the euro zone hit a historic high in December and the jobless rate slid further in November with monthly producer prices holding flat, data showed on Friday, pointing to a healthy economic growth.

The business climate indicator for the euro zone rose to 1.60, its highest ever level, from 1.55 in November, the European Commission said.

A separate economic sentiment indicator fell slightly to 110.1 in December, but still stood well above its long-term average, the Commission said.

Also on Friday, European Union statistical agency Eurostat said the seasonally adjusted unemployment rate in the euro zone fell to 7.6 percent in November from 7.7 percent in October, reflecting stronger labour markets in France and Germany.

Industrial producer prices in the euro zone remained unchanged in November from the previous month, capped by falling energy prices, but rose 4.3 percent year-on-year, boosted the rises in oil and commodities earlier in 2006, Eurostat said.

High prices at factory gates may translate into consumer inflation and prompt the European Central Bank to raise interest rates. The ECB has increased borrowing costs six times since December 2005 and is expected to hike rates again in March.

In another release, Eurostat said the euro zone retail sales rose 1.3 percent in November from the same month in 2005. The indicator grew 0.5 percent in month-on-month terms.

The data appeared to confirm healthy economic growth in the last quarter of 2006 and a possible slight slow-down in 2007.
"This points to sustained production growth in the fourth quarter of 2006," the European Commission said about the business climate indicator.

But it noted that industry managers' production expectations for the months ahead decreased.

The Commission has previously said it expects euro zone gross domestic product to grow 2.6 percent in 2006, slowing to about 2.1 percent in 2007.



© Reuters 2007.

[Joka]

Euro displaces dollar in bond markets
Published: January 14 2007 22:08

The euro has displaced the US dollar as the world’s pre-eminent currency in international bond markets, having outstripped the dollar-denominated market for the second year in a row.

The data consolidate news last month that the value of euro notes in circulation had overtaken the dollar for the first time. Outstanding debt issued in the euro was worth the equivalent of $4,836bn at the end of 2006 compared with $3,892bn for the dollar, according to International Capital Market Association data.

Outstanding euro-denominated debt accounts for 45 per cent of the global market, compared with 37 per cent for the dollar. New issuance last year accounted for 49 per cent of the global total.

That represents a startling turnabout from the pattern seen in recent decades, when the US bond market dwarfed its European rival: as recently as 2002, outstanding euro-denominated issuance represented just 27 per cent of the global pie, compared with 51 per cent for the dollar.

The rising role of the euro comes amid growing issuance by debt-laden European governments. However, the main factor is a rise in euro-denominated issuance by companies and financial institutions.

One factor driving this is that European companies are moving away from their traditional reliance on bank loans – and embracing the capital markets to a greater degree.

Another is that the creation of the single currency in 1999 has permitted development of a deeper and more liquid market, consolidated by a growing eurozone.

This has made it more attractive for issuers around the world to raise funds in the euro market. And, more recently, the trend among some Asian and Middle Eastern countries to diversify their assets away from the dollar has further boosted this trend.

René Karsenti, executive president of ICMA, said: “It is the stable interest rates in Europe that have helped and the fact that [the euro] has strengthened and shown resilience.”

Since the start of 2003, the European Central Bank’s main interest rate has fluctuated only 1.5 percentage points, ranging from a low of 2 per cent in the middle of that year to 3.5 per cent, its rate today.

In comparison, the Fed funds rate, the main US interest rate, has fluctuated 4.25 percentage points, ranging from 1 per cent in the middle of 2003 to 5.25 per cent, its level today. The euro has also risen to trade around $1.30 against the dollar, from around parity three years ago. Sterling issuance has grown in the past three years, reinforcing its attraction as a niche currency among some investors. The yen, in comparison, has fallen out of favour.

Overall, international capital markets have doubled in size in terms of bond issuance during the past six years.

http://www.ft.com/cms/s/572b41a6-a41...0779e2340.html

Not sure what it implicates, but sounds good for the euro.