EUROPE - The Falling Euro

"Eyes on Greek instability as Euro plunges to nine-year low – Part 1" PBS NewsHour 1/5/2015

GWEN IFILL (NewsHour):  The value of the Euro plunged to a nine-year low against the dollar today, renewing fears in some quarters that the economic stability of Europe could be at risk.

Jeffrey Brown has our look at that.

JEFFREY BROWN (NewsHour):  One reason for the Euro’s recent fall, all eyes are once again on economic and political instability in Greece.

Just weeks before the January 25 national election, Greece’s left-wing Syriza Party is ahead in the polls, and its leaders want to change the terms of a bailout deal, one that imposes extreme austerity, forged as a result of the country’s economic crisis.

But that move would likely anger the rest of the Euro group, leading to a possible split.

MAN (through interpreter):  Greece has to remain in the Euro and has to keep its promises and the signature that Greece has done.  So the Europeans, I think they are right.  Greece shouldn’t distance itself from Europe and shouldn’t get out of the euro.

MAN (through interpreter): I don’t believe our leaving the Euro would be that much of a problem. I think we’d be in the same mess. We’re at zero. It can’t get worse. We will try to work and make things better.

JEFFREY BROWN:  Will Greece go so far as to leave the German currency?

The German magazine “Der Spiegel” reported that, for her part, Chancellor Angela Merkel is — quote — “no longer afraid that a Greek exit could result in the collapse of the entire Eurozone.”

But, today, a government spokesman insisted that Germany’s stance has remained the same.

STEFFEN SEIBERT, German Government Spokesman (through interpreter):  Since the beginning, it has been the policy of the federal government and its European partners to stabilize and strengthen the Eurozone, meaning the Eurozone with all its members, certainly also including Greece.  This has not changed at all.

JEFFREY BROWN:  In the meantime, another reason for the euro’s fall, as Europe’s economy continues to struggle, the European Central Bank is widely expect to take new action to stimulate growth, along the lines of the U.S. Federal Reserve’s quantitative easing of recent years.

"Will falling euro end up boosting Europe’s economy? – Part 2" PBS NewsHour 1/5/2015

Excerpt

SUMMARY:  One reason for the euro’s drop in value is the anticipation that the European Central Bank is going to enact some stimulus effort, along the lines of the U.S. Federal Reserve’s quantitative easing.  Jeffrey Brown learns more from Jacob Kirkegaard of the Peterson Institute for International Economics and Kenneth Rogoff of Harvard University.