If Euro is supposed to be valued higher, why are Europeans asking for Dollars ?!

[52ndStreet]

So in short...they exponentially spent more than they took in...and now they need to beef up the Euro to keep it from imploding by mixing in a more solid currency.

This is my question also, they spent more than they took in, and then they continue to amass
debt by borrowing from the U.S. Fed Reserv Bank multiple times, aren't they just compunding their debt?, and then they try to wright off the debt that they do owe.
Isn't this hurting the value of the U.S. dollar also.? They are using the U.S. dollar to prop up
their insolvent Euro at th expense of the United States.!?

The euro isn't insolvent. A few countries who use the euro will default but the euro is not insolvent.

The Euro may not be insolvent per se, but you have a few Eurozone member countries that are now at borderline insolvency, who have huge debts that they can not repay. Portugal,
Itlay, Greece, Ireland ,Sapin. These countres have the Euro as their currency. Doesn't this
affect the value of the currency,? and the Eurozone as a whole?.
The so called " PIGS" of the Eurozone.?

 

[barb019]

So the dollar debt is transfered to the Federal government so it becomes the responsibility of the masses to pay it back, right?

 

[dilloduck]

People are being screwed by bankers. They have multiple ways of trying to disguise it but the common people take the hit. Always.

 

[Brutus]

But wouldn't that assume that they will have currency to trade back?
Hmm...I am going to make a wild guess and say that the FED has forgiven the currency re-exchange in the past. Sort of laundering your debt.

If I understand right...

Bank A holds $10 in debt that Gov. B owes it.
Gov. B has Euros, so to pay Bank A - Gov. B goes to the Fed and exchanges currency and then pays Bank A.
But Gov. B still owes the FED dollars to buy back their Euro...so the dollar debt transfered to the FED.

The counterparty for the Fed is the ECB. The risk is with the ECB. The risk to the Fed is that the ECB cannot pay it back. However, that is extremely unlikely because if the ECB becomes insolvent, by law and charter, it is recapitalized by the member nations.

The ECB will supply dollars swapped to them by the Fed to the European bank. The bank will then repay it's dollar obligations. Often times, that is a US bank. But even if it is not, the ECB has to buy back dollars and repay the Fed at cost plus interest. Thus, the risk is with the ECB, not the Fed.

In this transaction, debt does not change hands between the Fed and the ECB.

So in short...they exponentially spent more than they took in...and now they need to beef up the Euro to keep it from imploding by mixing in a more solid currency.

yes but the USA is just as bad, The major difference is that we can print all the money we need while individual European countries cant.

 

[Toro]

This is my question also, they spent more than they took in, and then they continue to amass
debt by borrowing from the U.S. Fed Reserv Bank multiple times, aren't they just compunding their debt?, and then they try to wright off the debt that they do owe.
Isn't this hurting the value of the U.S. dollar also.? They are using the U.S. dollar to prop up
their insolvent Euro at th expense of the United States.!?

The euro isn't insolvent. A few countries who use the euro will default but the euro is not insolvent.

The Euro may not be insolvent per se, but you have a few Eurozone member countries that are now at borderline insolvency, who have huge debts that they can not repay. Portugal,
Itlay, Greece, Ireland ,Sapin. These countres have the Euro as their currency. Doesn't this
affect the value of the currency,? and the Eurozone as a whole?.
The so called " PIGS" of the Eurozone.?

Yes it does effect the value of the euro. Some countries will default. The euro should go down. But that's a different issue from your original question. Their debts will not be transferred to us. Instead, the bondholders will get hit or the European taxpayers will bail the banks out.

 

[52ndStreet]

The euro isn't insolvent. A few countries who use the euro will default but the euro is not insolvent.

The Euro may not be insolvent per se, but you have a few Eurozone member countries that are now at borderline insolvency, who have huge debts that they can not repay. Portugal,
Itlay, Greece, Ireland ,Sapin. These countres have the Euro as their currency. Doesn't this
affect the value of the currency,? and the Eurozone as a whole?.
The so called " PIGS" of the Eurozone.?

Yes it does effect the value of the euro. Some countries will default. The euro should go down. But that's a different issue from your original question. Their debts will not be transferred to us. Instead, the bondholders will get hit or the European taxpayers will bail the banks out.

Wasn't the Euro created by combining a basket group of currencies,like this "IMF, SDR", account,/and/or including some U.S. Dollars? , what percentage of U.S. Dollars are within the Euro?.Will they need more
U.S. dollars to prevent a Euro collaspe?

 

[Toro]

The Euro may not be insolvent per se, but you have a few Eurozone member countries that are now at borderline insolvency, who have huge debts that they can not repay. Portugal,
Itlay, Greece, Ireland ,Sapin. These countres have the Euro as their currency. Doesn't this
affect the value of the currency,? and the Eurozone as a whole?.
The so called " PIGS" of the Eurozone.?

Yes it does effect the value of the euro. Some countries will default. The euro should go down. But that's a different issue from your original question. Their debts will not be transferred to us. Instead, the bondholders will get hit or the European taxpayers will bail the banks out.

Wasn't the Euro created by combining a basket group of currencies,like this "IMF, SDR", account,/and/or including some U.S. Dollars? , what percentage of U.S. Dollars are within the Euro?.Will they need more
U.S. dollars to prevent a Euro collaspe?

The euro was created by national countries exchanging their currencies for euros at a fixed exchange rate. There may have been an exchange of dollars for euros within the reserve accounts of the national central banks to the ECB, but I don't know about that. I do not know what percentage of dollars are within the eurozone. I imagine they will need more dollars to prevent a liquidity crisis in Europe, and I expect the Fed to supply dollars if need be.

 

[Ropey]

Yes it does effect the value of the euro. Some countries will default. The euro should go down. But that's a different issue from your original question. Their debts will not be transferred to us. Instead, the bondholders will get hit or the European taxpayers will bail the banks out.

Wasn't the Euro created by combining a basket group of currencies,like this "IMF, SDR", account,/and/or including some U.S. Dollars? , what percentage of U.S. Dollars are within the Euro?.Will they need more
U.S. dollars to prevent a Euro collaspe?

The euro was created by national countries exchanging their currencies for euros at a fixed exchange rate. There may have been an exchange of dollars for euros within the reserve accounts of the national central banks to the ECB, but I don't know about that. I do not know what percentage of dollars are within the eurozone. I imagine they will need more dollars to prevent a liquidity crisis in Europe, and I expect the Fed to supply dollars if need be.

And I expect China to attempt to get a foothold in this. I would not be surprised if China makes a move here.

 

[52ndStreet]

Would a large infusion of U.S. dollars solve the Eurozone debt problem?.
Your replies please.

 

[EdwardBaiamonte]

Would a large infusion of U.S. dollars solve the Eurozone debt problem?.
Your replies please.

Europes problems, like ours, are caused by excessive liberal welfare programs paid for with debt. The solution is fewer liberal programs, less debt and more real work.

 

[52ndStreet]

Would a large infusion of U.S. dollars solve the Eurozone debt problem?.
Your replies please.

Europes problems, like ours, are caused by excessive liberal welfare programs paid for with debt. The solution is fewer liberal programs, less debt and more real work.

I just read an online article on the bbcnews.com that central banks all over the world
have decieded to make U.S. dollars available to help to ease the global credit crunch.
All the markets are surging on this news.

The Federal Reserve bank of the United States, and the Canada, Japan , United Kingdom,
will all make their currency, and "U.S. dollars" , available to all European countries at cheaper
rates.

I do understand your point, to much state welfare in Europe, and not enough tax revenue
being taken in.

But Cheaper availability of U.S. Dollars seems to be solving the problem.
Your response please.?$$