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Flashback If the Euro Fails...

May 19, 2010

VIEW: A clip about currencies and crises ... and the new era of risk and instability that comes from interconnected global markets.

The video is excerpted from The Crash, FRONTLINE's report that unraveled what happened the summer of 1998 when markets panicked. On Aug. 31, 1998 the Dow plunged 512 points, wiping out a year's worth of gains.

And it all began months earlier with a localized crisis. Asian markets were spooked by what was happening in Thailand and with its currency, the baht.

Featured in this clip is journalist William Greider.



I write this comment from Spain wich is, as you know, in economic trouble right now. Debate over the eurozone policies to maintain stability should be done in our countries. Many people are advocating for stronger european institutions and powers in order to give more coherence to the EU frame. The European Union is the greatest political experiment in human history, trying lo leave behind national shelfishness that leaded to wars in the past. The future of the world has to be a multinational cooperation and the EU is the best laboratory for that.
In this sense, I fins surprising some approach to the current crisis by american or english media. For instance, this present page "if euro fails". There is no such risk in the near future and its evocation is, as you say in the video report, a call to accomplish the profecy. What is behind this attitude? simple lack of reflection? deep antieuropean biass?
Let me tell you that I love Frontline and as a TV journalist myself I consider it a reference of the greatest importance.

Gil Toll / May 24, 2010 1:32 PM

There is a difference though. Whereas the Thai government couldn't fight the speculators because it didn't have enough reserves to peg it to the Dollar the Euro isn't pegged to anything, so no exchange rate to defend. Plus the Eurozone can print money if it wants to.

Egill A. / May 25, 2010 8:02 PM

If the Euro fails?
Then it is welcome to another much deeper global recession and and absolute meltdown in the global banking finance and investment community of enormous proportions.
When will the world grow up and stop talking nonsense. Japan has the highest national debt ( c/f GDP) in the world and its currency is Very strong the US is heading towards a huge and growing deficit and its currency is gaining strength. The only mistake the euro zone made was not forcing Greece out of the Euro and going back to the drachma.
Nevertheless the world cannot allow the Euro to fail! To prognosticate it will is utter rubbish fueled by Currency speculators and hedge funds.
The euro zone should temporarily re-impose fx restrictions to allow only transactions backed by real commercial trade or buying and selling assets like bonds and shares, and at the same time ban short selling of shares and bonds government or corporate.
Then when things have stabilised and the debtor governments finalised their budget and deficit management packages go back to free FX and securities markets.

J.V.Hodgson / May 26, 2010 1:34 AM

I ask that you look at the roles of the ratings agencies in this. If you do this, look at the timing of the downgrading of Greek debt as it relates to huge bond sales within the USofA.

Now, think back to the roll of those exact same ragings agencies in the lead up to the 2007-08 crash...

I suggest the real culpret is the lax US controls between corperations and government regulators... there is a very cosy revolving door behind this.

Did you expect anything different when the fox is guarding/financing/regulating the hen house?

S. Shuker / May 27, 2010 9:56 AM

It's all the same global 1%-ers that runs everything. EVERYTHING. The existence of Nations and governments is all an illusion. All of this is just more puppetry by our masters. Wake up.

Dre / May 28, 2010 11:08 PM

If the euro fails? It would be a chance for a new and stronger Europe not weighted down by a currency that serves only a few of its member states. I come from a EU country that thankfully stayed out of the euro but ever the spectre of it hangs above us as "our" politicians actually serve Brussels more than our own might try to forcefully introduce it. Living in the EU is becoming ever worse as power is removed from our elected officials into the hands of criminals within the EU hierarchy and the media calls it good ore improvements, in reality its a creeping loss of sovereignty that belongs to us no one else and a destruction of the only thing that matters above everything else; our country.

Christian / May 30, 2010 4:03 PM

I think alot of people fail to remember that the Euro spent a great deal of time at 20-30% less value than the US$. If it were to drop another 20% and end up at par with the dollar how is this in any way bad for the Eurozone? It's not... not in any way and I'll include inflation in that.

The problem with world currencies is in fact the peg. The greatest threat to this instability is the Chinese Yuan. It will soon, if not already, be the second biggest autonomous economic zone behind the USA. How in any way does this justify a peg? The US and Eurozone must stop allowing this to occur. Admittedly they know if they push China too hard policital instability could wreak havoc on China and the world needs a stable China. A billion angry and scared Chinese is not good for the world or the millions of multinational companies doing business there. Appreciation of the yuan must continue until full market forces allow it to fluctuate. Capitalism depends on it.

Trever / May 30, 2010 11:21 PM

Just a short note,the euro cannot be allowed to fail,the reality is " assist the ailing economies of europe or you will aiding their bankers {for america add the word again}

fred welzen / June 1, 2010 6:10 PM

One word for the world if the EURO fails (or pretends to fail): AUSTERITY

Brett / June 8, 2010 2:03 PM

Here is the bottom line. The EU banking system was the benefactor of the Greek bailout. The system is still very fragile and cannot sustain too many more hits. However, the bigger issue that needs to be answered is can and will stronger countries like Germany and France continue to support weaker countries like the PIGS? And is it reasonable to expect a weak country like Greece to fit into a system that is really designed for stronger countries like Germany and France? Time will tell but you can only ask for so much Irish or Greek austerity before you destabilize their government and they drop out of the EU. And you can only get the citizens of the stronger countries to prop up their weaker partners for so long before they vote in a new government to stop these bailouts. In theory it is very noble but in reality the economic imbalances may be too great to overcome.
We are in very shaky economic times, only a year ago the USA was close to an economic meltdown. And overall our banking system is better capitalized than the EU banks. So to say that a member or members of the EU cannot fail is foolish. And if a few of the EU members had to leave, were kicked out or fail the EU could collapse. That would not be a shocking event considering all the stress that has been put on the system. Remember, stress creates caution and caution creates mistrust and this leads to many investors and bankers to become ultra conservative. This real credit constraction often leads to stagnation. Just look at Japan, before their bust they were booming and credit was very easy. Since that time, over the last 17 years, they have become ultra conservative and deflation has been their biggest problem.

ken / September 28, 2010 3:37 AM

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