Euro currency is once again on sell mode as eurozone drama gets worse

In theory, the euro currency should be toast by now as the financial situation in many southern euro zone states just gets worse and worse, however it seems the ECB will do anything to keep their shared currency project together, but for the time being it’s back to sell mode.

Drama in Portugal

European stock markets have taken a tumble as the survival of Portugal’s coalition government is thrown into doubt today, Portuguese share prices plummeted 6 percent in early trading today and bonds spiked well above 7 percent this morning.

The resignation in quick succession of two of Portugal’s biggest political beasts has left many questioning whether the right of centre government, which has enthusiastically embraced austerity measures, can survive much longer. Traders and investors are once again reacting to growing political turmoil after Foreign Minister Portas resigned last night, a day after the shock departure of Finance Minister Vitor Gaspar amid growing unrest against austerity in the country.

Portugal is suffering its worst economic recession since the 1970s, with a unemployment rate at almost 18 percent. With youth employment more than twice that level, tens of thousands of members of the country’s most highly educated generation have been leaving to seek work abroad.

Greece Finances in a Mess – Again

Meanwhile, Greece now has three days to reassure Europe and the IMF that it can deliver on conditions attached to its bailout in order to receive its next bundle of aid, four euro zone officials said on Tuesday.

The lenders are unhappy with progress Greece has made towards reforming its public sector, a senior euro zone official involved in the negotiations said, while another said they might suspend an inspection visit they resumed on Monday.

Athens, which has about 2.2 billion euros of bonds to redeem in August, needs the talks to conclude successfully. If they fail, the IMF might have to withdraw from the 240 billion euro bailout to avoid violating its own rules, which require a borrower to be financed a year ahead.

Over the past three years, since Greece hit the panic button, Europe’s pain has been much examined, with inconclusive results.

The view that the 28 nation EU with Croatia joining this week, and particularly its 17 nation euro zone, is now a terminal clunker has become fashionable. The crisis that began in Greece has been controlled for now, but much of Europe, including France, is in recession. The questions triggered here about the future of Europe, and its common currency, the euro, are unresolved.

The Union that was the European miracle of the second half of the 20th century now embodies the malaise of the 21st century.

Euro – Reserve Currency Status

The euro’s existential crisis led to a decline in its use as a reserve currency in 2012, the ECB admitted in a report published yesterday.

The central bank blamed one of its favorite ‘betes noires’ the fragmentation of euro zone financial markets for most of the decline, pointing to the fact that the fortunes of reserve currencies are tied, as a rule, to the existence of broad and deep securities markets denominated in those currencies.

With five of the euro zone’s 17 members currently needing external support, the ECB acknowledged that perceptions of increased credit risk among the traditional issuers of reserve currencies had reduced appetite for euro denominated debt last year.

Anyone for Euro Toast?

The euro currency is surely toast soon and burnt toast at that. It’s simply not working and causing pain and misery across this once great continent. The dysfunctional EU experiment is the laughing stock of the civilised world and the euro remains deeply flawed, whilst the EU experiment is still being run by a bunch of failed national politicians.

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Euro currency is once again on sell mode as eurozone drama gets worse