Though EU and IMF declared the emergency aid plan of 750 billion EURO, G7 central bank decided to reunit to reactivate the USD currency swap system, ECB purchase the government bond directly in the secondary market finally, To relieve the further spreading of Greece sovereign debt crisis, expecting to avoid a new outbreak of economy crisis, the market would be scaring in the end, and the moan to a stringent qualification of aid bailout, the avoidance to risk asset and the worry to a prospect of economic growth would be the market dominance. At the end, dollar will be the biggest winner in the market, with a clear way to avoid market risk essentially. At Friday (May 14) New York session close, the dollar index closed at 86.29, which is the highest in those 13-month, 2 weeks straight out has received sun, in that the week rose as high as 2.25%. As to major currencies, EUR/USD dipped 396 points, a 3% decline to an 18-month low; BPD/USD dipped 268 points, a 2% decline; USD/JPY rallied 88, a 1% up; AUD/USD slightly declined 21 points.Buy on , Enjoy the best Sterling Silver Jewelry
"Gift package" turned into "bomb bag", the market became "scared person": EU Beijing Time declared at (10th, May) Monday a large aid plan with scale of 500 billion EURO to help the European countries facing debt problem. Meanwhile, IMF promised to provide a 250 billion to make a assistance, while at the same day, the Federal Reserve announced to restart currency swaps mechanism together with countries of G7 to relieve the situation of insufficiency of dollar`s liquidity in European market. Soon afterwards, European Central Bank announced that it would interfere with bond market, whenever necessary, and outright purchase government and private bonds in the secondary market, to guarantee the stabilization of local market`s debt and liquidity. The joint action of EU, IMF and G7 Central banks was called as the biggest one to rescue the economy of countries all over the world after the bankruptcy of Lehman Brothers. However, the good situation of market risk was holding just for one day slightly, while the worry and panic are coming continuously again.Pearl Jewellery Boots Before Youth Day
Though the 750-billion-rescue is striking, it has stringent requirement on limiting budget deficit of the countries receive rescue. The market worries whether countries including Greece hoping to receive rescue can honor their commitment and fulfill established targets. International Investment Master Jim Rogers pronounces that the 750 billion rescue plan for the euro is fatal, due to high expenditure will increase the debt burden of the euro area. He believes that the latest debt crisis in Europe is the beginning of the euro's demise. He said when being interviewed: [it`s terrible. Euro will one day pay price for it because it gives free rein to any country which counts on being bailed out. I am shocked by this aid action, meaning they are going to give up euro. They don`t care specially whether they have a sane currency policy, while these countries are squandering the money not belong to theirs, and keep spending." NourielRoubini, professor of New York Colledge, with the name of " Docotor of Doomsday" expressed that to revive the domestic economy, Greece and other countries near the edge of European area will have to abandon EURO.
He said: [In my mind, it`s impossible that Greece plans to cut budget deficit from 13 percent to 3 percent. And I doubt that Greece and other semi-peripheral countries would be force to quit monetary union. Besides Greece, Spain and Portugal also declared austerity measures this week. But investors have shifted their eyes to economic growth. In the backdrop of incipient economic recovery, the harsh austerity measures might drag the economy back into recession. In such a dilemma, how should Europe deal with this avalanche of debts? Spanish Prime Minister Jose Luis Rodriguez Zapatero in Wednesday (May 12) announced a package of austerity program, plan by 2010 the budget deficit gross domestic product (GDP) from 11.2% in 2009 down to 9.3 %, in 2011 and further dropped to 6.5%.
The specific measures include, cut down the public budget 6 billion EURo, and decrease the income of officials 5%. The government will freeze the income of officials in 2011, and cut down 13,000 official positions in 2010. Besides, Zapatero expressed Spanish local government will decrease budget 1.2 billion EURO. Morgan Stanley downplayed its predict over Spain`s GDP growth from -0.7% and 0.8% to -0.9% and 0.4% respectively, saying the austerity measures will cast a negative influence on its economy. This bank also showed, the increase risk of Spanish economy this or next year is lower than lower level. This bank pointed that the new fiscal deflation policy will obviously bring damage to Spanish econmy, just out of recession. Based on the potential reunion possibility of declining real estate market and bank industry, Spain economy growth will tend to be down in the following two years. And Spain may need more fiscal restraint measures in the future which may lead its economy to a double-dip recession condition.