This isn’t going to work out for the Euro-Zone. In my opinion they made a huge mistake when choosing for one currency.

You can not have one currency, If all countries in the Euro_Zone keep there own governments.

Now every government/country has to be successfull to push the Euro up. Which is impossible, so the weaker countries will always pull the strong countries down.

If you have 1 currency you need ONE central government and one monetary pollicy. You would have to have a set up like the USA. 1 president leading all the separate states.

For Europe and the EUro the only way is down. THe issue that countries can not print more of their currency to solve or help with their deficit problem will show to be a economical fatality.

Greece is the first but won’t be the last. When Portugal gets more coverage together wit SPain, we will truly see how this will affect the Euro-Zone

I do not agree with your statements of inflating asset prices being the most imminent threat to the Chinese economy. Furthermore, drawing a parallel with the our recent Western asset prices is also a rather superficial claim. There are a few key differences between rising asset prices in China and here in the West.

Though recent increase in bank lending has increased leveraging in individuals and companies, their high savings will cushion them from any credit shocks they may experience. Furthermore, on the topic of inflating real estate prices, the Chinese regulations on home-buying and selling prevent it from deteriorating into a 2007-esque sub prime mortgage crisis. Large deposits and down payments and high taxation rates for selling houses within 5 years of purchase are prudent measures that will prevent housing prices from spiraling out of control.

I believe the most pressing issue right now is China’s currency issue. Although China is often touted to be recovering and growing at the expense of the Western economy due to undervalued currency, there is an aspect that is greatly overlooked - most of the export companies that operate in southern China survive on tiny margins of a few percent. Any drastic appreciations in currency, which is what the U.S. is pressuring for, will only put thousands of these SMEs out of business. If the 2007 crisis gave any clue as to how fragile the export industry is, we can expect millions of unemployed, which will destabilize China and benefit no one. If there is any issue that should be of concern in the short term, this should be it.

Sincerely,
Robert