A Greek Tragedy in the Eurozone
By · CommentsBy Kristina Zurla Landgraf • Feb 12th, 2010 • Category: Broker Commentary, Educational, Futures Feature, Market Updates
The disheartening events taking place in Greece over the past few weeks have been a setback to the global financial recovery. You might be surprised to learn that Greece’s debt-to-GDP ratio isn’t actually the highest in the Eurozone. It’s interesting to compare countries’ debt-to-GDP ratios, and see how dire the situation really is. The problems in Greece came to the forefront when ratings agency S&P downgraded its debt rating to BBB+ with a negative outlook. As a result, the financial media has put Greece in the spotlighgreekt, and its cost of borrowing money has increased. No doubt, Greece has runaway debt. It’s debt-to-GDP ratio is about 108 – 112 percent. It’s a very serious situation and puts some questions on the table as to how the Eurozone would handle a country not being able to meet its debt obligations, or default. There has been speculation Greece could end up in this situation.
When the European Union (EU) was formed, there was a fiscal deficit limit of 3 percent of GDP, but very few countries have honored that. Greece has a fiscal deficit of 12 percent of its GDP, four times the limit specified in the eurozone agreement. When the Eurozone was formed, its criteria also called for a government’s debt-to-GDP ratio to be below 60 percent—which we will see hasn’t been honored either.
Individual EU countries can’t simply print money to get out of this situation, unlike a country like the U.S. or Canada, which can do so in a worse-case scenario. Greece can’t print euros, because the money supply is handled by the European Central Bank. They have to engage in fiscal discipline, and generate tax revenue.
When the debt of a country is downgraded, interest rates, particularly on long-term debt, start to climb, and it becomes harder to service that debt. It’s a good example to see what could happen in the U.S. or any other country where rating agencies have threatened to lower the debt rating. It’s certainly a cautionary example for countries running large deficits.
17 News Trading Tips & Tricks from Jimmy Young
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Jimmy recorded this video as part of his Professional Forex Trader Training Program earlier in the month. If you want to dig into more nuances of news trading then this is an excellent start – it’s a little more than an hour and covers 17 strategies and tips.
Back to Back to Back 78.6%
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Friday saw mulitple 78.6% retracement entry levels ..which trade would you have taken? Watch today’s daily webcast to see what is possible with a little awareness of this magical retracement level – it’s seriously one of my favorite trades to take.
How about using the 78.6% level as an indicator of where you stand in a trade ..or maybe use it as an opportunity to get in with another position? Jimmy’s Bands provided a great trade opportunity in multiple pairs today and the 78.6% level was prevalent as usual…
SJ
MITACS Trends
By · CommentsEmployment trends in North America – local economies matter.
The interactive map shows the year over year employment gains and losses for the largest 20 Canadian and 100 US metropolitan areas. The data are three month moving averages of the seasonally adjusted employment levels for each city obtained from Statistics Canada and the US Bureau of Labor Statistics.
Aussie Dollar is a Champ!
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The AUD/USD pair was an excellent pair to be trading before the Aussie Payroll number was released. As Jimmy outlined, the strategy was to buy before the release and it paid off handsomely going in the favor of the trade 85 points in 10 minutes. Moving forward GBP is still the weakest and AUD is the strongest.
