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The Shrinking Euro Infographic

THE SHRINKING• EURO The EU dream was born out of the idea that countries are stronger together than they are apart, but data compiled over the past decade suggests that this may not be the case. The Greek debt crisis, political turmoil over Ukraine and global financial meltdown set the Euro currency on a downward spiral that it has not yet recovered from. EVENTS CONTRIBUTING TO DROP OF EURO Investors think Investors realize EU The decision of European subprime would be the U.S. only crisis is also vulnerable to subprime Central Bank to increase the interest rate backfires $1.4738 $1.3919 $1.2545 Investors are worried about the weakness of the EU economy $1.20 Greek debt Euro plummets as The Ukraine• crisis flares up the Greek debt crisis starts to $1.2640 crisis worsens heat up $1.2149 $1.36 Fear that election ECB's purchase may result in Greece leaving Eurozone of eurobonds devalues the Euro Traders push Euro down and invest in Pound GREXIT $1.06 $1.21 $1.0479 2007 2008 2009 2010 2011 2012 2013 2014 2015 TOP 4 REASONS FOR THE DROP OF EURO GREEK DEBT CRISIS QUANTITATIVE EASING Every new Euro created by the ECB's March 2015 QE policy, devalues the existing money A Greek default and exit from in circulation. the eurozone would plummet the currency and have a domino effect on the world's economy. "CARRY TRADE" THE UKRAINE CRISIS BET If the EU sanctioned Russia over the Ukraine crisis, it would have a serious impact on trade and their EU lenders. E.g. France has loaned Russia $51 billion! Traders bet on the Euro price falling and then reinvest in GBP for its higher interest rate. This has dampened the Euro in summer 2015. PRICE INDEX COMPARISON BETWEEN 2007 AND 2015 2007 Price 2015 Price Bread Oil Milk Dozen eggs €1.00 €1.10 €0.40 €2.12 France 42% Greece 41% Portugal 55% Austria 45% €1.42 €1.55 €0.62 €3.08 MOVIE ★★ ” 由 ★★★★ MOV ** Movie Soda (2 L) Boneless Pasta Tickets (2) Chicken Fillet €1.08 €0.79 Spain Germany Netherlands Italy 40% 52% €1.51 €10,58 €4.11 €1.20 89% 65% €20.00 €6.78 THE BIGGEST EUROZONE BLUNDER ADMISSION OF GREECE If Greece hadn't used false economic data, they likely wouldn't have been accepted in to the EU. The error was so great that even this tiny economy - just 1.3% of the EU's GDP - has contrived to traumatize Europe's leaders. WHAT IF GREECE WAS NOT PERMITTED INTO THE EUROZONE? DEFAULT Easier to default on debts Devaluation of its Higher employment More investments currency to lower cost of debts GDP GROWTH OF EUROZONE VS. NON-EUROZONE COUNTRIES 14% GROWTH RATE EUROPEAN UNION (28 countries) €12,245,966 €13,931,788 2009 2014 EUROZONE NON-EUROZONE (18 countries) (10 countries) 9% 29% GROWTH RATE GROWTH RATE €9,257,569 €10,078,662 €2,988,397 €3,853,126 2009 2014 2009 2014 €2,000,000 TOP 5 BEST PERFORMING COUNTRIES Growth rate 2009 2014 in mill. EUR EUROZONE NON-EUROZONE Estonia Sweden 14,138 309,679 38% 19,525 39% 430,258 Luxembourg Lithuania 36,268 26,935 36% 49,428 35% 36,309 Malta United Kingdom 6,139 1,663,573 29% 7,912 34% 2,222,912 Latvia Poland 18,816 314,689 28% 24,060 31% 413,134 Germany Romania 2,456,660 120,409 18% 2,903,790 25% 150,019 TOP 3 WORST PERFORMING COUNTRIES Growth rate 2009 2014 in mill. EUR EUROZONE NON-EUROZONE 15 11% A 10 237,431 18,423 1,079,034 45,091 4% A 179,081 17,506 1,058,469 43,085 -2% V 148,357 93,372 -4% V -5% v -10 154,739 103,217 -15 -20 -25% V Greece Cyprus Spain Croatia Czech republic Hungary FUNDAMENTAL FLAWS OF EURO According to experts, the ECB must set monetary policy for the eurozone as a whole, even if that policy is highly inappropriate for some member countries. Europe lacks labor mobility, wage flexibility, and a central fiscal authority. The trade can flourish even without a single currency or fixed exchange rate. 6" Europe's common market exemplifies a situation that is unfavorable to a common currency." -MILTON FRIEDMAN, 1997 THE MOST EXPOSED COMPANIES TO THE DROP OF EURO BASED ON SALES TO EUROPE Coca-Cola Enterprises (Europe) Western Union O Human Industrial Industries Philip Morris O XL Capital Ltd McDonald's Autodesk Accenture AON II ... Coca-Cola XL P AON WU 100% 60% 48% 45% 44% 41% 41% 40% 40% 39% THE MOST EXPOSED COUNTRIES TO THE DROP OF EURO AS OF 15 JUNE, 2015 Norway Switzerland Russia South Korea 134,148 236,926 285,137 82,165 4.0% 7.0% 8.4% 2.4% USA Brazil Turkey India China Japan 516,092 68,034 128,831 72,539 467,191 107,848 15.3% 2.0% 3.8% 2.1% 13.8% 3.2% Total EU trade (million EUR) Share on total EU trade (%) WHAT CAN RESCUE EURO? "It would be easy for the ECB to solve this- "If the eurozone is to "The answer is to issue .... prosper under a single currency over the next decades, the Greek threat .will have to be removed." conditional bonds, so that- states with weaker fiscal problem. The easiest way positions pay iínterest rate penalties if they fail to.. strengthen their public finances." would be to write off the Greek bonds." .. DeAnne Julius, Paul De Grauwe; . . American-British economist Professor of International Geraint Johnes, Economics, London School of Economics Professor of Economics,. Lancaster University Management School "Europe has a special problem, which is the single currency without the single government. "My roadmap to.. . recovery is for the euro to split in two, with a stronger northern euro. and weaker southern Paul Krugman, version." Professor of Economics Glenn Uniacke, and International Affairs at Princeton University Senior Dealer, Moneycorp SOURCES PRESENTED BY Currency=EUR, 2004 USD per 1 EUR

The Shrinking Euro Infographic

shared by ggeorgiev on Nov 13
The EU dream was born out of the idea that countries are stronger together than they are apart, but data compiled over the past decade suggests that this may not be the case. The Greek debt crisis, po...


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