What do you think the US to Euro exchange rate will be in 18 months

[C0ckney]

spanish ministers have denied that spain is going to seek a bailout, so expect it to happen soon, possibly this weekend.

the leader of angela merkel's party has publicly said that spain should come under the 'bailout umbrella'. what a tempting offer, why not and join ireland, greece and your neighbour portugal, you can see how well the 'rescues' are working out for them!

[The Mad Monk]

Returning to Argentina for a bit...

yes, they have dogs that detect dollar in the fronteer
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People want to take out dollars and put them in Uruguay which is something like the Switzerland of south america.
In the neighbour countries they accept pesos with a 30% devaluation

Argentina loses a third of its dollar deposits

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Fri Jun 8, 2012 4:46pm EDT

* Argentines reacting to foreign exchange restrictions

* About $100 mln in dollars withdrawn every day

* Rush toward greenback started in November

By Jorge Otaola

BUENOS AIRES, June 8 (Reuters) - Argentine banks have seen a third of their U.S. dollar deposits withdrawn since November as savers chase greenbacks in response to stiffening foreign exchange restrictions, local banking sources said on Friday.

Depositors withdrew a total of about $100 million per day over the last month in a safe-haven bid fueled by uncertainty over policies that might be adopted as pressure grows to keep U.S. currency in the country.

The chase for dollars is motivated by fear that the government may further toughen its clamp down on access to the U.S. currency as high inflation and lack of faith in government policy erode the local peso.

"Deposits keep going down," said one foreign exchange broker who asked not to be named. "There is a disparity among banks, but in total it's about $80 million to $120 million per day."

U.S. dollar deposits of Argentine banks fell 11.2 percent in the preceding three weeks to $11.5 billion, according to central bank data released on Friday. The run on the greenback has waxed and waned since November, after President Cristina Fernandez won a second term on promises of deepening the state's role in the economy.

From May 11 until Friday, data compiled by Reuters from private banks showed $1.9 billion in U.S. currency had been withdrawn, or about 15 percent of all greenbacks deposited in the country.

Feisty populist leader Fernandez was re-elected in October vowing to "deepen the model" of the interventionist policies associated with her predecessor, Nestor Kirchner, who is also her late husband.

Since then she has limited imports, imposed capital controls and seized a majority stake in top energy company YPF.

A spokesman for the central bank said on Friday that the rate of dollar withdrawal from Argentina's financial system shows signs of slowing.

"We have seen a tendency toward fewer withdrawals, to about $90 million (per day) over the last week from $120 million the week before," the spokesman said a day after the bank lifted daily reserve requirements on dollar deposits to help banks respond to steady drum beat of withdrawals.


DITCHING HER DOLLARS

The near-impossibility of buying dollars at the official rate is driving some savers and investors to pay a hefty premium in the black market.

Many are taking what dollars they can get their hands on and stashing them under the mattress or in safety deposit boxes, fearing moves by the government to forcibly "de-dollarize" the economy. Officials have strongly denied any such plan.

The president's battle to slow capital flight and fatten the central bank reserves needed to pay the public debt has prompted even tighter controls in recent weeks, making it almost impossible to buy dollars at the official rate. The effects have been felt throughout the South American country's economy.

For example. Argentines, who normally pay for new homes with stacks of dollar bills, have been struggling to get their hands on U.S. currency since Fernandez started imposing stringent controls on dollar buying late last year. [ ID :nL1E8H6EZ8]

She wants Argentines to end their love affair with the greenback and start saving in pesos despite inflation clocked by private economists at about 25 percent per year.

Fernandez set an example on Wednesday by vowing to swap her only dollar-denominated savings account for a fixed-term deposit in pesos.

But savers in crisis-prone Argentina are notoriously jittery. Memories of tight limits on bank withdrawals and a sharp currency devaluation remain fresh a decade after the country's massive sovereign debt default.

"There is a lot of fear, considering everything that has happened before," another foreign exchange broker said. "Confronted by risk, whatever kind of doubt, depositors pull their dollars out of the bank and wait to see what happens. (Writing by Hugh Bronstein; Editing by Leslie Adler)

http://www.reuters.com/article/2012/06/08/argentina-dollar-idUSL1E8H8EJA20120608

...the dogs aren't working.

[N35t0r]

Even taking your dollars out of the bank and sitting on them is worth more than saving in pesos, and leaving them in the bank risks them being forcibly swapped to pesos (something the government swears it won't do, but there's a precedent).

[Dinner]

Rumor has it today is the big day where Spain gets its bailout.

[Zoetstofzoetje]

a small one, perhaps, and the beginning of the beginning of the end.

[DanS]

Good job on the rescue. Germany finally got a little creative.

[Kuciwalker]

They don't need to get creative. They just need to tell the ECB print some more ****ing euros and make up for criminally undershooting their inflation target.

[giblets]

At this point is that really enough for Spain to get out its mess? A little more inflation?

[Jon Miller]

The question is if the markets decide that this means that the rest of europe will back up Spain.

JM

[Kuciwalker]

At this point is that really enough for Spain to get out its mess? A little more inflation?

A little more inflation and a lot more NGDP. And sure, the Eurozone will still have problems, but they'll be more manageable.

[Zoetstofzoetje]

you know what the problem is with Spain?

every time there's an issue, a cause is clearly identified. the politicians / the government / the province / the mayor / the corporations / the banks / the neighbour. but the cause is never 'me', so someone else always has to do the changing.

welcome back, peseta.

[C0ckney]

Good job on the rescue. Germany finally got a little creative.

it's certainly 'creative' to promise funds from one 'rescue' vehicle which doesn't exist yet (ESM) and funds from another to which spain is supposed to contribute 13% of the money (EFSF).

the plan will add 100billion euros to spain's debt on the back of a rapidly shrinking economy. it will not solve the problems in the spanish banking sector and spain will still be left in a currency which does not suit its needs. it's the same plan which has failed in greece and is about to fail in portugal and ireland. this time it will be different i'm sure...

[DanS]

the plan will add 100billion euros to spain's debt on the back of a rapidly shrinking economy.

Unavoidable. Besides, no serious investor omitted it from the Spanish gov't's balance sheet anyway. Rather, now the Spaniards know where they're going to get the money to plug the leak. Last week, they didn't.

Spain should now be able to weather this, given sufficient austerity and structural reform.

[C0ckney]

of course it was avoidable. they could have nationalised the banks, defaulted and left the euro. instead they've chosen the long and painful road to nowhere already taken by greece, ireland and portugal.

Spain should now be able to weather this, given sufficient austerity and structural reform.

why do you think this? i see no evidence that would support this view.

[DanS]

Re "they could have nationalised the banks, defaulted and left the euro," that strikes me as very premature euthanasia. Spain has a lot of problems, but they aren't as severe as some other countries' problems.

In my view, Spain is much better situated than Greece and somewhat better situated than Ireland or Portugal. Its government has a mandate for reforms and the government is taking advantage, more or less. Of course, austerity and reform on the scale that they need, absent EU-wide reforms, feels like a swift kick to nuts. This isn't fun and games.

As one example, the Irish bank recapitalization has totaled E150 billion. Spain's looking something more like E105 billion (it might grow I suppose). And Spain is an immense country in comparison to Ireland.