It's not so much the moaning but it is causing quite a problem. Moving over when the exchange rate was good, around 1.60, you could probably say this might fall to 1.40 or even 1.30 and still be good. However, was quoted 1.12 at the Post Office today which, if you are relying on a UK pension, means even the best plans go awry. In my case, I have a mortgage in Spain of just under 800 euros a month. I send over 800 pounds and was counting on the extra to pay my bills. At 1.30 that meant I was getting an "extra" 240 euros a month to cover bills. When it dropped to 1.25 then still had the extra 200 euros. Now, only 96 euros a month on top and, if it goes to 1 for 1, I will have to send extra over.
Plus, going round the supermarkets and filling the trolley for a couple of weeks at 100 euros was great when that was only £60. Gosh, how cheap it is here, we thought, If that goes to £100 it won't be so cheap.
Anyhoo. Spain is also in trouble with the credit crunch and inflation. They can't do anything about it, like lowering interest rates etc, because it is all dictated by the ECB. There is lots of speculation around that Spain might actually withdraw from the euro. It would take a brave nation to do this unilaterally but, as the Southern European countries (notably Spain, Italy and Greece) are most affected, there may be a case for all three countries withdrawing. The Northern nations haven't been hit so hard so can weather the storm better but it is not doing the economies of the Southern countries any good at all. If you think this is pie in the sky, have a Google for this subject and there are several well-informed experts speculating on this. Indeed, it has been reported that people in Germany are refusing to accept euro notes from the banks unless they have been issued in Germany and are not taking other countries issued banknotes. Strange that, for one currency, there can be a lack of confidence in some parts of it.
This one comment from a betting site:
The economy around the world is so bad that the folks from Paddy Power have begun offering bets on the meltdown. Gambling911.com, which welcomes Paddy Power to its family of fine sponsors, will now regularly feature bets offered by Ireland's largest bookmaker, and the UK's third biggest bookmaker.
One of the bets currently being featured at Paddy Power - The first country to pull out of the Euro by December 31, 2009 (that's just over 12 months from now but it could happen tomorrow for all we know).
The favorites - Italy and Ireland at 7/4 and 3/1 odds, respectively. Spain had odds of 7/2.
In a punishing day for currencies Friday, investors pummeled the Australian and Canadian dollars and sought the U.S. dollar as a haven, the Wall Street Journal reported.
There was also an article in the Daily Telegraph speculating on these countries withdrawing. Also this one from the Monte Carlo report:
There are plenty of others discussing the same theme. Not my opinion but it does make you think. Maybe the fact that my bank statements still come with the peseta equivalent is a pointer to the low confidence in the system. Could it happen?