How low the Euro can go

Suzhou China

Euro continues to slide against the US dollars while the European leaders trying to get their debts and finances in order. Some economists started to question the viability of a single currency for Europe that was started 11 years ago. There were talks that Greece may pull out from the 16-country eurozone, drop the euro and go for a weak currency policy in order to revive its economy, its competitiveness and its export to arrest its raising unemployment rate that has reached 22% from 6% before the crisis.

From the chart, the indication is that Euro is likely to reach 0.85 or 0.9 Euro to 1 US dollar pretty soon for a 8 to 10% drop.

Last Tuesday Germany has banned the short selling of Government's bonds and stocks of 10 of its financial institutions. Is the crisis caused by speculative funds? How active are the hedge funds in Europe? Will the 1998 Asian financial crisis repeats itself in Europe?