daytrading march 26 pre-market, page-4

Thanks HLL, great summary as always :>

I have heard over the last two days so many people saying "if it can happen there, why not here, our banks are big too!" or some paraphrase of that... I'll tell you why the Cyprus bailout situation won't affect our banks...

Eurozone is unique in that its a cluster of economies all trying to operate under the banner of a single currency. This advantages and disadvantages different economies based on what their GDP is primarily based on.. German manufacturing, Greek agriculture etc etc.. so the strength or weakness of the currency can make certain economies better and others worse. Much like the sectors of our economy but the problem is on a bigger scale.

When one of these economies collapses because it cannot keep up growth, which was originally propped up by an excess of credit debt, then the Eurozone central bank has to print money or recapatalise debt. The problem with this, is unlike a single nation, the Eurozone must agree as a coalition to print money, something which Germany specifically does not want to do.

Germany hates lowering the Euro.. Germans are known for quality, which people are willing to pay the Exchange Premium to acquire. So if they have a lower euro, Germans can import less raw materials for the same amount of Euro and then when they sell, they sell for the same amount... lowers there business margins. Germans aren't alone however, many economies in the Euro are better off with a higher euro.

Australia however won't have this problem because when push comes to shove, no government would risk never being elected again by stealing deposits in Australia... Not when they can print money and lower the Aussie dollar ;) but that causes a whole lot of issues of its own when it comes to foreign money investment.