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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Giordano Bruno who wrote (293825)11/26/2010 11:18:28 PM
From: Les HRead Replies (1) of 306849
 
BlackRock's Larry Fink predicts euro will fall to $1.20

BlackRock founder Larry Fink has warned that the debt crisis in Europe will cause the single currency to drop sharply.

telegraph.co.uk

boss of the world’s largest money manager predicts that the euro, which has been hit by fears that Ireland's financial woes could spread to Portugal and Spain, will fall 10pc to $1.20 against the dollar.

Mr Fink told the Financial Times: “The fundamental problem is most European sovereign credit is owned by the banking system. The banking system was supported by the regulators’ credit ratings of sovereign credit, so you could have bought Ireland and it had the same credit rating as Germany at one time ... that policy was clearly wrong.”

On the huge amounts of government debt that European banks now hold, he added: “You have something that was freely understood and traded and people invested in it, to something that nobody wants.”

The crisis has led to euro-era highs in the cost of borrowing for Ireland, Spain and Portugal. And despite the US restarting QE, the dollar - which touched a nine-week high of $1.3199 against the euro on Friday - will “appreciate considerably”, Mr Fink believes.

“The euro is probably going to go back down to $1.25 or $1.20 even with the Federal Reserve’s QE2 action ... so imagine if they [the Fed] weren’t doing this where dollar/euro would be," he added.
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