More brains and bonkers connection: thinking out of a broken box

We have covered many studies linking creativity with Psychosis and this new study by Manzano et al provides further corroborating evidence.

Dopamine has been linked with psychosis and is now also being increasingly being linked with creativity, especially divergent creativity and thinking style.

Divergent thinking is influenced by dopaminergic function. Reuter [6] found a correlation between divergent thinking (the Inventiveness battery of the Berliner Intelligenz Struktur Test) and polymorphisms of the dopamine D2 receptor gene–DRD2 TAQ IA. Higher creativity scores were observed in carriers of the A1 allele. This polymorphism is unrelated to general intelligence [7], [8], which suggests that it is more specifically related to Glr (“long-term storage and retrieval”). This finding is in line with functional imaging research showing the D2 system to be involved in attentional set shifting and response flexibility, which are important components of divergent thinking [9]. Furthermore, the finding indicates that divergent thinking is related to regional differences in D2 densities, since the DRD2 TAQ IA polymorphism has been shown to modulate D2 binding potential (D2BP) in both striatal [10] and extrastriatal regions [11].

Divergent thinking is traditionally measured using alternate uses test, for eg., in which a familiar object like brick is provided and subjects asked to name novel use for that object. The responses are marked for creativity as per the follwoing criterion:

• Fluency–the number of valid responses;
• Originality–how frequent the participant’s responses were among the responses of the rest of the sample;
• Flexibility–the number of semantic categories produced;
• Switching–the number of shifts between semantic categories;
• and Elaboration–how extensive each response is (if the task involves producing more than single words)

The main findings of the study was that dopamine D2 binding potential (D2BP) receptor density in thalamus correlated negatively with divergent thinking and creativity scores. Here is how the authors interpret the results:

Based on the current findings, we suggest that a lower D2BP in the thalamus may be one factor that facilitates performance on divergent thinking tasks. The thalamus contains the highest levels of dopamine D2 receptors out of all extrastriatal brain regions [33], [45]. Decreased D2BP in the thalamus has been suggested, firstly, to lower thalamic gating thresholds, resulting in decreased filtering and autoregulation of information flow [31] and, secondly, to increase excitation of cortical regions through decreased inhibition of prefrontal pyramidal neurons [46], [47], [48]. The decreased prefrontal signal-to-noise ratio may place networks of cortical neurons in a more labile state, allowing them to more easily switch between representations and process multiple stimuli across a wider association range [49]. This state, which we hereforth will refer to as the “creative bias”, could benefit performance on tasks that involve continuous generation and (re-)combination of mental representations and switching between mind-sets. The creative bias could also explain why the different measures of divergent task performance correlate: A decreased signal-to-noise ratio in thalamus would decrease information gating and possibly increase fluency; decreased signal-to-noise ratio in cortical regions should better enable flexibility and switching between representations; similarly, the associative range should be widened and selectivity should be decreased which might spur originality and elaboration.
Besides carrying benefits related to fluency and switching, the decreased signal-to-noise ratio associated with the creative bias should be disadvantageous in relation to tasks that require high levels of selective attention. Some support for this prediction can be taken from Dorfman [50] who showed that the greater a person’s divergent thinking scores, the slower his or her reaction times were on a negative priming task requiring the inhibition of interfering information. Furthermore, the creative bias may also bring a risk of excessive excitatory signals from the thalamus overwhelming cortical neurotransmission, with ensuing cognitive disorganization and positive symptoms [30]. It is thus tempting to suggest that dopaminergic modulation of neurotransmission mediated through dopamine D2-receptors could be one of the mechanisms which associate creativity with positive psychotic symptoms. Interestingly, positive symptoms are not necessarily related to problems in executive function, at least not to the same extent as negative symptoms [51], which indicates that in the creative individual “blind variation” might be affected without a concomitant decline in “selective retention”. It can be speculated that aberrant thalamic function may promote unusual associations, as well as improved performance on divergent thinking tests in healthy individuals, in the absence of the detrimental effects typically associated with psychiatric disorders. In other words, thinking outside the box might be facilitated by having a somewhat less intact box.

In plain English speak, the same decreased signal-to-noise ratio in perfrontal regions that gives rise to creativity also gives rise to proneness to psychosis. The more the noise that is introduced the greater the chances that the ideas generated by ‘blind variation’ are more creative; if the ‘selective retention’ procedure is also defective or loosened to an extent, it may result in psychopathology and psychosis, while if intact it leads to creativity. Thus while one factor , that of loosening of associations, flexibility and set switching is common to both psychosis and creativity, the defects in selective retention may be the crucial factor that distinguishes brains from bonkers.

Six world hypotheses or how we explain eyerything and anything

I recently came across this blog post by Christopher Peterson and was immediately drawn into the work of Stephen Pepper and using Google books access tried to read as much as I could of his print-on-demand book ‘World Hypotheses‘.
It is a philosophical work of how people reason about their world and ‘carve nature at the joints’ but despite being a philosophical work and thus being dense and obtuse to a degree, it is surprisingly lucidly written and in my opinion is an important work that needs to be highlighted.
As per Pepper, we have four valid and mature world hypothesis that are adequate in scope (explain everything) and precision (explain uniquely and not vaguely) and two immature world hypothesis that fail the test of scope/precision in their adequacy. I do not make that distinction and will be treating all six world hypothesis on equal footing. For the record, the inadequate world hypothesis are animism and spiritualism.
A world hypothesis is a way to explain everything in the world and relies on root metaphors to explain thus. Each hypothesis has a pet root metaphor which is sued to illustrate and explain phenomenon or categories, and their relationships.
To met the six world hypothesis follow a stage pattern and it would be my contention that as one matures one may discard one world hypothesis lower down the ladder in favor of the other more developed and mature.
With that let us introduce the world hypothesis. Also taking the lead from Peterson, I’ll be taking an example of my neighbor playing loud music at 2:00 in the night to illustrate different ways of explaining the same event according to the different hypothesis and different root metaphors (and will be lifting from the Peterson article the examples he gave there).
The first hypothesis is that of Formism (realism/ platonic Idealism) i.e. everything is explainable because they belong to a particular category/ form and have characteristic qualities. The root metaphor is that of analogy or similarity. Formism explains in terms of placing whatever we are trying to explain into a category (form). Why did my neighbor play his music loudly at 2:00 AM? Because he is an a**hole!
This theory belongs to the first stage where one is more concerned with Describing things and concerned with traits.
The second hypothesis is that of Animism i.e. everything (even inanimate things like weather) has an underlying spirit that explains the way it behaves. The root metaphor is that of spirit and agency. Animism explains by associating everything we are trying to explain with an underlying spirit that has agency . Why did my neighbor play his music loudly at 2:00 AM? Because he was suddenly possessed by the Michael Jackson spirit!
This theory belongs to the second stage trying to Explain the phenomenon and concerned with impulses and agency.
The third hypothesis is that of Mechanism (most common amongst reductionist scientists) i.e. everything is a machine following laws of cause and effect. If something happens, it happens because of a well defined and unavoidable cause. The root metaphor is that of machine. Mechanism explains in terms of causes: events that regularly precede whatever we are trying to explain. Why did my neighbor play his music loudly at 2:00 AM? Because he passed all of his final exams and that is what people do when they pass exams!
This theory belongs to the third stage that tries to predict and is centered around observable behavior and causal chains.
The fourth hypothesis is that of Contextualism (pragmatism) i.e. everything can be explained in terms of the context or surround in which the figure/event takes place. this is most popular with historians who are used to see events as uniquely determined by the historical and cultural milieu. The root metaphor is that of a historic event. Contextualism explains in terms of the interplay between whatever we are trying to explain and its larger context. Why did my neighbor play his music loudly at 2:00 AM? Because it was Saturday night, and this is a college town!
This theory is properly of the fourth stage focused on how society / larger context can influence and control the phenomenon and is most concerned with social influences.
The fifth hypothesis is that of Organicism (absolute Idealism)i.e. everything is an organic complex whole. The theory is still determinate but as compared to Mechanism is ‘life’ oriented. The root metaphor is that of coherence. Facts are sparse at present and as they emerge and become more complex one reaches in the limits the absolute truth. Organicism explains in terms of the unfolding of the inherent nature of whatever we are trying to explain. Why did my neighbor play his music loudly at 2:00 AM? Because he is a young man who just moved into his own apartment!
the fifth theory is at the fifth stage concerned with integration/ individuation etc and is concerned with emergent properties.
The sixth hypothesis is that if Spiritualism i.e everything is not what it seems and can only be really grasped through the spiritual experience. The root metaphor is that of the spritual experience. All said and done, there is no substitute for experience. the metaphor is also that of Love and can be only felt inter-personally. Only Love is Real. Why did my neighbor play his music loudly at 2:00 AM? Because he loves music and felt at oneness with the world and forgot about time as he got absorbed in the music.
This is clearly a jump from previous stages and belongs to stage 6 dealing with transecdence and interpersonal concerns.
Of course there are bound to be higher (7 & stage theories equally and perhaps better explain the world, and I woudl be glad if readers can point me to those world hypothesis, no matter how inadequate/mystic they may appear at first appearance.
I’m hooked to Pepper, what about you?

The Mouse Trap : Personality and Motivation

I have blogged extensively about personality and how it may be related to emotions. A common theme underlying my discussion of personality and emotion has been these traits/states arising as a result of adaptation to basic evolutionary tasks or problems that each living organism/species has to solve. Where there are problems to be solved or tasks to be accomplished or goals to be achieved,  there is also going to be motivations and drive to achieve them and underlying needs that drive that pursuit. Thus motivation and Personality/ emotion are also intricately linked and associated when one uses the underlying basic adaptive problems paradigm.
In my last post I had mentioned that Personality can be discussed in just descriptive terms as in trait theories, the most famous of which is the five factor model of personality or one could look at the underlying processes and mechanism and come up with theories that are grounded in motivational or cognitive terms as to what actually drives the behavior in consistence with the observable traits and behaviors.
I have recently come across an important paper in my view which tried to bridge this gap by explaining the motivational systems (or reaction norms as they call it) underlying the five factor model of personality.
To recall, the five factor model or OCEAN model posits the following five factors:

1. Neuroticism or sensitivity to negative affect
2. Conscientiousness or ability to delay gratification and persist with task at hand
3. Extraversion: propensity to socialize and be more outgoing
4. Agreeableness: empathetic and cooperativeness
5. Openness to Experience: Intellect and curiosity etc.

Now, I have elaborated or tried to explain the OCEAN  traits as per my understanding, but Dennissen and Penke looked at how prominent personality researchers have interpreted the traits to arrive at a common motivational framework that is grounded in theory and then they developed a scale in accordance with theory to measure  these motivational  reaction norms – the important difference from tradition FFM message scales being that all statements referred to underlying motivations/ propensities etc and did not refer to specific behaviors in specific situations.  They then subjected their scale to factor analysis that came with a five factor structure that was consistent with FFM and also had predictive validity of similar sorts. They thus conclude that their theoretical framework is on the right track.
There are of course problems with such can interpretation, but I found some of their motivational reaction norms pretty consistent with my basic adaptive problems and basic developmental life tasks paradigm, while some I could find were slightly different or more nuanced interpretations.

Looking at the original data set of 9 personalty researchers from where they derived this framework, some of these I could resolve to my satisfaction.
Neuroticism is interpreted as sensitivity to social rejection/exclusion. I have problems with this interpretation in that focuses too much on social dimension, while to me it is general sensitivity to threat/stress.  In their paper they do discuss this:

As can be seen in Table 1, almost all theorists link neuroticism to individual differences in affect regulation, conceptualizing this factor as differences in the ability to handle stress (Buss, 1991), facilitation of performance under pressure (Hogan, 1996), affect regulation (McAdams, 1992; van Lieshout, 2000), and affect intensity. These conceptualizations all regard neuroticism as the sensitivity of a domain-general system to respond to environmental threats. Various studies have also linked neuroticism to individual differences in general differential reactivity to negative events or stressors.
I like the above interpretation of Neuroticism as it is consistent with the adaptive problem of avoiding Foes. However, the authors  chose this interpretation over the above:

By comparison, other conceptualizations treat neuroticismas a trait that is especially activated in situations in which people’s social relationships are threatened. For example, Matthews (2004) pointed out that ‘‘individual differences in human anxiety revolve primarily around social fears such as being criticized or rejected, rather than physical threats” (p. 260, italics added). Support for this conceptualization comes from research by Bolger and colleagues (1989), who found that interpersonal stressors were more important in causing negative mood than non-social ones, such as transportation problems or work overload. Similarly, Denissen and Penke (in press) found that neuroticism was particularly correlated with the intensity of people’s negative reactions to social threats.

Conscientiousness did not have many interpretations:

All theorists listed in Table 1 agree that conscientiousness is involved in task-related behaviors. Speci?cally, McAdams (1992) conceptualizes this factor as involved in work-related behaviors, MacDonald (1995) as the monitoring of non-attainment of goals, van Lieshout (2000) as executive regulation in the performance domain, Ashton and Lee (2001) as the intensity of engagement in task-related behaviors, Buss (1991) as the capacity for reliable work and enduring commitment, and Hogan (1996) as trustworthiness and dependability. Holmes (2002) and Nettle (2006) are arguably most successful in capturing the positive aspects of both poles of the conscientiousness continuum by describing it as the promotion of immediate vs. distant goal striving. This conceptualization nicely maps onto lifespan-theoretical insights regarding individual differences in the tenacity of goal pursuit  (Brandtstädter,Wentura, & Rothermund, 1999). In the current paper, we adopt the view of these various authors that conscientiousness can be plausibly conceptualized as differences in the tenacity of goal pursuit.

To me the goal pursuit tenacity bodes well for adaptive problem of finding Food or exploring.
Extraversion seems to have multiple interpretations, all to my eyes equally valid.:

In Table 1, three clusters of conceptualizations of extraversion emerge. First, van Lieshout (2000) conceptualizes this factor as re?ecting a person’s activation vs. inhibition of impulses, which is somewhat similar to MacDonald’s (1995, 1998) notion of extraversion as re?ecting individual differences in behavioral approach. Both views are consistent with Lucas, Diener, Grob, Suh, and Shao (2000), who hypothesized that extraversion is positively associated with the sensitivity of individuals’ reward system. Because these authors view positive affect as a proxy of the activity of the general reward system, this hypothesis can also account for the high correlations between extraversion and individual differences in positive affect (Watson & Clark, 1997), even when controlling for social activity (Watson, Clark, McIntyre, & Hamaker, 1992).
A second cluster of explanations of the extraversion factor is the notion that this trait is involved in people’s hierarchical proclivity (Buss, 1991), leadership potential (Hogan, 1996), or disposition to wield power (McAdams, 1992). In addition, the disposition for dominance vs. submission in accessing resources is one of the two social dimensions that can be mapped onto extraversion in Holmes’ (2002) model. However, a problem with this account is that differences in dominance seem to be confounded by differences in competitive resources such as physical prowess, mental ability, material wealth, and social alliances, which depend not only on extraversion but also on other personality factors, such as general problem-solving ability and persistence in reaching goals.
Third, extraversion has been linked to the motivational predisposition to experience social interactions as rewarding (Ashton & Lee, 2001; McCrae & Costa, 1987). Insofar as this predisposition motivates people to seek out the company of others, this view is consistent with Holmes’ (2002) second possible conceptualization of extraversion as tapping into people’s level of assertiveness vs. passivity in initiating social contacts. In an empirical study, Ashton, Lee, and Paunonen (2002) presented evidence for this position, showing that a ‘‘tendency to engage and enjoy social attention” (p. 246) correlates very highly (.74) with traditional extraversion measures. Ashton et al. (2002) reasoned that extraversion can be adaptive because it is correlated with people’s ‘‘social attention-holding power” (Gilbert, 1989), allowing for the exertion of group in?uence and the attraction of possible mates (Campbell, Simpson, Stewart, & Manning, 2003; Nettle, 2005, 2006). In the current paper, we take this latter explanation as a plausible conceptualization of extraversion, though other explanations (e.g., as differences in general reward sensitivity) might also be consistent with the empirical evidence.

I am most sympathetic to second and third interpretations as they directly relate to the problem of Making Friends and Alliances.
Agreeableness is interpreted in two ways:

In Table 1, two clusters of conceptual interpretations for agreeableness can be discerned (the conceptualization by Ashton & Lee, 2001, is directed at a rotational variant of this factor and will not be considered here). First of all, several theorists regard agreeableness as fostering intimate relationships, conceptualizing it as enjoyment of other people’s company (Hogan, 1996), facilitation of intimate family relationships and parental investment (MacDonald, 1995), or dispositional love (McAdams, 1992). This conceptualization is consistent with the hypothesized social nature of personality traits. However, Hogan’s (1996) notion of enjoyment of other people’s company is dif?cult to differentiate from sociability, a key feature of extraversion. In addition, MacDonald’s (1995) emphasis on the facilitation of intimate family relationships and parental investment is not consistent with ?ndings by Graziano, Jensen-Campbell, and Hair (1996) that the effects of agreeableness on reactions to interpersonal con?ict with non-kin individuals do not consistently differ from reactions to con?icts with kin.
A second cluster of conceptualizations of agreeableness focuses on this factor’s role in human cooperative behavior, with Buss (1991) relating it to people’s willingness to cooperate, Holmes (2002) to acting cooperative vs. competitive, Nettle (2006) to empathy and trust vs. self-interest, and van Lieshout (2000) to the coordination vs. opposition of joint interests. This conceptualization is consistent with game-theoretical research on reputations of cooperation vs. competition in resource dilemma’s (Rasmusen, 2006) and with research by van Lange and colleagues (van Lange, 1999; van Lange, De Bruin, Otten, & Joireman, 1997) regarding the existence of individual differences in social value orientation. Finally, Koole, Jager, van den Berg, Vlek, and Hofstee (2001) showed that agreeableness is related to altruistic behavior when playing a variant of the public goods game. Consistent with this evidence, we propose that agreeableness can be plausibly conceptualized as individual differences in this tendency to display altruistic behavior.

To me the first interpretation of empathy and prenatal investment and intimate family relations is consistent with the adaptive problems of having and caring for Kids. The second interpretation of altruistic behavior and cooperativenes is equally acceptable as presumably this builds on primitive kin-non-kin concerns and parental investment propensities.
The last factor Openness to Experience I have elsewhere reinterpreted as conformity/rebelliousness. The authors find following interpretations:

As can be seen in Table 1, several clusters of conceptualizations exist for the openness to experience factor. All conceptualizations converge in their conceptualization of this trait as involving a high level of cognitive activity, as indicated by having a broad, deep, and permeable consciousness (McCrae & Costa, 1997), a high propensity for innovation and solving problems (Buss, 1991; Hogan, 1996), engagement in the intellectual and creative domain (McAdams & Pals, 2006; Nettle, 2006; van Lieshout, 2000), processing incomplete information (Holmes, 2002), and intrinsically motivated curiosity facilitating the development of cognitive competence (MacDonald, 1995). In trying to make sense of this factor, however, openness should be distinguished from psychometric intelligence, which is correlated with openness but not identical to it (McCrae & Costa, 1987; also see Penke et al., 2007a).
A parallel distinction was made by Ackerman (1996), who noted the difference between maximum and typical levels of intelligence: whereas the former is identical to operationalizations of psychometric intelligence, the latter has been shown to correlate very highly with openness to experience (Goff & Ackerman, 1992). This conceptualization is almost identical to Cacioppo and colleagues’ (1996) construct of need for cognition, which they de?ned as ‘‘a stable individual difference in people’s tendency to engage in and enjoy effortful cognitive activity” (p. 198). Empirically, this view is supported by Berzonsky and Sullivan (1992), who found a correlation of .78 between need for cognition and the NEO-PI-R openness to ideas scale (though the correlation with other openness facets was lower). Accordingly, we propose that openness can be plausibly conceptualized as differences in the reward value of engaging in cognitive activity.

The need for cognition may be driven by the evolutionary task of identifying kin from non-kin.
To me this looks promising and in the expected direction. I’ll be watching research from this group more keenly henceforth and keep you guys posted.

An Article That Describes the Currency trading and The Euro Crisis and its Impact on the Diff Economic and Financial Effects

There are four known currency pairs that dominate the percentage of trades. This are identified when buying and selling in the forex currency trading system market. These four currency pairs are the Euro vs. U.S. Dollar, the U.S. Dollar vs. the Japanese Yen, the U.S. Dollar vs. Swiss Franc, and the U.S. Dollar vs. the British Pound.

The euro remains very attractive against the pound and the dollar despite the ongoing problems presented by European Debt and the probable bailouts or defaults. It has been stated in which two thirds of European economists surveyed expect Greece to default on their debt. Last year such an announcement would have had the markets in absolute turmoil, indeed much of last year’s weakness on the euro was due to the debt crisis.

This year despite the well publicized problems in Portugal, Ireland, Greece and Spain the Euro remains a very unattractive prospect for those looking at buying overseas property. This is due to a number of factors which I mentioned and explained in detail below:

– EFSF – The European Financial Stability Facility is designed to act a safety net for indebted European nations. The fund has recently been made permanent and has given the markets the confidence that the ECB and stronger Euro zone members are serious about coming to the financial aid of the weaker members – a criticism levied at many members. As discussed European Debt concerns had been a major weight on the euro last year but now the issue is well known and appears to be being dealt with confidence has been restored. It is worth noting that longer term this is likely to be the issue that could present Euro weakness as concerns arises over the inability of the indebted nations to repay their debts.

– Interest Rate Decisions – The UK looked almost certain to have a rate hike in the first quarter of this year and the pound made strong gains on the euro as investors positioned themselves for the event. We then had a barrage of data releases showing that in all probability the UK wasn't ready for a hike and as such these positions were unwound and led to sterling weakness. Conversely the Euro zone has been floating the prospects of an interest rate hike as soon as next month. With unemployment falling it appears the Euro zone may have turned a corner and will be the first to stomach a rise in the base rate. This has compounded the problems for the GBPEUR rate as investors have taken up stronger positions on the Euro. The US economy whilst growing is still incredibly weak and due to the amount of cheap loans issued to stimulate recovery cannot afford to go raising rates. They are still administering the latest round of Quantitative Easing and will need to fully assess the effects before committing to a rate hike.

- Economic Outlooks - The economic outlook for the Euro has improved this year with encouraging signs in manufacturing and factory orders. Unemployment is falling and the overall picture remains buoyant despite the problems of the PIGS. The UK is suffering from very low growth and the immediate future does not look rosy either. It could be months or a year before the economy is deemed strong enough to be able to handle a rate hike and even then if the Euro has already had one, it is unlikely to be a major mover.

And now a Question Arises to us When will the Euro weaken?

 

 For this: The Euro has been under huge pressure recently as a result of the debt crisis. Despite this the Euro remains very strong as a currency which often has clients asking me when the Euro will weaken.

This is normally in relation to the GBP (Great Britain Pound) EUR rate. With the well publicized nature of the debt crisis this is a good question to be asking. After all this time last year the rate was in the 1.20's... We are now a year later and the debt crisis has only got worse.

Interest Rates – the currency is attractive to buy which keeps it strong. The higher a countries interest rate, the more investment it receives, and hence the stronger it grows. The raising of interest rates is a sign to the wider world that the Euro zone economy is expanding and can allow an interest rate hike. Looking specifically at the GBP EUR rate the sterling side is weak due to low interest rates. You only need to look at the weakness of the pound against most other currencies to understand why it is also weak against the Euro. The prospect of an interest rate hike is again being pushed into 2012 for the UK, and the Federal Reserve has said rates could be on hold until 2013! Can your currency transfer wait a year or even two in the hope things ‘might' improve?

Germany – When investors look to the Euro they look at the whole economy and not just individual nations. So the poor state of the PIIGS (Portugal, Ireland, Italy, Greece, Spain), whilst a major concern is not the whole story. Despite some worse than expected GDP figures coming out today for Germany, Germany has a very healthy economy with very strong exports. The long term expectations are that this will continue. Contrast this to the UK with a Manufacturing and Industrial sector in decline, and a financial sector tarred by the global financial crisis.

Economic and Political Will – There is a massive political and economic will behind the Euro. The backdrop to the current arrangement is a long bloody history and the original idea behind the economic union was to prevent the countries going to war again. To get to where we are today has taken decades of negotiation and consensus which I cannot see being undone quickly. Whilst coming under immense pressure for not acting decisively enough, the Euro zone leaders also have provided the financial back up to deal with the crisis. There are current questions over whether the bailout funds will manage Italy, hence the recent volatility, but the ECB (European Central Bank) have tools to dampen the volatility.

Eurobonds – Presently each Euro zone member issues bonds themselves. Bonds are used by governments to finance the day to day running of the country. By auctioning off debt on a promise to pay back in the future, investors provide credit and liquidity to keep the governments functioning. The idea of a Eurobond would be to consolidate the members borrowing, thereby reducing the amount of interest on bonds weaker nations have to pay because they are weak. Germany has said they will not back a Eurobond but only because they feel the indebted nations (PIIGS) don't have their house in order. It is foreseeable that Germany would back the Eurobonds if the PIIGS can show themselves to be able to benefit from the Eurobond scheme. I personally cannot see how the weaker nations can manage long term in the current state. I feel the Eurobond is one answer to Europe's problems and if announced down the line will further help the Euro.

Despite the huge uncertainty in the market the Euro remains strong. Europe is the UK's biggest trading partner and we have invested heavily in their debt. For better or for worse we are part of Europe. If you believe the Euro zone will collapse, or even hope that it will because you feel suddenly the GBPEUR rate will improve, I would advise caution. The collapse of the Euro zone or further major shocks will hurt the UK economy which is already under huge strain.

In my opinion getting the best rate is about setting realistic expectations over your time frame and being ready to pounce when things are favorable. Part of our service is to not only offer award winning exchange rates, but also keep clients informed and updated so that they have all the information to make informed decisions.

Here are the five main reasons why this is the case.

1.     Internally, the euro zone is a terrible mess, with extreme imbalances of debt, trade and competitiveness, but in aggregate, it looks like a remarkably strong economy. The current account is broadly in balance, public debt and the ongoing deficit as a proportion of GDP remains well below that of the US, levels of household and private indebtedness are relatively low, and there's even a little growth, albeit fast disappearing.

2.     China is attempting to diversify its foreign exchange reserves away from undue reliance on the dollar. The euro is the biggest and most obvious alternative.

3.     Interest rates are higher than in the US and the UK, and there has been no quantitative easing of any significance to debauch the currency.

4.     The dollar and sterling are justifiably weak. All problems are relative, and both the US and the UK still have big ones in terms of dealing with the aftermath of the financial crisis.

5.     If the euro zone breaks up, forcing weaker members such as Greece to leave, you are left with a potentially much stronger core. The more "Germanic" the centre of gravity in the euro zone, the stronger the currency will be.

The question is whether this underlying narrative can survive the current crisis. Back in the early noughties, the euro slipped below parity with the dollar. This might happen again. Here's why. By common agreement, the euro will either breakup or it must move to some form of joint liability, fiscal union. At the moment, we appear set on the latter course. But the politics make it extraordinarily difficult to engineer. At best, it's going to happen incrementally and probably in a quite unsatisfactory manner. With Europe lurching from one crisis to the next, it's hard to believe there's going to be much in the way of economic growth.

In countering such sluggishness, the European Central Bank will eventually be forced to abandon present disciplines and engage in much easier monetary policies, including quantitative easing. In the meantime, the credit worthiness of the Franco-German core will be undermined by progressive acceptance of liability for the periphery's legacy and future debts.

If on the other hand, the single currency does come apart at the seams, then chaos will reign, and it will be hard to determine who owes what to whom. In such circumstances all parts of the currency would lose value, not just the detaching periphery.

Even if market conditions do change and we start to see a lot more volatility, it will be only last for a few weeks anyway because we have the Christmas and New Year holidays just around the corner, and the markets are always very quiet and impossible to trade at that time of the year.