This page has been archived and commenting is disabled.
The EU in its Current Form is Finished
As I’ve stated several times in the past, my personal view is that Germany is in fact simply playing for time so it can mitigate the damage that will result from it LEAVING the Euro in the near future. Think I’m off base here? Consider that Germany has:
1) Asked its major banks to raise capital as soon as possible
2) Introduced legislation to nationalize its major banks in the event of Crisis
3) Introduced legislation allowing it to leave the Euro but stay in the EU
Do these look like the actions of a country that intends to remain part of the Euro? Remember, Germany’s finance minister has stressed the importance of a “political union,” NOT a “monetary union.”
“What we’re now doing with the fiscal union, what I’m describing here, is a short-term step for the currency,” Mr. Schäuble said. “In a larger context, naturally we need a political union.”..
[Schäuble] sees the turmoil as not an obstacle but a necessity. “We can only achieve a political union if we have a crisis,” Mr. Schäuble said.
Germany may in fact not be the only one:
Some central banks in Europe have started weighing contingency plans to prepare for the possibility that countries leave the euro zone or the currency union breaks apart entirely, according to people familiar with the matter.
The first signs are surfacing that central banks are thinking about how to resuscitate currencies based on bank notes that haven't been printed since the first euros went into circulation in January 2002.
http://online.wsj.com/article/SB10001424052970203413304577084483874422516.html
Folks, if you’re not considering the possibility that the current EU is going to be broken up… you need to start doing so now. They’re all out of options over there which means… you guess it… it’s default/ systemic risk rime.
The EFSF, which was supposed to save the day, failed to raise even five billion Euros in bonds… so that plan is dead. The IMF doesn’t have the firepower to bail out Europe (and the political environment in the US wouldn’t stand for it either). And the ECB can’t monetize the system without Germany walking out of the Euro entirely.
In other words: the EU in its current form is out of options. Small wonder various members are contemplating having to revert back to their old currencies. My question to the bulls: what happens to stocks when the Euro implodes?
If you’re looking for specific ideas to profit from this mess, my Surviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor.
Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).
Best of all, this report is 100% FREE. To pick up your copy today simply go to: http://www.gainspainscapital.com and click on the OUR FREE REPORTS tab.
Good Investing!
Graham Summers
PS. We also feature four other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s my proprietary Crash Indicator which has caught every crash in the last 25 years, or how to stockpile food (where to get it, what to buy, and how to store it) our reports cover this information in great detail.
And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com
- advertisements -
"“We can only achieve a political union if we have a crisis,”
is that you, rahm?
the conspiracy marches on.
Marches on ?
For the Premier Danseur, several plies, well-executed, could unite the even crowned heads of Europe.
My question to the bulls: what happens to stocks when the Euro implodes?
I really hate to say this but US debt and equity markets could be the beneficiary of the coming euro-implosion. Commodities though because no euro=no buying commodities except in dollars which will send the dollar to it's strongest position in years. Strong dollar=weak commodities.
After a time when euro region currencies settle down to a new normal that will change, unless there is a ME war of course, that would be a real monkey wrench in all our plans.
I think that for a while anyway former euro nations will need to make a soft peg to the dollar to help stabilize their national currencies.
you have no idea what youre saying. if euro implodes there will be greatest depression at best and supply chain breakdowns at worst (unless it happens 2 years from now - when countries can prepare - and i disagree with author there are 'no options left'. there is IMFs acting like a central bank still ahead..
Oh yes, sorry Nate, I did not realize you had got your crystal ball out of the shop. It is always so much easier to label your speculations as better than my speculations and that of course means the other guy must be dumber than a brick, yes?
You seem to think that because of monetary dislocation in the EMU - as in no more EMU - but rather 17 individual nations doing business with independent currencies as they used to, they will neither buy nor will their suppliers sell. That simply is not the case depression or otherwise. I did not say there would not be a depression, I maintain we are already IN a depression, this will just make it worse of course.
But, that does not mean commerce ceases. It will mean that the euro will be as confederate money was immediately post civil war, not legal tender, zero value, and each nation will go through a process of reinstating their own money at a price they set, a price which will be wrong in all 17 cases, but they have to start somewhere and then the market will dictate what it thinks the money is worth. It will be a total mess for a while, that is why I say some will make a soft peg to the dollar. Soft, not hard, temporary because in the first weeks there will be ForEx chaos.
Oil and other foreign suppliers will NOT want to accept most "new" European currencies at the hoped for initial issue value, so those nations will be in a rush to get hands on dollars to pay immediate bills with, that will cause the dollar to rise significantly overnight. Or is that the part of my post you disagree with?
The euro collapse will be closer to two weeks than to 2 years and it will happen. I sincerely doubt the IMF will step in as a quasi central banker simply because Americans will NOT accept that, politically it will not fly, and in an election year there is no politician willing to push such an unpopular choice.
my comment on IMF was speculation
I would callmy comment that US stocks will NOT go up if Euro busts common sense - even the wall st firms who have not studied supply chains are talking 20 trillion $ hit to world economy if Euro unwinds. If you truly think Euro has 2 weeks left you should not spend a single more moment on this site, or even on the internet (informed speculation)
I see, and thank you for clarifying your criticisms. As to where I can or should go where would you suggest is safe from what is about to happen? I have always said here that it would be best to be on an island with no natural resources. A neutral island nation, like Ireland. That is part of the reason I got my Irish passport.
Much of the world has accepted the euro as both legal tender and tentatively as possible replacement for the dollar as reserve currency since 1999. The 17 EU nations that were members of the EMU put their lives on the line to back the euro, but in the end it was too flawed ever to work, that is why oil was never priced in euro but remained priced in bucks.
Before I go on with economic fallout of a dead euro let me address the US equity and bond market question. There is an unimaginable amount of wealth and cash/credit out there sloshing around, mostly looking for return on investment, but all of it is looking for return OF investment at this point. If you are a rich person anywhere in Europe, Italian banker, German CEO, British lord, Dutch trading firm, Finish housewife that "inherited," and you read the headlines about the totally inevitable collapse of the euro how would you protect your wealth? The answer is that you get your money into America by any means possible as fast as you can. You do not care if a stock pays dividends, you do not care if Bernanke announces QE3, you do not care if the USA has a big deficit, you might take a big hit investing in US stocks and debt, you only care that your money might not be legal tender tomorrow. Europeans have a long memory of this happening to them. I say that the declines in the EU bourses are directly related to US stock increases, God knows there is no other reason for the Dow to be up. A ton of money will fly into American markets for the sole reason there is no better place to insure it. A flood of it, that will make our markets and the dollar itself go up, watch the TIC and see for yourself.
As to the fallout of the soon to be dead euro, we will see. If I were the head of Irish or Portuguese government I would repudiate any and all euro denominated debt and start over. In the case of Ireland for example they had no external debt, they only got saddled with a hundred twenty five billion or so (about $47,000 per man woman and child) at the insistence of Merkozy because it was French and German banks that blew the house price bubble in Ireland. To bail out 3 banks in Ireland, all of which got their money from continental banks. The people knew they could not pay $400,000 for an average house on a salary that was at best $30,000 per year, but they had no choice, live in your car or go along with bank demands. Same thing here in the US. Average pay here is $41,000 per year, after taxes call it 29,000. One third of that should go to housing, or $9,570 per year for all housing costs. That is what the average American can reasonably pay for housing, mind you the median is far lower than that. Just about $800 per month. So how did the Irishman pay 400,000 for his house? Answer is they don't. And the Irish have no ability to default on a mortgage because of bankruptcy, once you sign a mortgage there you owe it for life even when it is taken by the bank and sold. I saw one house six months ago for 2 million euro when the euro was $1.45, it is now 659,000 at $1.32 to the buck. Still no takers.
Your point is there will be a horrific depression, my point is we are already in a horrific depression. Of course it will get worse and on that we can agree right? But, as bad as it will get the world is not going to end. Swarthy swans aside that will give us a newly militant nationalism in Germany, and it will happen, Iran, not an issue war or not, China thank you but they are in a major toilet swirl, India, machine tool orders already down 26% just from October, a whole lot of bad shit out there, but the USA damaged as we are sails along in spite of kleptocrats like Bernanke and Paulson and Geithner. You think the rest of the world and TPTB outside the US has not noticed that fact?
Life will go on.
At some point all these debt maneuvers fail, right? The further they push it, the worse the outcome for all of us. The globalists are like stubborn pitbulls hanging on the throats of the people, oblivious to the reality. Piss on the One-World meme, let's get back to work in our own countries, doing our own things.
Default you dumbasses, let's get some real economics going again.
Well that's the whole problem: Those that are in power don't want us all doing our own thing. Notice the talk already of oh we'll just dismantle the currency but we need to keep a political union. DIE MOTHERFUCKERS!
Damn Terrets. LOL.
I'm a fan of ZH, but this guy really bothers me. In any market, making money requires timing. The information this guy is pedling may in fact be good information, but it IS NOT profitable information. Period. It is not enough to endlessly cry that the world is ending. Eventually he will be right and anyone care to bet me that when that day comes he will brag that he correctly called the market top? This site is about the truth, so here it is....
Anyone who has executed trades based on Graham Summers' information over the past year or more has lost money. Period
To "The Trade Group" - I have to ask, are you a subscriber of his Private Wealth Advisory Newsletter? Or are you just saying that you don't like his posts cuz they are spamming signups for his newsletter?
I'm new to ZH and I'm a novice investor in general. I am subscribed to GS's newsletter, and I just put 10k into investments the Graham Summers recommended on Nov 1 and during the month of Nov I saw 10%-15% gains on the investment.
Actually, I gained 15% on the ETFs he recommended and I lost 15% on the bank stocks he recommended because he told us to SHORT the bank stocks and I though he said BUY the bank stocks ... so I lost 15% while the rest of the subscribers gained 15%...newb mistake I suppose.
I've been following his trades for most of the year before I finally decided to invest some money ... and yes there have been some losers that I've seen, but he's also called some pretty big gains that I wish I was a part of.
I'm STILL also a bit skeptical, because today he sent out a notice to get into some ETFs and this is my result:
http://awesomescreenshot.com/0baq5nk80
Now I don't know if GS is going to claim that we 'gained' on the major ups today or not, but by the time I got his email the ETFS had already moved up, so I'm left (for now) with a big loss on the day...who knows though, maybe he expects these ETFs to move even higher over the coming days.
My faith has been restored:
http://screensnapr.com/v/QsZytB.png
Agree. It is just spam.
Aunty Christ I see your point but if all the other nations are broke and cannot pay for German goods in Euro's what difference does it make if they go back to DM's? Either way aren't they screwed?
It would appear that way, GCT. Germany realizes their current account surplusses have led to major dislocations that eventually need to be corrected. The most obvious way would be for the DM to radically reprice vs the Euro, benefitting the PIIGS ability to grow and rebalance their trade deficits over time.
you seem to have taken up Ye Olde Socialist humming mantra, that one where Germanys trade surpluses, or any countries, somehow imbalances other countries around it
this pile of fuking tosh was peddled last year (no surprise by Euro-tossers) that Germany must somehow hack away at its export success and rebalance Europe. That old moronic socialist belief that the strong and healthy should handicap themselves down to the level of the rotten lazy socialist vandaised Greek economy for example
Germany is dong very well (although their rotten politicians and bwankers are doing their worst to piss it all away)
it is up to the other bankrupt socialist scum countries around Europe to wake up, wise up, grow up and compete instead of sucking off others... you know, earn their living on merit
Europe is stagnant and bankrupt because the thinking has been socialist... 100% failure everytime ...so 'Game Over' socialism, flushed down the toilet of humanity where you belong
If Germany were to revert to the DM, their currency would be instantaneously the most overvalued currency in the world, destroying their export industry...
the eu was finished before it got started.
http://expose2.wordpress.com
At which point the Germans print like motherfuckers and start buying up the rest of Europe with slightly devalued DM's. The DM stabilizes, exports become affordable, the Bundesbank / German govt goes on a shopping spree and Germans profit.
Silver Rhino, you obviously don't appreciate the German inflation-phobia...
Oh damn, did I forget a /sarcasm tag somewhere? :-)
It would not come close to passing the USD as the most overvalued currency in the world.
I totally disagree with your assessment. The $ is second cheapest currency (after the yuan). We won't realize the true value until we get effective leadership in DC, a sound energy policy that is based on attaining energy independence, and the back bone to make some tough decisions regarding profligate entitlement programs.
You must be well connected to have acquired such powerful drugs.
you obviously don't get out much...want a beer in Zurich? Be prepared to pay $18 for it. Want a burger in Sydney? Hope you don't mind paying $10 for a big Mac, mate. Ever been to Iceland for some sheep soup? Try $35 for a cup of it, sorry no free refills.
How does that speak to the USD being undervalued? If the USD was properly priced you'd be paying $180 dollars for a beer in Zurich.
LMAO!!! We would be paying $.10 for a Beer in Zurich you fucking bitch.
So by your logic, when Bernanke prints another 3 trillion next month a beer should only cost .01 cent. Jackass.