"Europe Will Devalue Or Dissolve..."

Tyler Durden's picture

Submitted by John Rubino via DollarCollapse.com,

No rest for the wicked. With the shockwaves from Brexit and President Trump still reverberating around the world, the established order is bracing for more bad news. Next up is a December 4 Italian constitutional referendum that might end the reign of centrist prime minister Matteo Renzi and replace him with a bunch of anti-euro iconoclasts from the Brexit/Trump part of the spectrum. Here’s an excerpt from a much longer, deep-context Guardian UK article:

As the air of insurgency becomes unmistakable, the technical debate over reforming a 70-year-old constitution is in danger of becoming a sideshow. Perhaps the most disturbing poll for Renzi found last week that only 40% of Italians say they will vote on the reform package; 56% consider their vote to be more a verdict on the prime minister, his government and, by implication, the state of the nation.


If that bigger picture still dominates come polling day, it is hard to see anything but defeat for a man once billed as Italy’s Tony Blair. After 13 years of a flatlining economy, Italians are battered, bruised and looking for somebody to blame. Unemployment is running at 11%, but is close to 40% among the young, who made up the bulk of the 107,000 who left the country last year to seek work abroad. The aftermath of the financial crash is estimated to have wiped out about a quarter of Italian industry. The average family income is less now than it was in 2007.


Traditionally among the most enthusiastic proponents of European integration, ordinary Italians are furious at the EU’s failure to share the burden of the huge migration surge to their southern shores. Lectures from Brussels on the need to cut public spending and balance budgets, given the desperately straitened times, have added insult to injury. It is no coincidence that a current bookshop bestseller – 1960: The Best Year of Our Lives – is a nostalgic evocation of the Italian postwar economic miracle, when the country’s growth was judged to outstrip Germany’s.


As initially strong support for his constitutional reforms has plummeted, Renzi has tried to turn the tide. In an attempt to woo an increasingly Eurosceptic electorate, he has begun to talk tough to Brussels, temporarily abandoning austerity targets and threatening to veto the EU budget unless other member states show more solidarity over migration.


Resorting to what opponents describe as scare tactics, he has also drawn attention to a recent spike in the interest rates on government bonds. The markets have become decidedly uneasy at the prospect of Italy becoming the next country to deliver a seismic shock at the polls. “The yield will get bigger if uncertainty grows,” noted the prime minister. “That’s not a threat: it’s just a fact.”


A sharp rise in the cost of financing Italy’s colossal public debt could spell disaster. But just as the so-called fear factor failed to keep Britain in the EU, there are few signs that Renzi’s economic warnings are having the desired effect.

And not long after Italy takes its shot at the status quo, France will go to the polls for a run-off presidential vote pitting far-right François Fillon against extreme-right Marine Le Pen. Check out the latter’s rhetoric:

Brexit: Check. Trump: Check. Marine Le Pen: ?

“I think that the elites have lived too long among themselves. We are in a world where globalization, which is an ideology, has forgotten, and put aside the people, the people’s interests, aspirations, and dreams,” National Front party leader and French presidential candidate Marine Le Pen told CNBC following Trump’s election victory.


“They have acted like carnivores, who used the world to enrich only themselves, and whether it’s the election of Donald Trump, or Brexit, the elites have realized that the people have stopped listening to them, that the people want to determine their futures and in a perfectly democratic framework, regain control of their destiny. And that panics them, because they are losing the power that they had given themselves,” Le Pen went on to say.


The major tenets of National Front’s ideology include nationalism, protectionism, and right-wing populism – with strong stances against immigration. A once obscure political party that had no real weight in French politics, the National Front is now a major player.


Envious of the U.K.’s Brexit referendum, Le Pen wants France to leave the European Union. In campaign stops across her country she has championed for more immigration restrictions and has been vocal against radical Islam – very akin to the way Donald Trump carried his campaign. Much like the president-elect’s foes, Le Pen’s critics have relentlessly labeled her a racist and a fascist.

It’s hard to overstate the threat posed by these two votes to the EU - the world’s largest economic entity - and by implication to the rest of the global financial system. Italy is the third biggest country in the EU, and France is the second. Let either pull out and the result might be dissolution and the end of the euro. Trillions of dollars of euro-denominated bonds would suddenly be converted to lira or francs, forcing the holders of those bonds to take big losses and impairing bank capital across the continent, leading in turn to derivatives blowing up pretty much everywhere, and so on until the whole house of cards is threatened.

So what does a fiat currency/fractional reserve banking Establishment do when confronted with such a looming catastrophe? What it always does of course: Cut interest rates and ramp up money creation in order to devalue the currency.

Put another way, the only way to ease the burden the common currency places on inefficient countries like Italy and France is to cut the value of the euro to the point where French wine and Italian cars are screaming buys around the world. Those industries grow and hire more people, who in turn are more open to preserving the status quo.

Now combine a massive euro devaluation (which, by the way, is already in progress)…

…with a trillion-dollar US infrastructure program financed with borrowed money, and the result might be a world awash in unprecedented amounts of liquidity. If that’s not paradise for precious metals then it’s hard to imagine what would be.

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BetaGap's picture

Austria, Italy, Netherlands, France, Germany

There will be change. Much of it.

Haus-Targaryen's picture

The second to last paragraph is horribly flawed:

"Put another way, the only way to ease the burden the common currency places on inefficient countries like Italy and France is to cut the value of the euro to the point where French wine and Italian cars are screaming buys around the world. Those industries grow and hire more people, who in turn are more open to preserving the status quo."

(Emphasis added) 

The problem with this theory is Italy and France share a currency with Germany and Spain. 

Thus, if you devalue the EUR by 20%, the Fiat 500 just got 20% cheaper -- but so did the VW Golf.  Sure, French wine just got 20% cheaper, but so did Italian and Spanish wine.  

You see Germans manufacturing has never been competitive on price alone.  They compete in more or less every premium category across the board.  Even their shit beer (Öttinger) is considered "premium" everywhere else in the world.  There will be no recovery in Italian and French manufacturing as long as they share a currency with Germany.  

Split the EURO in half if you want to preserve the EU.  Luckily for all of us, the EU is run by fanatics who will keep rearranging deck chairs as the thing sinks. 

BetaGap's picture

They even have a shit beer over there?

Haus-Targaryen's picture

When I first moved to Germany, as a starving college student I found Öttinger -- you could get an entire "Kasten" (24 pack of half-liter bottles) for 6,50€ on sale at Real- (think Wal-Mart).

The first few months I was here before I made German friends I was in love with it.  Compared to most American beers it was heavenly and cheap.  As I started making friends they all told me this is the worst beer in Germany and a few went to the local store to buy me beer because they thought Öttinger was all I could afford.  

After 15 months here I came back to the US for my last semester of school and I saw Öttinger at a liquor store for $4.50 a bottle marked as premium beer.  Same bottle costs 0,28€ in Germany. 


Infocat's picture

The free market doesn't always work perfectly.

fx's picture

Neither Italy nor France will leave the Euro anytime soon. People have way more to loose than most Euro-doomsayers here realize. Contrary to the USA the vast majority of people over here do NOT live from paycheck to paycheck but have considerable financial savings. Neither the French nor the Italians will put all their savings and retirement accounts at risk and leave the Euro. Case closed. Populists can still rise and even win elections in europe - but only as long as they do not aggressively push the euro-exit. Once they start this, their voter base will narrow considerably.
Longer term the euro cannot survive, of course. But a Euro exit by any country (except perhaps Greece) is unlikely to happen for at least another 5 years.

Haus-Targaryen's picture

You might be correct.  

Your above scenario is predicated on the continuation of the current bull market.  The next recession, irrespective of how it comes will push the EUR up and down the wall.  Due to its construction, it only takes one nation to break the entire thing apart (thanks Target2). 

5 years is pretty optimistic, but could happen.  Depends on whether central bankers can keep control of the various secondary sovereign bond markets.  

fx's picture

of course economic or market events could disrupt the Euro much sooner. I agree with that My point was, political movements or populist campaigns won't lead to a euro break-up anytime soon. they could indirectly of course induce economic events that ultimately speed things up.

Ghordius's picture

"Depends on whether central bankers can keep control of the various secondary sovereign bond markets"

if I read what ZH's Tylers say to that, there is soon nothing to control anymore because... there is nothing to buy anymore

"the next recession will push the EUR up and down" because... this one did not? but it did push the Pound and the Dollar like yo-yos?

DEMIZEN's picture

agree. but expect euro to devalue considerably.

Singelguy's picture

If the anti EU parties win the elections in France, Germany, and Italy, they might not leave the euro immediately. I suspect they will first seek serious structural reform of the EU, making it more transparent and democratic. If that effort fails, they will initiate their own Brexit referendums. That will certainly happen in the next 5 years.

fx's picture

The free market (as long as it is really free) always works perfectly - for one side, that is.

yngso's picture

In a really free market everybody wins.

de3de8's picture

Cause it' s far from free

wildbad's picture

despite living in southern germany, i brew my own. i buy only good beer as a comparison. i like the czech beers and the bavarian and even a few from here Baden Württemberg.

when i go back to the states, even the craft brews don't do much for me.

brushhog's picture

I went to southern Germany a few years ago for Octoberfest. There, I discovered Augustinerbrau...the most crisp, drinkable, and distinctly German beer I have ever had. To bad I cant ever find it here in the US. It might be worth another trip back just for the beer.

new game's picture

do what the chinese do, peg the bitch to the almighty dolla. a peg like a stake in the dollas heart.

yea, the euro is a failed regime with the loosers waking up to reality. turmoil, bitchez...

yngso's picture

Compared to the US, the Fed and the USD, everything else becomes a side show.

Singelguy's picture

The problem is not the value of the euro. The primary problem is the structure of the EU. The unelected officials in Brussels issue edicts on what the member nations must do. In return, the member nations are required to send billions of euros to Brussels every year to pay for all the useless and dare I say destructive bureaucracy, money that could be better spent on serving the needs of their own people. The citizens of the EU are starting to wake up, especially in light of the disastrous and uncontrolled migration from Africa and the Middle East and Brussels' unwillingness or inability to effectively deal with it.

Secondly, the structures within the member countries of the EU are severely lacking and completely counter to economic growth. Business is over burdened with taxes and regulations, the effects of which are being exacerbated by the flood of refugees.

In the current environment, the EU will not survive. If the TPTB had stuck to the original idea of creating a free trade zone instead of trying to morph it into the United States of Europe, it might have actually worked.

Stan Smith's picture

+1 and then some.

Anyone who doesnt think this house of cards isnt going to fall is high off their ass.    Im not nearly smart enough to predict when,  but short of wholesale changes -- which no one in Brussels is going to be willing to do -- this thing is doomed.  

I've stated in other posts, the only way the EU 'makes it' is for things that havent even remotely been proposed yet start to gain footing.   That will ONLY happen with the threats of countries leaving.  

Bash the Brexit if you will,  but if anyone doesnt think this has effect on mainland Europe,  your wearing blinders.

Funn3r's picture

Every time I hear the word "unelected" my bullsit-ometer pings an alert. Why does the writer use that word - the only answer can be that they want to send a message of repression and control. After all, democratic officials are elected, so anyone who is unelected must be against democracy? right? RIGHT?

Well no. Every nation in the world is run by unelected people both inside and outside of government. I don't recall voting for the legions of civil servants who populate Westminster and Whitehall. And Yellen, Draghi, or Carney did I vote for them either? 

So if you don't like the EU you don't like the EU. But the problem is not because they were not directly elected.

Leknam's picture

Well put. Can't fault your analysis, spot on! One observation I will make is that you are very noble to think that it has turned out like it has. Due to incompetence.The puppet masters rely on people trying to offer a solution to keep the charade going.. It will end overnight like a damp squib when the puppet masters move their plan to the next stage. Nobody leaves unless the trapdoor opens and we must know by now who holds the lever.

yngso's picture

EFTA is much better. If the UK rejoins it, other EU countries could too, or it could maybe lead to serious reform of the EU?

Shyysiryxius's picture

Hells yeah. Been a great year so far lets keep this season going!

beijing expat's picture

The banks are bankrupt and will fail at some point. It's Just a question of how much the financial oligarchy can wring out of the taxpayers before the inevitable happens.

I say, elect a people's government, pull out of the Euro, run the banks through court and imprison the guilty.

Then just run banking as a public service through the post office and do mortgages and whatnot through crowd funding on mobile apps.

It's a new model but the old model is only profitable when fraud is involved.

If the Oligarchy complains, fuck em.

mikkip's picture

don't see how this is necessarily good for gold in usd terms

Ghordius's picture

so the gist of the article is

- because Trump (US) and because Brexit (UK)... "it stands to reason that"... followed by France and Italy leaving something, anything

- the EUR, is bad. take it as an article of faith

meanwhile, the article suggests that the EUR must be devalued, and that it is being devalued (well, this part is true, isn't it?)

Haus-Targaryien, above, proposes to "save the EU"... by splitting the EUR. the question is more: why should we "save the EU" if it's "run by fanatics"? (there are people like me that consider the EUR project as more important for peace then that "EU" project)

well, no. I don't see any French or Italian national interest in doing what is proposed here

the world is engulfed in an unprecedented monetary war, the Currency War

any national leader that wants to get his country out of any european club has to make a plan, and show the upsides of doing that, for that very national interest

any national leader that wants to whip out a national currency, for example, has to state how the government he heads wants to "play" that currency

a harder currency? well, how hard? like gold? isn't gold already there, free to use, here?

a softer currency? what, even softer then what all currencies are being made?

the current EUR is keeping, so far, it's only promise: price stability. which is the whole thing of a well-run fiat currency. so no, wake me up when the EUR is not keeping anymore that promise, and French and Italian industries need something new

meanwhile, you point to the EUR, I point to the still ruling Global Reserve Currency, the Mighty Dollar, the true gorilla in the room (and our problem)

Ghordius's picture

a graph of the EUR in USD would only be a symptom of lack of price stability... without a continental sized eurozone (330 millions, remember?)

go on, tell me that it's the EUR weakening, that's it is the EUR that is going up and down, while the USD is a true "rock of stability"

the reality of the USD is that it's vagaries affect the whole world. and they would affect more the eurozone economies if the EUR was smaller, for example

price stability is simple, actually. you make one price calculation per year, you print one pricelist... and you keep that pricelist for a whole year

yes, that includes the German Beer example you were making. 0,28€ a bottle

and it's a demand that is typical for economies which are based on small and medium-sized companies, which lack the resources to have multi-currency ledgers with hedges and all that


Oettinger has 1'100 employees, does not advertise, does deliver directly, and it's whole USP is that it makes a decent beer at the lowest price, and no Big Biz involved anywhere, be it big marketing or big advertisement or megabanks. That's a good example for the typical european SME

so yes... price stabeeleeeteee, bitchez

Haus-Targaryen's picture

You can only have stability if you have something to compare it to, either against time or against something else. 

While some parts of the continent have attained a certain level of "price stability" they haven't been able to attain in recent history (Italy, Spain, Portugal, Greece and France) other countries are experiencing more price instability when compared to recent history.  

The idea you can get nations who typically lacked price stability to attain a certain level of price stability exclusively by using the same currency there that you use in more price stable nations (e.g., what the EUR is) is very short-sighted. 

There are reasons why the Italian Llira was very volatile while the DM by comparison was very stable.  Using the DM in Italy as their official currency will only grant Italy a certain time of price stability to make its economy and population more like Germany's until the markets realize nothing has changed except the artwork on the notes, and out comes a bigger rat terrier this time to shake a bigger rat. 

We crossed that Rubicon in Q2 2012.  Good ol' Mario made the rat too big to shake by injecting artificial demand for sovereign debt while daring those evil speculators "make my day, short the Euro" but that just gave the rat-terrier time to get even bigger.

No matter what happens the rat is going to get shaken.  Will it survive?  Depends on how big the rat terrier is.   

Ghordius's picture

"...other countries are experiencing more price instability when compared to recent history"

you seem to live in a different world, at times. and then... I remember that you are way younger then me

you never experienced neither the Deutsche Mark nor exporting stuff from Germany priced in Deutsche Marks

you came to Germany with the EUR already there, and Oettinger priced cheaply in EUR cents

you missed the times when everybody and their grandmothers were busy betting on the DM's FX. you missed the times of Soros

nope. your statement I quoted is quantifiable. you have to pick the timeframe, and tabulate, and consider what is the bedrock, like a basket, for example

I spent considerable amounts of time doing just that, in the 80's and 90's, and came to a completely different conclusion

and this before the Currency War was more then a distant, possible but still unlikely scenario

go back and read what I consider price stability. it's all about price calculation and price lists

then consider the situation of Oettinger Beer. walk for a mile in their shoes

Haus-Targaryen's picture

You're describing traditional FX markets.  

You must be a huge fan of a "one world currency" given the above logic. 

Ghordius's picture

why? the world I was born into had a USD backed by gold that was the near-equivalent of that

I could retort that "you must be a huge fan of competitive devaluation", a "game" I hate... but the game in town, lately

OpenThePodBayDoorHAL's picture

Oops you decided to let your countries be governed by unelected bureaucrats in Belgium, and >10,000 of them earn more than the UK prime minister while they put out 600 pages describing what diameter cabbages farmers are allowed to grow. Kohl and Mitterand created a monster "group" currency without a group bond market and now that it's fully entrenched they need to ride it down like Slim Pickens in Dr. Strangelove. Draghi's running out of CCC-rated junk to buy, the Chinese are fast replicating Germany's high-end machine tool business. Europe will always be a lovely museum to visit, great landscapes, history, and food, but you are well and truly fucked from an economic and currency point of view. Try hiring and firing in France, or starting a company in Spain, where you need a plan in place to pay startup employees for five years if a startup fails. You never re-capped your banks but bail-in rules are now firmly in place so the real screwing can proceed. Good luck.

AmandaFawndel's picture

DIE-versity......it's for YOU, not for the j00!



Wake the fuck up white people!

The socialist jew run banking cartel needs a bigger flock of sheeple to shear, as their American flock is getting poorer and poorer. The world is now their Oyster.

And what can't the greedy socialist jew FEDERAL RESERVE BANKING CARTEL buy with the SEVEN TRILLION DOLLARS they printed for themselves under Obama? It's buying the destruction of White Countries before our eyes.

WHAAAAAT????? You mean the greedy lying socialist jew media never explained to you that QUANTITATIVE EASING WAS SOCIALIST JEW BANKERS PRINTING THEMSELVES MONEY?

The average American stupe probably has never even heard of Q,E., but it's what made your grocery bills double under Obama!

White Culture, White History, White Family, "White Religion", and White Work Ethic have all been attacked since the 1960's. Diversity = The War on Whites Christians and Heterosexuals.

Multiculturalism destroys countries, while uni-culturalism holds them together.
Political Correctness, Multi-Culturalism, Diversity,....all designed to destroy the foundations America was built on,. It's all part of the Jew World Order, which is WHY SOROS IS SPENDING hundreds of MILLIONS bankrolling MUSLIM REFUGEES IN EUROPE, and why Obama has opened our Southern Borders and Paul Ryan is funding the invasion.

It's no coincidence that America and Europe are being over run with non-white, uneducated, illiterate criminals, terrorists, and rapists at the same time.

China and Russia are being taken down too, by economic warfare and proxy wars, with a real war coming. i.e. with "War Protesters", a Nightly "Body Count" on the Jew run media, and a parade of outraged liberals screaming at the tops of their lungs....and yes it will happen under the next "Republican" President, keeping the current jew run media "Republicans are Warmongers" meme alive.

it's Divide and Conquer, and White people also have a long history of fighting back against Kings and Tyrants. Now you know why White countries are being destroyed, what are you going to do about it?

Only one thing works, and we all know what it is. We should all now see why the Founding Fathers were smart enough to include the 2nd amendment in the United States Constitution. It now seems that the Jew World Order cannot flourish unless all white countries perish.
And to think our forefathers once overthrew a corrupt Government over the price of some stinking Tea!!!

How far we have fallen.

ARM YOURSELF WHITE PEOPLE....IT'S TIME TO EXTERMINATE THE NAZI JOOS ONCE AND FOR ALL....and anyone who follows their DIE-Versity teachings.....

Fireman's picture

"Multiculturalism destroys countries, while uni-culturalism holds them together."


Count Richard von Coudenhove Kalergi’s Plan outlined by Gerd Honsik

“Kalergi proclaims the abolition of the right of self-determination, ... the elimination of nations by means of ethnic separatist movements or mass allogeneic (genetically dissimilar) immigration to create a multiethnic flock without quality, easily controllable by the ruling class. Kalergi characterized the multiethnic flock as cruel and unfaithful but maintained the elite must deliberately create them in order to achieve their own superiority: ‘Then the elite will first eliminate democracy – the rule of the people. Next, the elite will eliminate the people via miscegenation, thereby replacing the ruling white race with an easily controllable mestizo race. By abolishing the principle of equality of all before the law, avoiding and punishing any criticism of minorities, and protecting minorities with special laws, the masses will be suppressed." 


from "Practical Idealismus" 1922





Yes it is a conspiracy and there are no doubts as to who is pushing this zionazi agenda.

Afghan pedophile rapist "Christian" convert gets to stay in Sweden.


Thanks Barb


Stan Smith's picture

"Bad Breakups for 1000, Alex"

Money_for_Nothing's picture

This isn't liquidity. This is a web of debt. Feudal capitalism. Feudal socialism. Cuba had feudal communism. Trump may fire hose this away with his small hands. Otherwise it will crumble slowly then quickly.

yngso's picture

Wasn't it Louis XIV, the last French king before the French Revolution, wo said that after me comes the flood? The central banksters too know what will be the consequences of their actions.

DEMIZEN's picture

euro devaluation helps peripheral countries solving their debt problems and will keep europe together. banks? fuck the banks, Time to fail has finally come. We are ready for a new cycle i figure.


Dilluminati's picture




Not enough taxes going to nowhere, we need more for them and less for me!

Rich Monk's picture

Facist Jews run European businesses, and communist Jews run politics and the education system. Wake up people!

bjax's picture

I'm long on toilet paper. People are going to need it either before, during or after the big crash. I have a shitload .... hmm that doesn't sound good!

Last of the Middle Class's picture

Devaluation of your currency is essential for non performing economies controlled by psychotic politicians. It briefly reduces the costs of your goods and services while passing on the real cost which is inflation quietly to your own citizens and at the same time assumes your neighbor countries are too stupid to realize what you just did. It is the hallmark of a clueless ruling class attempting to conjure up something economically using nothing but smoke and mirrors. The costs are hidden and quietly passed on to your citizens and is, in fact, nothing more than a massive price fixing agreement with other countries. That is until they respond in kind.

south40_dreams's picture

At this point, what possible difference does it make?

THE DORK OF CORK's picture

Total Bollox.

The article is a bankers mercantile charter.

The reality is the French cannot afford their own wine because of overwhelming usury costs.


The problem is as always the gap between inflated prices and net income .

wholy1's picture

I believe the more appropriate word is "DEvolve" - it's a PROCESS, just like most eveything else "IN this world".

bankbob's picture

For 70 years the USA has been the guarantor of Global Security, Global Trade and Global Energy.  And, we are getting out of the Global Management Business.


Europe will return to their old imperial trading routes and partners.  It is only a matter of time.

yngso's picture

No, history doesn't go backwards. The world is becoming something very different, totally new, and that's a good thing. There's so much of the old, the imbalances that have been crated along with the industrial revolutions that have cahanged everything in general for the better, that needs to be gotten rid of.

onmail1's picture

euroPeons co-pirates anthem:

u have gold

we dont care

we have euro

we will buy from u

with our paper

all that we want 

food , garments , electronics

free free free

our paper is supreme

& u must worship us

for we are gods

if u dont

we r coming to get u

fckk u & loot u & send u to

another world