Guest Post: The End Of The Euro: When Will It Happen?

Tyler Durden's picture


Submitted by Tim Staermose of Sovereign Man blog,

My 2-year old nephew in Australia loves getting postcards.  He already associates me with frequent traveling.  I’m referred to as “Tim Hong Kong jet plane.”

So before leaving Italy today, after a fantastic week in the Umbrian countryside with our Sovereign Man Total Access members, I set out to mail him some postcards. What I got, among other things, was a useful lesson in Italian bureaucracy.

In Hong Kong, on the rare occasion I need to mail a letter, I put a few coins in the vending machine on the outside wall of the post office. Space is a prized commodity that costs a lot of money in Hong Kong, so post offices are small and efficient.

Here in Rome, the main post office at Piazza San Silvestro is in a majestic old building with imposing architecture.  There were acres of cavernous space inside that could have been much better used by high-end retail shops earning a profit. Instead it goes to Italy’s famously slow, inefficient, loss-making postal service.

It was a procession just to buy a few stamps. Stand here, stand there. Take this ticket, fill out this form, print that form. What should have taken 10 seconds took 10 minutes. I finally got what I needed, but the process it took to get there was a real eye opener.

They have all these fancy IT systems—the mail clerk was in a clicking frenzy moving from screen to screen with all sorts of dropdown menus and product codes. But I get the sense that this ‘technology’ just gives the post office a veneer of modernity and sophistication without actually being necessary or adding any value.

This is typical of bureaucracy: take a simple task, make it unnecessarily complicated, then spend a bunch of money on technology that makes it even more complicated.

Given my experience this morning, Italy has clearly mastered the art of unnecessarily complicating the simple. It’s no wonder they have serious problems paying the bills.

Moreover, the country’s demographic challenges indicate the country’s fiscal situation cannot improve.

Robust economies are productive… and productivity is typically not associated with the elderly. Italy has one of the world’s oldest populations concurrent with one of the lowest birth rates.

This trend drives an unsustainable fiscal quandary: bloated public sector bills with lots of old people to pay pensions to, coupled with a rapidly shrinking population devoid of young workers to pay taxes.

At this point, Simon and I both agree there can be little doubt that Italy will exit the eurozone… most likely voluntarily. A return to the lira means the Italian government (probably to be headed by Berlusconi once again) would be free to print currency at will. This is the only reasonable solution remaining.

(Simon thinks they’ll probably even make up some silly patriotic-sounding name like ‘new strong lira’…)

When will it happen? Probably sooner than we think. Look at the European bond market— making a loan to the Italian government for three years yields just 3.642%… an absurdly low figure given the country’s untenable finances.

screen capture 1 1 300x140 The end of the euro: When will it happen?

Meanwhile the same loan made to the German government yields less than one one-hundredth of that amount (0.034%…) Yields on shorter duration bonds (2-year and below) are all negative.

screen capture 2 300x141 The end of the euro: When will it happen?

In other words, you lose money loaning to the German government for up to two years.  This is the period of time that the bond market is sensing maximum risk, and it may be worth considering as a final window for the euro’s demise.

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Fri, 08/31/2012 - 17:15 | 2753880 Wolferl
Wolferl's picture

It will never happen. The Euro will be the next major reserve currency soon, even crude oil will be priced in Euro.

Fri, 08/31/2012 - 17:22 | 2753885 Ahmeexnal
Ahmeexnal's picture

How do you say KOOL AID auf douche?

Your thousand jahre reich will NEVER happen. Now please ROT OP!!

Fri, 08/31/2012 - 17:30 | 2753913 slaughterer
slaughterer's picture

Tnis "sovereign man" site, is this concept of sovereignty related to Georges Bataille's concept or Carl Schmitt's concept?  The answer will detertmine if I buy you "sovereign man" riters out for $5billion.  Also, why not a "sovereign woman"?  Please, be so daring as to PM me or respond on this reply thread.  Otherwise you guys are not so sovereign as ai thought.  

Fri, 08/31/2012 - 17:35 | 2753923 BKbroiler
BKbroiler's picture

In Italy, it can take months to just get your electricity and landline turned on.  MONTHS.  Getting a day in court can take decades. The level of bureaucracy in every part of life is absolutely stifling and unbelievable.

Fri, 08/31/2012 - 17:49 | 2753950 malikai
malikai's picture

..And I thought Britain was bad. The word that comes to mind is 'untenable'.

Fri, 08/31/2012 - 20:26 | 2754235 Ahmeexnal
Ahmeexnal's picture

Even german sheeple are "wising up" to franco-greek-italian union muscle flexing:  in a country where strikes were pretty much non-existent, welcome to the new normal.

Air traffic in and out of Frankfurt airport, Europe’s third busiest, struggled to normalise on Friday afternoon after hundreds of flights were cancelled due to a Lufthansa cabin crew strike. The effects were felt throughout Europe.

Lufthansa....the new IBERIA.

And the new normal in europe: stiff your elderly, but keep cashing their retirement checks.
German traffic police who stopped a car for driving erratically found the body of the driver’s father stuffed behind the back seat. It appears he starved to death.
But wait, hope is not lost yet!  German engineering brings to the world the latest marvel of technology that will pull europe out of recession and turn the eurozone into a export behemoth.  Behold...the 190 euro....PAPERBAG:
German fashion house Jil Sander has launched a men’s hand bag which is not only designed to look like an ordinary brown paper bag – it is a brown paper bag. But at a price of €190, throwing it away after one use would be a mistake.
If this fact alone does not scream out "failed society", nothing will.  Meanwhile, accross the Maginot Line, french collectivist politicians proclaim that citizens have the right to inject themselves in comfortable "opium dens" paid by the moronic taxpayer:
A socialist politician has made an appeal for supervised “shoot-up rooms” to be made available to drug users in towns across France. In an interview with daily paper Le Parisien, socialist party MP and health minister for Paris, Jean-Marie Le Guen, called for the government to create legal injection rooms in light of figures revealing an increase in heroin use in Paris.

Le Guen, who is also a doctor, said: “90,000 kits containing among other things two syringes were distributed between January and June, which is a 7 percent increase on the same period in 2011.”

You can't make this shit up!
Fri, 08/31/2012 - 20:28 | 2754265 nmewn
nmewn's picture

A €190 brown paper man bag? the bum who has everything ;-)

Fri, 08/31/2012 - 20:37 | 2754284 Ahmeexnal
Ahmeexnal's picture

for the bum who has everything....except a brain ;-)

There, fixed it for you.

Fri, 08/31/2012 - 20:49 | 2754312 nmewn
nmewn's picture

lol...maybe I was looking too far into the future...theres a subsidy on the horizon ;-)

Fri, 08/31/2012 - 23:09 | 2754503 AldousHuxley
AldousHuxley's picture

end of euro = rise of yuan


Chinese will make that decision when the time comes. but right now they got this worthless dollar problem.

Sat, 09/01/2012 - 04:03 | 2754657 Maghreb
Maghreb's picture

On the shooting galleries front they actually save money. Socialized health care means if some smack head gets AIDs he has to receive a full course of meds that are very very expensive. Also you can basically ID the fuckers and keep track of them, opium dens act as a magnet so as to keep them all in one place. 

Keep your freinds close and your junkies closer.

Fri, 08/31/2012 - 17:53 | 2753955 kito
kito's picture

at least their food is simple.........pasta al dente......fresh marinara sauce.....sprinkle of aged parmigiano of chianti................cant improve that......................

Fri, 08/31/2012 - 18:05 | 2753971 BKbroiler
BKbroiler's picture

cant improve that................

unparalleled. and life is still very good there, but things are changing quickly.  my uncle's pension was cut in half a few years after retiring in his late 60's from a government job.

Fri, 08/31/2012 - 18:42 | 2754036 smiler03
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This article was written by Simon Black.


Simon Black ALWAYS writes with just one or two sentences per paragraph. BUSTED.

Fri, 08/31/2012 - 18:46 | 2754048 NewWorldOrange
NewWorldOrange's picture

So, Grammar Queen, why don't you contribute an article to ZH Your Heiness?

Fri, 08/31/2012 - 19:30 | 2754151 smiler03
smiler03's picture

You missed my obvious point, picky twit. The article was written by Simon, his style gives it away. His name is not at the top. Maybe you haven't spotted his style?

Simon Black is a pillock and is stupid enough to use one of his "colleagues" names at the top so that those accustomed to his "I just happen to be in gagaga Land doing good to the world and my investors and my anecdotal point is... I know best and I love it."

But you interpreted it differently, that's your choice.

And anyway, where did I say his grammar was bad?

Fri, 08/31/2012 - 19:43 | 2754170 smiler03
smiler03's picture

I said his grammar was bad lower down, fairys muff.

Fri, 08/31/2012 - 18:51 | 2754061 brettd
brettd's picture

Na...The French know how to cook.

The Italians know how to live.

Fri, 08/31/2012 - 19:14 | 2754114 Vet4RonPaul
Vet4RonPaul's picture

brettd, the Italians know how to cook and live better than the French.  I've been to both countries numerous times and dined in style.  The Italians have it all over the French.  The French use too much butter and sauces.  Italian cuisine is simply the best in the world and I've been around (sort of like a whore but not as classy).

Sat, 09/01/2012 - 04:26 | 2754664 MisterMousePotato
MisterMousePotato's picture

"Too much butter?!?" There's no fucking thing as 'too much butter'.

Case in point ... popcorn or English muffins made by yours truly.

And/or, well, anything else.

"Too much butter?"

Shakes head.

p.s. After I wrote this, I gave you a down arrow. Wish I could give you 20.

"Too much butter."

Mutters to himself.

Third edit: I just realized ... I am French. Well, sorta. First generation American, but my parents are native born French.

Wonder if that ...

Fri, 08/31/2012 - 18:59 | 2754081 brettd
brettd's picture

The former US ambassador to Italy recently said (paraphrase):  Europeans tend to manage problems, while Americans tend to fix them.  (At least that used to be the idea...)

Fri, 08/31/2012 - 19:15 | 2754117 Vet4RonPaul
Vet4RonPaul's picture

now there's a non too smart diplomat

Fri, 08/31/2012 - 20:10 | 2754229 Ghordius
Ghordius's picture

+1 excellent comment. The very phrase "is europe fixed now?" is utterly repellent to my ears. "Fix your own >insert dear female relative<" comes quite spontanuosly to my lips.

Fri, 08/31/2012 - 20:28 | 2754257 deez nutz
deez nutz's picture

Europeans tend to manage problems, while Americans tend to fix them.

Americans have something called a "printing press".  With this device america can hyperinflate itself to great magnitudes to solve problems.   Like sci-fi its mortal-to-hero to stop evil then hero-back-to-mortal metaphorphisis.  Think "ultra-man". 

The only difference is America can't turn off the press without killing the super hero.  

Sat, 09/01/2012 - 14:17 | 2755221 giovanni_f
giovanni_f's picture

"debt ceiling" comes into my mind. Fixed as can be.

Fri, 08/31/2012 - 18:13 | 2753993 RiskAverseAlertBlog
RiskAverseAlertBlog's picture

Excellent question, and no doubt rhetorical, too. Thus, was there any need for the challenge, or was this made knowing you could not go to either presidential campaign for the answer you already know? Hope you're an American. We could use more like you.

Fri, 08/31/2012 - 17:18 | 2753891 Rakshas
Rakshas's picture

The euro ..... didn't seem to get a mention yesterday at APEC i Heard Rubles and Yawn and maybe YEN and Sing ding

I think toilet paper is next the next reserve clownery

Fri, 08/31/2012 - 17:21 | 2753895 magpie
magpie's picture

I agree with a qualified "never", we might even see a peg with the Dollar as both are devalued into oblivion.

Fri, 08/31/2012 - 18:09 | 2753979 NewWorldOrange
NewWorldOrange's picture

It should be obvious to everyone by now that all fiats are going down. Might take years but it's inevitable. And what would happen if say, China, announced tomorrow that their currency will now float fully, and be even partially backed by gold? The U.S. government has placed us in this precarious position where any number of events can collapse our system and send us into a cannibalistic orgy with out of control debt our kids/their kids/etc can never repay. The Fed enabled that. What enabled the Fed to print unlimited money? Having no restrictions on it. What used to restrict it? The Gold Standard (at least a semi- Gold Standard.)

Yet most every American thinks that's a quaint, idiotic standard, and even when a few Republicunt mouth pieces pay it lip service, they do it only to try to appease Ron Paul supporters, and don't even believe their own words. The situation is the same throughout the western world. Where are they paying it more than lip service, and accumulating vast amounts of gold/precious metals? The east. China. India.

That's where we are. It's not going to change. i.e. WE'RE FUCKED. If there will be a new global reserve currency (at least for a time), it's going to be one backed by something tangible like gold/metals/oil. Countless politicians and economists etc in China have made it well known they intend to bring down the dollar. China has been buying up metals deposits all over the world for years. Go figure.

As for the Euro, or the dollar -- either could plug along for many years. Or a single black swan event like the announcement of a floating gold-backed Yuan could send them into a downward spiral next week. There is no calculus available to predict when. That sort of tea leaf reading is the fantasy of central planning Keynesian idiots. It's a complex variable as the Austrians would say. Only thing that's certain is that it WILL happen.

Fri, 08/31/2012 - 18:59 | 2754080 Ahmeexnal
Ahmeexnal's picture

Never mind a gold backed Yuan.
Black swan has a full name: SILVER BACKED DRACHMA.

Fri, 08/31/2012 - 17:26 | 2753902 sessinpo
sessinpo's picture

It will eventually happen, but not for some time. It is simply the current tool being used for wealth transfer and to gain power by central planners, EU, ECB, IMF. etc. This is really nothing new. This isn't the first time a single European currency was tried for the same reason, not the reason they gave, which was to modernize Europe and make it globally more competitive. Isn't it interesting how they had made the argument that Europe would be more competitive by reducing choices, by creating a monopoly. The left has truly mastered the art of changing definitions to suit their agenda - sometimes we call it political correctness.

Fri, 08/31/2012 - 17:51 | 2753952 malikai
malikai's picture

WTF? Was that today?

Fri, 08/31/2012 - 18:00 | 2753960 Daily Bail
Daily Bail's picture

No, it's from last September.  I reposted it on the front page because of the 5-month high for gold.

This is better:

Bring The Gold & Keep The Cash To Line Your Panties
Fri, 08/31/2012 - 20:50 | 2754314 Bring the Gold
Bring the Gold's picture

:D Hehe, a leprachaun after me own heart. I should use that as my user name. Oh right I did. ;) Love that video.

Fri, 08/31/2012 - 17:56 | 2753962 Rakshas
Rakshas's picture

Ok there has got to be a stupider statement out there  surely......... give this poor dumb clam a break already ,,,,,,,,,





Fri, 08/31/2012 - 20:30 | 2754269 GeezerGeek
GeezerGeek's picture

The USD is, in fact, backed by metals: lead and brass. They force us to use it. If the US scrapped the military and DHS - and I'm not suggesting this - then the dollar would fall rapidly, as the "full faith and credit" of the US government would no longer mean anything. How much faith can you have in an entity that is $16 trillion in debt if it has no way to enforce taxation on its citizens?

Fri, 08/31/2012 - 18:33 | 2754026 CrashisOptimistic
CrashisOptimistic's picture


An awful lot of people are calibrating their futures on the concept of eventually this and eventually that.

All of them, no exceptions, all of them think business as usual is as far as the eye can see -- largely because they do not begin and end all their thinking with oil, as they should.

Oil decides all this stuff.  It predates money.  Money has no meaning.  Oil means everything to a civilization of 7+ billion.

And before you say "bullshit, we got along without it for hundreds of years", note who "we" are.  Less than 1 billion.  That's how many there are going to be.  Soon.

Fri, 08/31/2012 - 17:46 | 2753945 Peter Pan
Peter Pan's picture

When Italy decides to exit the Euro, it will take another 10 years by the time the bureaucracy fills out the forms.


Fri, 08/31/2012 - 18:55 | 2754071 Silver Bug
Silver Bug's picture

All fiat currencies are a ticking time bomb. They all die eventually.

Fri, 08/31/2012 - 17:19 | 2753894 HedgeAccordingly
HedgeAccordingly's picture

Chicks! enjoy the weekend -

Sat, 09/01/2012 - 04:30 | 2754665 MisterMousePotato
MisterMousePotato's picture

My mother taught me that modesty is a virtue.

Fri, 08/31/2012 - 17:22 | 2753900 Newsboy
Newsboy's picture

Euro will end 5/1/15, but world will end 12/21/12.

Oh well...

Fri, 08/31/2012 - 17:32 | 2753915 Brazillionaire
Brazillionaire's picture

I don't think the world will actually end on 12/21/12... just gonna flip around a little bit, north becomes south... that sorta thing. 

We're opening Christmas presents on the 20th, just in case.

Fri, 08/31/2012 - 17:26 | 2753906 Element
Element's picture

Oh! ... I can answer this!

Not by the end of Summer 2012!

Fri, 08/31/2012 - 17:27 | 2753907 Hannibal
Hannibal's picture

Wishfull thinking is just that,...pure platonics, fabricated imaginary abstracts!

Fri, 08/31/2012 - 17:27 | 2753909 Cult of Criminality
Cult of Criminality's picture

Just pull the fricken plug already.

Glad I, do not have to watch any of this shit like those in the financial field have to.

As a long time commercial plumber I, would much rather deal with hospital fecal matter more than anything these people spew out their ass or face.

Fri, 08/31/2012 - 19:18 | 2754124 jumbo maverick
jumbo maverick's picture

The town I live in has JFK's quote "Ask not what your country can do for you but what you can do for your country." carved in a huge stone wall right out front of city hall.

I was thinking about that the other day and how far we have fallen as a country.

Now I have renewed hope after reading your above message, "I would much rather deal with hospital fecal matter more than anything these people spew out their ass or face."

This should be carved in stone in front of my city hall. I mean this without any sarcasm at all. When I see someone saying something like this then I know there are still rational people out there.

Fri, 08/31/2012 - 20:35 | 2754280 nmewn
nmewn's picture

Unfortunately, we have many here now who say...ask not what you can do for your country, ask what your country can do for you.

Fri, 08/31/2012 - 20:39 | 2754291 GeezerGeek
GeezerGeek's picture

That quote should be embossed on every SNAP card, Medicaid card and whatever other welfare freebie vouchers there are. Maybe it should also appear on any correspondence from Social Security and Medicare once the recipient goes beyond what he (+ employer) already 'contributed'. I would also suggest that everyone who received a bailout from the Feds should have it branded, in reverse, on their foreheads so they can see it every time they look in a mirror.

I wonder if Mitt will listen to such a proposal.

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