Guest Post: The Fatal Flaws In The Eurozone And What They Mean For You

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Wed, 09/21/2011 - 08:53 | 1691865 oobrien
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Fatal flaws in the Eurozone?

Are you kidding?

I live in South Korea.

If Europe shits the bed, we'll have a banking collapse.

Asia isn't as sound as many will have you believe.

If Europe goes, I'm jumping out my apartment window.

Not really.  I'm speaking figuratively.

Wed, 09/21/2011 - 09:02 | 1691881 oobrien
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In all seriousness...

I'm shitting my pants.

If I were single, this would merely be history...and kind of exciting.

But I've got mouths to feed.

I have trouble sleeping because I've got skin in the game.

I ain't some young 20-year-old computer geek living in his mother's basement.


Lucky motherfuckers.

Wed, 09/21/2011 - 09:54 | 1692066 DosZap
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Asia isn't as sound as many will have you believe.( this may be a basis for your beliefs).

Wed, 09/21/2011 - 08:57 | 1691875 knukles
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Sociopaths on Parade

Wed, 09/21/2011 - 09:00 | 1691878 Djirk
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other than number 5 sounds similar to the US....Brazil HELLLPPPP

Wed, 09/21/2011 - 09:12 | 1691913 LawsofPhysics
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Ah Brazil, dated a Brazilian beauty for two days because that was about as long as I could keep up with her.  Damn good two days though.  Yeah, who is going to save the U.S., I am hearing rumblings of "the imigrants will save us" from the GOP of all people.  Knowing Texas very well we can all look forward to places like Dallas becoming as "safe" as Mexico City.  Inflation adjusted, I am pretty sure that the average standard of living in the U.S. is pretty close to being on par to most third world countries already.

Wed, 09/21/2011 - 09:02 | 1691884 SheepDog-One
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Um, so when do we get back to the fact that the bankruptcy debt problems in the US makes Europe look like NOTHING? 

Wed, 09/21/2011 - 09:23 | 1691951 DaBernank
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ZH has never stopped talking about the terrible situation in the US. Every article here that discusses problems for China and Europe elicits many comments amounting to "Yeah, but what about the US?" EVERYBODY knows the US is fucked and the Fed will monetize debt as fast as it can. We know where that leads. What makes the current situation in Europe interesting is that many of the structures to deal with the problems do not exist at all or are being created on the fly (see: EFSF). Add to that the fact that there is deep-seated animosity between all the cultures of Europe and you get a different kind of powder-keg.

I also wouldn't say the debt situations in Europe are nothing. The Greek bailouts, if calculated on a per-capita basis would amount to 6.3 trillion USD for the US, that's for a country amounting to 2.5% of European GDP.

Wed, 09/21/2011 - 09:33 | 1691986 Spitzer
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This article is a joke. All it explains is the flaws within the Euro only because it is living within Bretton Woods 2. Bretton Woods 2 is the fuck up, not the Euro or the ECB.

California is the biggest state in the dollar bloc and it is the most fuct. Greece isn't exactly the biggest state in the Euro bloc.

Wed, 09/21/2011 - 09:10 | 1691906 LeBalance
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I am uncertain why these well understood "flaws" in fiat / credit structured monetary systems are being summarized for the Nth time.  They have been written about ad infinitum by Mises, Rothbard, etc and here on ZH.

For instance, watch Peter Schiff's testimony (posted on ZH several days ago).  He makes exactly the same points, in far fewer words. And he makes complementary points on the counterproductive nature of government stimulus, taxation, and regulation.

I do hope that this article educates more folks who do not know these very basic monetary facts.

But for the others (who already understand) the issues that concern them are how to change and mitigate what is coming.

I believe that pulling your wealth from the system is very important and interacting (feeding) the system as little as possible is a plus.  A main issue facing government is truly an epiphany.  "They" (government) must DIE in order to best assist "Their" "people."  And they are in it for the "Power" over the "people" so that course of action is not going to happen.

Credit and Debt are temptations.  We understand where they lead.  It is your choice.

Wed, 09/21/2011 - 10:02 | 1692016 Shell Game
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Getting skin 'out' of the game and minimizing as much dependence on the system as possible is the best vote of non-consent.  Agree, the beast will never be swayed or tamed while it is still being Fed.

Wed, 09/21/2011 - 09:19 | 1691936 disabledvet
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Interesting analysis. I would simplify: "Wall Street Banks are perceived as the only path to prosperity without which there is no hope of gaining succor." Of course now it's more like "I'm gonna get you sucker!" So the only one who has truly "gotten it" is the Federal Government of the United States and to some extent now Japan---namely monetizing the debt and keep the benefit checks flowing because it takes the borrowing authority away from Wall Street and puts it directly in the hands of policy makers who are the only one's at least in theory who aren't trying to implode the entire global economy thus destroying their own existence. In short the government has been the rational actor since 2008 while Wall Street is simply lost in a sea of what you call "free money" which is nothing but code word for "we never really wanted to make money in the first place but fuck you and your stupid country." Clearly in this plan they have failed since they can't even pay their employees salaries without government money now HOWEVER! as they say "their pay is secure." Now let's see "I'm gonna get you sucker" in action!:

Wed, 09/21/2011 - 09:32 | 1691983 Volaille de Bresse
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Dead-on article Tyler (alas...).


There was a time at Zh when every article prompted this reply : "Gold, bitches!!!". However vulgr that replys seems to be more revelant than ever...

Wed, 09/21/2011 - 09:34 | 1691991 FunkyOldGeezer
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Why are the American talking heads epecially trying to dodge the bullet of the USA's debts and problems and pass the buck onto Europe????

Have the USA's problems mysteriously gone away?

Oh wait a moment. Still lots of money in the USA in private/institutional hands that might want to buy Europe on the cheap, because it will still have something worth having. So let's talk this sucker down and get on with making some dough sooner rather than later.

If this isn't all-out financial war, I don't know what is.

Americans invented the toxic debt and are now calling wolf on those wretched souls who bought into it and in doing so extended their pretense of wealth.

America uber alles, eh?


Wed, 09/21/2011 - 10:12 | 1692165 paulie
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"To expect these states to surrender their autonomy for the dubious benefits of servicing their crushing debts to big European banks is an exercise in political fantasy: it isn’t going to happen."

You bet your white ass it's not going to happen.
Why do you say "staggering profits ?". As long as the toy was working profits were huge and banks have made so much revenue over just the interests that repudating the national debt has become the most ethic thing to do to these crooks.

"Total public debt is a whopping 115.2% of GDP"
That's not right and, as an Italian I feel insulted by that low figure.
It's a solid 120%.



Wed, 09/21/2011 - 10:27 | 1692232 mantrid
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The Euro Removed the Mechanism of Currency Devaluation Is this supposed to be a fatal flaw? I thought inflation was plunder. But it seems printing money is good as long as it's not Ben printing. Everyone else is just invited to print themselves out of crap!  The fatal flaw here is the banking cartel blocking the old-fashioned bankcrupcy from taking place, not lack of printing press direct access.

Another fatal flaw in Euro was it's construction invited spending addicts to spend even more, in fact, everyone tried to spend more than others to take advantage, and the weakest economically were the strongest politically as they threathened collapse.


Wed, 09/21/2011 - 10:31 | 1692267 paulie
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I guess it's because the currency devaluation enables a natural correcting machanism for the trade imbalance.

With only one currency, this mechanism has been blocked (Germany knew this very well).

And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.

Does that remind you of something ?



Wed, 09/21/2011 - 11:11 | 1692443 Vint Slugs
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Fatal Flaw #7

Martenson and Smith collaborating.

Wed, 09/21/2011 - 11:23 | 1692507 Technowolf
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and its trading partners in the EU that run large trade and budget deficits— Portugal, Italy, Ireland, Greece, and Spain.

Ireland actually runs a trade surplus. Shame about the budget and the debt to GDP and the euro ....

We're more than able to f*** ourselves even with a trade surplus


Wed, 09/21/2011 - 11:23 | 1692510 paulie
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One question here for the American friends.

Why is it that speculation is attacking Italy and is seemingly not the USA whose debt from 5 to 14 trillion under the Obama administration ?



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