If the Euro falls, is that really bad for the $?

[SpasticGramps]

The institutional bank run by major European companies seems to be continuing. Another important concept for anyone wanting to know why this is all unwinding is "commingling rehypothecation". It was exposed in MF Global's collapse and it's the reason for the intensifying liquidity/collateral crunch. Really this all comes down to failing confidence in the global governance institutions. Bulldog is correct almost all government's are going to eventually be brought to their knees because of the unprecedented debt burdens. The longer we kick the can and remain in the denial the worse final and inevitable writedown of that debt is going to be.

Swiss, Germans Set To Unleash Capital Controls As European Companies Prepare For Euro End

Even as Eurozone leaders attempted to instill some meager sense of accomplishment following the latest (but certainly not last) Euro summit culminating with yet another 7-page term sheet which achieved absolutely nothing, and in fact succeeded in alienating the UK even more, the real game continues behind the scenes. And it is a game which the euro looks set to lose. As Bloomberg reports, in the aftermath of the Telegraph's latest report confirming what has been said here all about the collateral crunch in Europe, Europe's CEO are now actively preparing for the worst case outcome: the end of the Euro (despite UBS' and other banks' repeated calls that such an event would result in an end of the world). To wit: "Grupo Gowex (GOW), a Spanish provider of Wi-Fi wireless services, is moving funds to Germany because it expects Spain to exit the euro. German machinery maker GEA Group AG is setting maximum amounts held at any one bank. “I don’t trust Spain will remain in the euro zone,” said Jenaro Garcia, founder and chief executive officer of Madrid- based Grupo Gowex, which provides Wi-Fi access in 15 countries. “We moved our cash and deposits to Germany because Spain will come back to the peseta"... Contingency planning for an unraveling of the currency involves cutting investment, moving money to Germany, transferring headquarters to northern Europe from southern, and even going out of business." And to all the chatterboxes on CNBC repeating ad inf that a Eurozone collapse would be "manageable" here is a person who actually knows what he is talking about: "“How do you control an explosion in a controlled way?” Fiat SpA (F) Chief Executive Officer Sergio Marchionne told reporters in Brussels on Dec. 2. “That’s a contradiction in terms. This will be an implosion of some size with potentially disastrous consequences." He is right, and while the outcome is certain, it will not stop Europe's financial leader Germany from intervening in an attempt to prevent a surge in Deutsche Marks once the currency returns, and will likely set up capital control measures - that last bastion to every failing monetary system - to halt what is sure to be a record inflow of post-collapse DEM appreciating capital.

In other words, what is certain is that nobody has any certainty what will happen, and the result would be a massive deleveraging wave of epic proportions. What is also certain is that the global central banking cartel (sans the ECB in the post non-EUR world), would do everything to halt said deflationary vortex, and will just hit the CTRL+P combination on every possible device in its arsenal to stave off the inevitable. What is then absolutely sure, is that the second to last step will be the realization of Bernanke's theoretical threat to dump money out of helicopters... with the final outcome being history repeating itself once again, in that no civilization has ever collapsed from a deflationary collapse but always from the authoritarian response to it, yet which has seen hard assets survive in fair value form for over 20 centuries.

 

[McSnappler]

There are some people here with a real simplistic view of things (not everyone, no offence meant to anyone). If you really want to understand what's going on I'm afraid you're going to need to look a little further than IC Mag.

I recommend Currency Wars by James Rickards as a primer.

http://www.amazon.com/Currency-Wars-Making-Global-Portfolio/dp/1591844495/
http://www.amazon.co.uk/Currency-Wars-Making-Global-Portfolio/dp/1591844495

 

[ninja bud]

The real problem is greed, filthy dirty greed.

 

[SpasticGramps]

The other reason is fear of doing anything to hurt the City of London PLC and the banking sector that resides there.

This was certainly a driving factor IMO. Everyone rails on the US and Wall Street when it's actually The City (London) that is the most deregulated market. It's the only place where collateral can be re-pledged to infinity.

The Euro will not die, it is backed by hard working people who are able to make it worth something. Perhaps a few banks will die on the way...

The Euro is a fiat currency. It's only backed by politicians promise to not print too much. No fiat currency lasts in the long run because politicians always lie and print too much. The markets are begging for the ECB to step in and backstop all insolvent EU countries (Greece, Portugal, Ireland, Spain, Italy) and the insolvent and highly leveraged EU banking system.

The Germans refuse to do this because they haven't forgotten what monetizing welfare states bad debts will do (ie hyperinflation collapse pre-WWII). I believe in the end everyone is going to monetize as the currency war reaches it climax. All those who cheered these central bank interventions on because they thought it would stop a deflationary collapse will be rewarded with a much worse hyper-inflationary collapse in the future.

Deflationary collapses while painful are necessary for the market to find real value and thus heal and prosper. Hyper-inflationary collapses test the fabric of society and bring governments down.

 

[TLoft13]

Id like to tell Germany and France to fuck off. I want my sovernity back. The big problem is that France and Germanys banks are bust. I never wanted to be in the Euro in the first place..At least the brits told them to fuck off. The previous two world wars started in Europe, whats the odds off world war three starting here too?

I would like to have some more balanced view. The EU was un-decromatic from the beginning. Unelected assholes doing their powerplays. There's a reason why the whole process never involved the populations, because our oh so grandious leaders knew more often than not they would've had problems bringing 50% of even one country behind their schemes.
I- like most europeans- have no problem with a good neighbourly relationsship, cooperation on many levels ect.
But I'm fed up with paying for you southerners. We already payed much too much for you, hell, my unborn children already payed too much for your economic failure. Get your act together and stop whining, or get out and eat YOUR bancruptcy. Fuckin bums.

 

[Max Headroom]

The EU was un-decromatic from the beginning. Unelected assholes doing their powerplays.

no kidding... the EU is the USSR version 2.0 - now with extra globalism!


all the doom and chaos predictions everywhere are just a part of a very simple but effective plan that has been used for millennia.

it is called "Problem - Reaction - Solution"

you want to have more centralized control, therefore you create a problem (economic chaos) so the people will come running to you and beg you to implement the measures you wanted to foist upon them from the beginning.

real easy.

 

[mrcreosote]

The banksters wanted to cash in on the spend-thrift nations desire for easy money.
Now they claim that THEY were the ones that got suckered.
Look who is holding the credit default swaps on foreign debt and who stands to profit when all those bonds turn to junk. Not all banks are going to get a prison haircut.
There's gonna be a lot of AIG sad-sack stories very soon for those at the end of the line.
The central banks are throwing toothpicks at a drowning man in the hopes that he can build a raft and not drag them down with him when he goes under because the banksters are fresh out of life preservers.

The real problem is that we small fry are chained to the banksters by the miracle of thin-air money via fractional reserve banking.

 

[TLoft13]

The banksters wanted to cash in on the spend-thrift nations desire for easy money.
Now they claim that THEY were the ones that got suckered.
Look who is holding the credit default swaps on foreign debt and who stands to profit when all those bonds turn to junk. Not all banks are going to get a prison haircut.
There's gonna be a lot of AIG sad-sack stories very soon for those at the end of the line.
The central banks are throwing toothpicks at a drowning man in the hopes that he can build a raft and not drag them down with him when he goes under because the banksters are fresh out of life preservers.

The real problem is that we small fry are chained to the banksters by the miracle of thin-air money via fractional reserve banking.

Quoted for truth. Imho the problem is that money has much too much influence in our political system(and in the american and british even more so as far as i can say). So a few mega-rich assholes can actively influence the political process in way which is bad for about 99,9% of the people. And our spineless politicians smile and tell themselves that their "experts/advisors"- payed for by Mega-rich Inc., educated in Mega-rich University, really know what they are doing.

 

[SuperConductor]

Honestly I seriously doubt this has anything to do with sovereignty or creating a united states of europe, noone on his side of the pond is saying anything about it anyway apart from the tories who claim to have just averted it by isolating the UK. The very last thing Germany or France want is to be responsible for a bunch of poor countries with their hands out. Makes for great conspiracy fodder but doesn't make much sense. This whole crisis is down to 2 things that i can see.
1. Our leader's astonishing inability to come to agreements that benefit nations rather than score short term political points.
2. the credit rating agencies.
While world leaders dawdle around waiting for catstrophies to relieve them of the burden of decision making S&P and the like are busy turning the screw on everyone, not just the poor countries. Each time they downgrade a governments credit rating the loan repayments sky rocket so that governments need to take out more loans which leads to more credit downgrading and spiralling unpayable loans like what happened to Greece. Someone tell me these credit rating agencies aren't in some way affiliated with the banks who sell the loans to our governments, please. This is a scam pure and simple but the politicians aren't necessarily the ones doing the scamming they're being worked over by the banksters.

 

[ryanbradly]

if the euro falls, the repurcussions are like dominoes..... globally
Watch what the answer to all this will be?.... a world bank, meaning a one world currency
or/also the mandatory chipping of everyone so you can carry your fictitious debt everywhere. That is their plan watch it unfold.

 

[bombadil.360]

yeah right; I just wanna see the faces of americans and soviets alike when they're told they'll carry the same currency in their pockets; or arab nations and Israel... not gonna happen.

what will happen is that out of the chaos, doom and gloom and all the bullshit; is that people still need to eat, clothe themselves and have places to live, need water and electricity, and all that; and that will be the base for any stable stable economy, it actually already is. bada bing bada bang, not as fancy as a conspiracy, but a lot truer.

peace to all the joses and jaimes out there

 

[SuperConductor]

lol @ mandatory chipping.

 

[Bullfrog44]

yeah right; I just wanna see the faces of americans and soviets alike when they're told they'll carry the same currency in their pockets; or arab nations and Israel... not gonna happen.

what will happen is that out of the chaos, doom and gloom and all the bullshit; is that people still need to eat, clothe themselves and have places to live, need water and electricity, and all that; and that will be the base for any stable stable economy, it actually already is. bada bing bada bang, not as fancy as a conspiracy, but a lot truer.

peace to all the joses and jaimes out there

Very good points, but I have one problem. During the time that people "find out" they need to " eat, clothe themselves and have places to live, need water and electricity, and all that" ....what happens in the mean time. You think everybody is just going to be getting along peacefully thinking up ideas on how to maintain their needs as a group? I fear civil unrest during these times, but hey, maybe just another fancy conspiracy.

BTW - buy gold.

 

[HUGE]

Where on earth did you get that retarded propaganda? If you read up on this a little you will see they only had 3 McDonald's and they closed because they couldn't compete with the local chains due to exchange rates. Here is a link if you care to read http://blogs.telegraph.co.uk/financ...mcdonalds-flight-shows-icelands-policy-works/
V
The only smart thing to do is exactly why Iceland did. Kick out the thies and tell them to piss off

Dude, that is just not true. Iceland had to shut down ALL McDonald's because they could not afford the meat and buns for the burgers. If EU did this you think they could afford ANY US PRODUCTS? Not good advice at all.

JUC - You are right on for the most part. It is the general consensus in the world that people are owed stuff from their government. Grease is falling because they are an entitlement country. They believe Germany (the big rich EU country, you know the 1%) should just give them money so they can continue to have 5 week vacations and retire at 55. Why would Germany want to do this during times like these? But if they don't, they will be the bad guys very soon. If they do, they will fall with the Greek, Spanish, Portugal ext ext.... Hitler is being brought back into it for sure. Germany's name will be dragged through the mud by these people. Kind of sounds like how people are talking about Israel and the USA. Kind of sounds like OWS. Or maybe it is just WEALTH REDISTRIBUTION on the biggest scale in human history!!!!! Hummmmmm, anybody think the western way of life is under attack?

 

[ShroomDr]

WWI and WW2 were essentially the same war (from a historical perspective they are no different that the 'Thirty years war', or the '100 years war'). Germany was not 'vanquished from the battlefield' in WWI, only economically defeated.

Germany is militarily defeated in 1945, but economically victorious 66 years later...

1 euro = 1.3397 US dollars

 

[NashvilleN]

I think we have the slight edge in porn still.

 

[SpasticGramps]

Rating agencies are a lagging indicator. They have no credibility. The only reason they are even barley downgrading these countries now is because it's painfully obvious they are all insolvent.

If they were truthful most the EU would have been tripled hooked by now (CCC-).

 

[ShroomDr]

FWIW, i thought Iceland REAL problem was all the men decided being 'investment bankers' was better job that 'fisherman'.

Who wouldnt prefer to go to work in a office than a dirty stinky fish boat? But everyone cant be a banker, there has to be REAL work done.

Think i saw that on HuffPo or Realtime with Bill Maher.

 

[ShroomDr]

I dont understand the 'rating agencies either'

Not everyone can have AAA, but devaluation must be based on the 'others'

Say we have USA, Egypt, and Uganda.

(Idiotic) credit agency says USA is now AA... But that doesnt make Uganda or Egypt a better choice.

You still are going to put your money in the US vs Egypt or Uganda..

Untill Uganda reaches AAA status, i dont understand...



Youve got a Roast Beef Sandwich, a Gravel Sandwich, and a Shit sandwich.

I dont care if they left the cheese off the Roast Beef, it will ALWAYS be a better option than Gravel or Shit...

Everyone cant go 'bad' cause the 'bad' isnt getting better. There is only so much room at the bottom too.

"Kill em all and let god sort it out" -Marge Simpson.

 

[SpasticGramps]

Explains how the EU barely staved off a Lehman style collapse last weekend, buy kicking the can. Given the market reaction today it doesn't look like they kicked the can very far if really at all. Lehman style collapse is still very much in the cards. Their next Summit is scheduled for March.

Good luck making it to then without a "Lehman style collapse." Given today's market action that appears to be laughable. Italian bonds are approaching the 7% SHTF level after a brief reprieve after the Nonsense Summit this weekend.

Is the euro in serious technical trouble? (EUR/USD, FXE) NASDAQ

In early trade risk assets and the euro have come back under fire again as traders reconsider last week's European summit as more disappointment than triumph.

The euro dropped over 160 pips in the Asia and European sessions before finding support around the $1.3260 level (previous level twice in the past, 30 minute chart).

The Financial Times is eloquent in highlighting five key failure points of the European summit:

1. "The decision to set up a fiscal union outside the European treaties will do nothing whatsoever to resolve the euro zone crisis."

2. "If you want a fiscal union, nothing less than a full treaty change will do."

3. "A fiscal union set up outside the European treaty would face severe legal and practical limitations, nor can it issue euro zone bonds."

4. "We now have no treaty change, no euro zone bond and no increase either in the rescue fund or in ECB support."

5. "The EU fell short on every element of a comprehensive deal."

With the European Summit now behind us, what has changed? The EU basically stayed off a Lehman-scale failure in the near term but has once again kicked a solution for the debit crisis down road.

We still see continued pressure on the European Central Bank to buy bonds should the outlying countries come back under pressure.

Will the IMF step in? What can the IMF do to help the sovereigns?

Additional pressure stems around the S&P rating agency warnings it made last week concerning the ratings of European countries. S&P said that it would evaluate the progress made from the EU Summit before making any decisions.

It is highly expected that the rating agency will be disappointed with the lack of progress made by the summit leaders.

Traders should watch out for the real possibility of downgrades this week, causing traders to liquidate risk and increase money flow to the U.S. dollar. Look for the EUR/USD to accelerate its sell-off.

The latest corrective rally appears to have stalled out by $1.3260 and it looks like the bears want to challenge the critical October lows at $1.3145.

Any substantial break below $1.3145 is will open the door for a deeper pullback over the coming weeks/months into the lower $1.2000 level.

The euro is in serious trouble from a technical viewpoint. Only a daily close above $1.3260 will give the bulls a chance to give the euro a foothold for possible upswing