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

[mrcreosote]

I'm not so sure they can manage to print euros fast enough to even hand themselves over to to the ECB. There gonna have to skip the bond sales and just hand out paper.
The charts tell the story:
http://www.economist.com/node/21541019

Lesson 1 for everyone who wants govt. screwing with market pricing signals for interest from borrowing:

CHEAP MONEY AIN'T CHEAP. YOU'RE BEING SUCKERED.
Yes, I'm Capt. Obvious, but even still I hear people say that Govt. needs to DO SOMETHING...
They did...you're looking at it.
I gotta relax...my head's gonna explode.

 

[SpasticGramps]

Here is what Swiss mega bank UBS says you should buy if the Euro fails. Very Hank Paulson like. Just missing the "tanks in the street."

UBS' Advice On What To Buy In Case Of Eurozone Breakup: "Precious Metals, Tinned Goods And Small Calibre Weapons"

Three months ago, Zero Hedge presented the first of many narratives that started the thread of explaining the "unmitigated disaster" that would ensue should the Euro break up, which in the words of authors Stephane Deo and Larry Hatheway, would leads to such mutually assured destruction outcomes as complete bank failure and/or civil war or far worse. Because if there is one thing the banks have learned in the aftermath of Hank Paulson, is that scaremongering when bonuses are at stake is the only to get taxpayer money to fund exorbitant lifestyles. Unfortunately since the first UBS report, despite the best intentions of the status quo, the Eurozone's plight has only gotten far, far worse, reaching a Lehman-like crescendo when the house of cards threatened to collapse if not for a last minute Fed rescue. However, as Deutsche Bank and every other bank knows well, that measure was merely a short-term fix.

Today, Larry Hataway has released yet another sequel to the original piece, focusing on this so very critical week for Europe, which as Olli Rehn said, must find a solution by Friday or see the EU "disintegrate", in which the vivid imagery, loud warnings and level of destruction are even greater than before. In other words, Europe has 4 more days, something which S&P tried it best to remind Europe of, as the alternative is "or else." And here comes UBS to remind everyone that anything but a "fix" to a system that was broken from the very beginning, would be a catastrophe, captured probably the best in Hatheway's recommendations of assets to be bought as a hedge to a Euro collapse: "I suppose there might be some assets worthy of consideration—precious metals, for example. But other metals would make wise investments, too. Among them tinned goods and small calibre weapons." But even that is nothing compared to the kicker: "Break-up runs the risk of becoming one wretched scenario. Sadly, however, it can’t be ruled out, just as it would have been improper to rule out the horrors of the first half of the 20th century before they happened."

And there you have it: a reversion by Europe to the perfectly stable system from a decade ago, is now somehow supposed to result in World War. And with that the global banking cartel has official jumped the shark, just like the FT's latest rumor earlier today did the same by indicating that the well of European "bailout" ideas has officially run dry.

Simply put, linear thinking doesn’t work in a non-linear world. And break-up is likely to produce a very non-linear set of outcomes.

Which brings me, lastly, to the question I sometimes get about what is the ‘right’ asset allocation in the event of break-up.

I suppose there might be some assets worthy of consideration—precious metals, for example. But other metals would make wise investments, too. Among them tinned goods and small calibre weapons.

Break-up runs the risk of becoming one wretched scenario. Sadly, however, it can’t be ruled out, just as it would have been improper to rule out the horrors of the first half of the 20th century before they happened.

But it is very hard to see break-up as a solution. Let’s hope Europe’s politicians and policymakers agree and take action this week to fix what is broken before it all really breaks up.

 

[ShroomDr]

Just Googled it Right now (the damn server time is off ~25 minutes)

1 Euro = $1.3418

According to Wiki (here) the first day of trading was January 5th 1999

1 Euro = $1.19

 

[purple_man]

well if anyone can save the euro, it gots to be chuck norris
looks grim for european citizen...

blessss

 

[el dub]

I disagree with the assumption that the U$ economy is pinned to the success of the euro. While U$ exports (to Europe) may increase when the dollar is weak relative to the euro, there are many more subtle affects which add up.

Personally, I don't see a "united europe" benefiting anyone but European nations and the disintegration economically benefits the rest of the world, imo.

For instance, if one were to purchase seeds from Holland currently in euros, the price would be significant higher than when the Dutch economy was floating on its own.

The wife and I vacationed in Europe a few times before and after the euro was introduced. The dollar went much further in places like Holland and Spain before the EU.

lw

 

[mrcreosote]

Even Chuck can't help the Euro...

 

[SuperConductor]

The dollar was 'losing' for so long, now that it may have 'won', why will the $ lose?

Not sure it's really a case of the most expensive is the winner. Law of supply and demand means the dollar is cheaper because there's more of them in circulation.

Quantitative easing/printing digital money is used to keep the dollar cheap to encourage exports - buying from US businesses is cheaper than from EU businesses.
On the flip side it means it's more expensive for you to buy things cos your dollars are worth less = inflation. It's a balancing act.

Is it bad for the US if everyone in Europe is poor? Yes cos we'll buy less form you.

 

[SpasticGramps]

Congrats to the Europeans on their new Emergency Fiscal Pact today. Some of your sovereignty was turned over to the EU (Germany). You are all now one step closer to being German debt serfs.

Lots of bailouts and emergency funding was "agreed" upon at the summit. The numbers don't even begin to plug blackhole, but it was a feel good moment for everyone. This should put the Euro on the backpages into next year until the recession starts to take hold and places further stress on the mountains of debt that must be refinanced.

The Brits were the only country to not take part in the new treaty changes thus retaining their sovereignty.

The one thing that can poo poo this party is the threatened sovereign downgraded by S&P. If France or Germany gets downgraded then things will get ugly again.

 

[GreenMAX]

All savings converted to gold...check
Nearly self-sufficient on food...check
House heating on biomass.......check
Well water and solar panels.....check

Let the game begin.......

 

[SpasticGramps]

Brother can you spare me a dime?

IMF Seeks Funds for European Debt Crisis Bloomberg

In 2009, the U.S. led a global drive to increase the International Monetary Fund’s firepower to help pull the world out of recession, pitching in $100 billion. This time, it’s a bystander in a similar effort to counter the European debt crisis.

European leaders meeting in Brussels agreed to lend the IMF as much as 200 billion euros ($268 billion), opening the way for aid from nations such as Brazil and South Korea. While the U.S. supports the effort, it won’t participate, an administration official said in Washington yesterday.

Any solution to the crisis should be led by European nations themselves, not the IMF, to assure financial markets, said the official, who spoke to reporters on condition of anonymity.

Despite the greatness that happened on Friday, it didn't solve the immediate funding problem. The central question remains. Where is the money going to come from?

 

[PoopyTeaBags]

all centralized banks bailed out the euro so now if anything falls i think it all falls... we have given complete control to the centralized banks that have no oversight what so ever...

 

[rasputin]

Eat yer peas, Europa!

 

[SuperConductor]

The Brits were the only country to not take part in the new treaty changes thus retaining their sovereignty.

After Obama's symbolic visit to Australia (symbolic of turning his back on the UK) and our idiotic government turning it's back on Europe we may have our sovereignty but we no longer have any friends and all potential friends think we're stupid and selfish and they'd be right.

Cameron turning his back on europe was nothing to do with soveriegnty and everything to do with party politics, he was facing a backbench (grassroots) revolt and did this mainly to appease the hardcore eurosceptic tories.

The other reason is fear of doing anything to hurt the City of London PLC and the banking sector that resides there. Backfired though because the bankers don't want to do business with billy no mates.

This shit is all really complicated can't be boiled down to new world order type fairy stories but yeah the central banks are to blame, ask anyone in the street if they think the Fed or Bank of England are private businesses or public institutions and I bet they answer wrong every time. It can be boiled down to poor people being fucked over once again, shouldn't expect anything less; it's all about the Benjamins

 

[Hundred Gram Oz]

Yes were all screwed, buy gold and silver now while your currency still has some value!

 

[ninja bud]

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?

 

[alkalien]

There is one major problem with the Euro, countries can not pay their debts with fresh money. If the USA or UK or any other country finds their debts too high they tell their federal banks to just buy the debts with freshly pressed money. In the Euro zone nobody may press fresh money and so they have to pay in hard currency. This goes back to the german panic of inflation. Newly pressed money will decrease the worth of the currency. Compare the exchange rate cahnge of US-$ against swiss Franken and you'll see what I mean. Many germans think, that inflation is the worst thing that can happen and so the german chancelor can not risk to allow the ECB, the european central bank, to buy countries debts. (Well, they already do but only on a small scale) Doing so would kill her political career in germany. French Sarkozy has the same problem, elections are close by, so he can not risk his political career. What they are trying to do right now is trying to stop countries from spending more cash than they have, which is no entirely bad thing. Keep in mind that by creating more debts they are giving your money to some banks!

In the end they will either print new money or they will create euro bonds, a certificate over combined european debts for which all european countries will have to pay if one nation crashes. There is no doubt, that in the end taxpayers are gonna have to pay for the banks profits. (Keep in mind, that the banks are already paying bonus payments for employees with taxpayers bailoutmoney).

That's where the british come in. Cameron did not only protect London City banks from a 0.2% tax for paying the taxpayers back the bailouts. That's point two of a percent taxrate, I would be glad to pay this little! He did as well protect british ruled countries like grand cayman, which is one of the places where the banks store the money they took from every working man and woman in the world.

You may hate germany and france taking over control over the european union but they are the biggest economies and their taxpayers will have to pay the biggest part of the crisis and taxpayers no longer are accepting that. German an french politicians found that out and are trying their best not to show that they know who is gonna pay. That's what all this is about. In the end we all will have to pay, except for those who are richt and the banks of course.

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...

 

[Bullfrog44]

I really can't read through this thread. There are a lot of people that just don't realize what is going on across the world. I wont go into why, or how, but I will make a simple statement that I will get burned for, but it is the truth.

World governments are already ALL going down. All that is left is for them to slow down the "collapse" so THEY can better prepare. Every politicians knows it, and is lying to the US people. I know most people don't believe this but, EU is going down very soon. During this process the US and world will create another bail out for the EU. This will tie the US even more into the EU. When the "bailout" or whatever the new term will be, doesn't work, the rest of the world is next.

O yea, if and when all that happens don't forget what happens in history during times like this.....WAR.

Before everybody flames me, just save this post and look it up this time next year.........

 

[Hundred Gram Oz]

The debt belongs to the banks, NOT the people. Eurozone countries should look at Iceland and how they 'beat the debt', they simply told the bankers to f**k off and take their debt with them, France, Germany, UK threatened Iceland with their legal teams and threatened to never do business with them again but that was all BS. Iceland's economy is now starting to GROW.

 

[JuC]

imho this whole crisis is built - hmm maybe just used - to create something like the "united states of europe"....
governments won't give up souvereignity to bruxelles without being forced to..
merkozy are the masters of salami-tactics...think back about a year...fiscal union?! never ever!! and now? we (nearly) got it.
"USE"? no thats absolutely not our plan...well lets just wait one more year...

don't think the idea of kind of "USE" is too bad in general...especially in a time where globalisation is so important...
but we need to be aware this superstate gonna be democratic and works for the people, not holding slaves for the markets!!
it will come for sure, just a matter of time...and it's at us to make it a good place! lets see this as a chance when time has come.

€ will only work in the future if there is something like a european government... the single countries are too different in their decisions to have one currency together.

but i think it's really funny to get "advices" from US (tripeling their depts in the last 10 years, while germany/france not even doubled it) how to deal with the crisis...
and the advice is: got no money?? just print it!

tripeling depts is absolutely ok...but it needs a tripeling of the economy to stay stable... dept = money, that's our system!
(but maybe it's also enough to have an army which could blow up the whole world...)

only my theorys/thoughts!



just hope i can still travel through the world without hiding i'm german in the future...
read some really scary newspaper-titles ...especially from UK "news"papers... ><
hope that's just their way of "fun" comparing german economic influence today with hitler's plans... this is really really dark side of our history for me with millions of people killed... and beeing compared to that because having (huge) economic influence..that hurts!
criticizing germany is absolutely ok and needed!...but this hitler-comparison is so fucked up...

puh took me 3 times of re-logging-in to write this...ready to catch the stones now
feel free to throw the first one

@hundredgrams: problem is that most of european social-securitys like pensions etc are invested in dept papers... example greece: dept-cut of 50% means (in theory) 50% lower pensions for the people living there!

 

[Bullfrog44]

The debt belongs to the banks, NOT the people. Eurozone countries should look at Iceland and how they 'beat the debt', they simply told the bankers to f**k off and take their debt with them, France, Germany, UK threatened Iceland with their legal teams and threatened to never do business with them again but that was all BS. Iceland's economy is now starting to GROW.

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?