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The Euro Wont Survive This Depression


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Not posted for a while but just wanted to repeat what I was saying last year

that the Euro won't survive this depression IMO.

When I said this last year I was handbagged by most of the people who replied

Some even claiming that the pound would join the Euro by Xmas :lol:

And that the Euro would soon replace the Dollar as the World's reserve currency :lol::lol:

In 10 years time the strongest currency in the World will be the Dollar - followed by the Deutsche Mark

The Euro has got at the most 5 -10 years IMO.

:blink:

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Not posted for a while but just wanted to repeat what I was saying last year

that the Euro won't survive this depression IMO.

When I said this last year I was handbagged by most of the people who replied

Some even claiming that the pound would join the Euro by Xmas :lol:

And that the Euro would soon replace the Dollar as the World's reserve currency :lol::lol:

In 10 years time the strongest currency in the World will be the Dollar - followed by the Deutsche Mark

The Euro has got at the most 5 -10 years IMO.

:blink:

Im not so sure, there isn't an exit strategy for the Euro. How do you leave? Do you start printing your own currency and allow citizens to convert euros into it fresh paper? IMHO you will have a currency crash on your hands before you even get started, you wont be able to print enough currency to convert and the germans wont let you anyway. Or does everyone leave at the same time?

Edited by AteMoose
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Im not so sure, there isn't an exit strategy for the Euro.  How do you leave?  Do you start printing your own currency and allow citizens to convert euros into it fresh paper?  IMHO you will have a currency crash on your hands before you even get started, you wont be able to print enough currency to convert and the germans wont let you anyway. Or does everyone leave at the same time?

:blink:

Meaning?

As it happens it's probably the Germans that should leave the Euro, then it could devalue.

After all, they're the odd one out, wanting to work hard, save, maintain fiscal discipline, fight inflation etc. Everyone else wants to spend and devalue.

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If someone was going to leave they would need to enact surprise capital controls else all the citizens would simply empty their bank accounts transferring it to Euro zone banks. The PIGS leaving the Euro zone would send the Euro higher. When you lose your weakest members what remains is the strength. A breakup of the Euro zone would not crash the Euro, quite the reverse.

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If someone was going to leave they would need to enact surprise capital controls else all the citizens would simply empty their bank accounts transferring it to Euro zone banks. The PIGS leaving the Euro zone would send the Euro higher. When you lose your weakest members what remains is the strength. A breakup of the Euro zone would not crash the Euro, quite the reverse.

Which is my point, Say Greece or Ireland wants to leaves, they print a new currency but they wont be able to print enough wont because they have hyperinflation before they even start as people dont want the new currency? The weak countries cannot leave because they are weak. Can someone lay out a step by step guide to the break up of the euro?

Edited by AteMoose
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:blink:

Meaning?

As it happens it's probably the Germans that should leave the Euro, then it could devalue.

After all, they're the odd one out, wanting to work hard, save, maintain fiscal discipline, fight inflation etc. Everyone else wants to spend and devalue.

On Newsnight yesterday a City guy claimed that all Euros have a letter identifying which central bank they have been issued by and that Germans will only accept Euros that have been issued by the Bundesbank.

When he said this the Spanish govenment guy on the other side of the table defending the Euro nearly fell off his chair.

So basically a Euro note starting with code X is a Deutsche Mark.

:blink:

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On Newsnight yesterday a City guy claimed that all Euros have a letter identifying which central bank they have been issued by and that Germans will only accept Euros that have been issued by the Bundesbank.

When he said this the Spanish govenment guy on the other side of the table defending the Euro nearly fell off his chair.

So basically a Euro note starting with code X is a Deutsche Mark.

:blink:

And if they're just a number in your bank account?

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Which is my point, Say Greece or Ireland wants to leaves, they print a new currency but they wont be able to print enough wont because they have hyperinflation before they even start as people dont want the new currency?  The weak countries cannot leave because they are weak.  Can someone lay out a step by step guide to the break up of the euro?

Basically the German people realise that they are bailing out all the feckless, useless people in Europe and vote in a government with a mandate to bring back the Deutsche Mark.

Then the French people decide if the Germans aren't paying then they certainly aren't going to and they restore the Franc.

Game Over

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And if they're just a number in your bank account?

Which bank account and where?

How much money do German citizens have in foreign bank accounts and how much money do foreign citizens have in German bank accounts?

I don't know the answer to this question, but I would suspect that German banks have more of other peoples money than other countries have of theirs.

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Which bank account and where?

How much money do German citizens have in foreign bank accounts and how much money do foreign citizens have in German bank accounts?

I don't know the answer to this question, but I would suspect that German banks have more of other peoples money than other countries have of theirs.

Up until I draw money out of my account it's just a number.

If I draw €1,000 out of my account in €10 notes I will have 100 banknotes which could have originated anywhere, but up until that time my euros don't have serial numbers, surely.

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Basically the German people realise that they are bailing out all the feckless, useless people in Europe and vote in a government with a mandate to bring back the Deutsche Mark.

Then the French people decide if the Germans aren't paying then they certainly aren't going to and they restore the Franc.

Game Over

who are they bailing apart from their own banks?

No news today except that its all under control...no details, Greeks say they are going to be asking for money..what is it you know that no-one else does?

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:blink:

Meaning?

As it happens it's probably the Germans that should leave the Euro, then it could devalue.

After all, they're the odd one out, wanting to work hard, save, maintain fiscal discipline, fight inflation etc. Everyone else wants to spend and devalue.

Just don't mention the . . .

ver2_germansBig_95227a.jpg

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who are they bailing apart from their own banks?

No news today except that its all under control...no details, Greeks say they are going to be asking for money..what is it you know that no-one else does?

History apparently.

And personally I don't find the idea of politicians telling me everything is under control very reassuring.

:)

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The way out is the same as the way in;

Create new currency, with fixed exchange rate devalued to, say, 0.7 euros (optional, could be 1.0)

Set future date at which new currency floats.

Convert all state held currency reserves etc to new currency at pegged rate. Make it legal tender. Allow private money to be exchanged at pegged rate.

Cross fingers on D-Day.

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In 10 years time the strongest currency in the World will be the Dollar - followed by the Deutsche Mark

The Euro has got at the most 5 -10 years IMO.

:blink:

I'm not so sure about that in that countries are conspiring to topple the Dollar, Iran for example sells its oil in Euros, China is diversifying etc..

In that a pointer to this is Iran's nuclear programme, nuclear weapons are a secondary issue, the issue is oil, Iran burns lots of oil to generate electricity such that it needs to import lots of it. They can't import more or drill more due to sanctions, so they are building nuclear power, with nuclear power they can suddenly export more of their oil sold in Euros which will be a serious thorn in the side of the US$. China is actively helping them by upgrading Iraninan oil processing facilities.

Also China isn't buying as many US$ as before.

But as what Injin says the US$ is an advanced fiat currency they are already printing an insane amount, the printers in Frankfurt are not printing at such a great pace.

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On Newsnight yesterday a City guy claimed that all Euros have a letter identifying which central bank they have been issued by and that Germans will only accept Euros that have been issued by the Bundesbank.

When he said this the Spanish govenment guy on the other side of the table defending the Euro nearly fell off his chair.

So basically a Euro note starting with code X is a Deutsche Mark.

:blink:

this is the case

I remember a couple of years ago when I lived in Germany some of the locals

were ensuring they only kept German denominated euros

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who are they bailing apart from their own banks?

No news today except that its all under control...no details, Greeks say they are going to be asking for money..what is it you know that no-one else does?

So basically, the Irish economy was screwed, so they all took pay cuts and loads of pain because that was what membership of the Euro demanded.

In Greece on the other hand, where the economy is equally screwed, everyone goes onto the streets and threatens to riot if the government cuts anything.

So becuase the Greek people refuse to take the pain, the rest of the tax payers of Europe are going to have to bail them out.

Ever heard of moral hazard?

The Euro is finished.

IMHO

:blink:

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So basically, the Irish economy was screwed, so they all took pay cuts and loads of pain because that was what membership of the Euro demanded.

In Greece on the other hand, where the economy is equally screwed, everyone goes onto the streets and threatens to riot if the government cuts anything.

So becuase the Greek people refuse to take the pain, the rest of the tax payers of Europe are going to have to bail them out.

Ever heard of moral hazard?

The Euro is finished.

IMHO

:blink:

yeah, but you dont KNOW theres going to be a bailout....if there is, whats to stop all the others just spending, boosting their markets in 5ms and claiming help from abroad?

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I'm not so sure about that in that countries are conspiring to topple the Dollar, Iran for example sells its oil in Euros, China is diversifying etc..

In that a pointer to this is Iran's nuclear programme, nuclear weapons are a secondary issue, the issue is oil, Iran burns lots of oil to generate electricity such that it needs to import lots of it. They can't import more or drill more due to sanctions, so they are building nuclear power, with nuclear power they can suddenly export more of their oil sold in Euros which will be a serious thorn in the side of the US$. China is actively helping them by upgrading Iraninan oil processing facilities.

Also China isn't buying as many US$ as before.

But as what Injin says the US$ is an advanced fiat currency they are already printing an insane amount, the printers in Frankfurt are not printing at such a great pace.

But the US has such strong fundamentals that it can easily survive a Global Depression

Vast reserves of human capital, land, natural resources and energy.

The US economy could easily double in size this century without any external trade

At the end of the day the World needs the US far more than the US needs the World

IMHO.

:)

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yeah, but you dont KNOW theres going to be a bailout....if there is, whats to stop all the others just spending, boosting their markets in 5ms and claiming help from abroad?

By spending I presume you mean borrowing?

And I don't see how all the major economies in the World can claim help from 'abroad' - they are 'abroad'.

:)

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Can someone lay out a step by step guide to the break up of the euro?

Some scenarios are examined here:

Exiting EMU: not surprisingly, the Maastricht Treaty contains no exit procedures, but bailing out would not be that difficult.

It looks at a general dismantling by mutual consent and also the withdrawal of a single member; both "staged" and (ahem!) "sudden" withdrawals are examined.

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The way out is the same as the way in;

Create new currency, with fixed exchange rate devalued to, say, 0.7 euros (optional, could be 1.0)

Set future date at which new currency floats.

Convert all state held currency reserves etc to new currency at pegged rate. Make it legal tender. Allow private money to be exchanged at pegged rate.

Cross fingers on D-Day.

Cross fingers before D-Day IMO, speculative attacks would begin immediately, if the country's fundamentals weren't good.

cf sterling 1992.

Better for weak economies to withdraw and float straight away.

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