fuagf, it has to work or the current currency system is "Game Over". Hard to imagine the nations of Europe turning over control of their mostly nefarious operations to a more diciplined Germany. Like the Mafia being ran by the popo......
"It's clear, neither the markets or the Fed like a strong dollar. A strong dollar inhibits profits on exports. Hence more money printing to counter this effect and make it easier for the U.S. to pay foreign debt. The gala is to pay off foreign debt with dollars that are worth less than those borrowed. Sorry China.
If I were to make a call, I would say that soon the Fed will announce some "hula hoop" strategy to print more money and somehow route it to Europe. Then Europe won't collapse, the Euro will actually get a boost because we printed more dollars and the world will be saved.
And gold will be $5,000 an ounce as predicted by MacNeil Curry, famous Bank of America Merrill Lynch analyst.
"Financial institutions are increasingly reordering their European exposure along national lines just in case the region splits apart. Banks give preference to shedding assets outside their national borders and risk managers try to match assets and liabilities within national borders rather than within the eurozone as a whole. The indirect effect of this asset-liability matching is to reinforce the deleveraging process and to reduce the availability of credit, particularly to the small and medium enterprises which are the main source of employment.
So the crisis is getting ever deeper. Tensions in financial markets have risen to new highs as shown by the historic low yield on Bunds. Even more telling is the fact that the yield on British 10 year bonds has never been lower in its 300 year history while the risk premium on Spanish bonds is at a new high.
The real economy of the eurozone is declining while Germany is still booming. This means that the divergence is getting wider. The political and social dynamics are also working toward disintegration. Public opinion as expressed in recent election results is increasingly opposed to austerity and this trend is likely to grow until the policy is reversed. So something has to give.
In my judgment the authorities have a three months’ window during which they could still correct their mistakes and reverse the current trends. By the authorities I mean mainly the German government and the Bundesbank because in a crisis the creditors are in the driver’s seat and nothing can be done without German support.
But the likelihood is that the euro will survive because a breakup would be devastating not only for the periphery but also for Germany. It would leave Germany with large unenforceable claims against the periphery countries. The Bundesbank alone will have over a trillion euros of claims arising out of Target2 by the end of this year, in addition to all the intergovernmental obligations. And a return to the Deutschemark would likely price Germany out of its export markets – not to mention the political consequences. So Germany is likely to do what is necessary to preserve the euro – but nothing more. That would result in a eurozone dominated by Germany in which the divergence between the creditor and debtor countries would continue to widen and the periphery would turn into permanently depressed areas in need of constant transfer of payments. That would turn the European Union into something very different from what it was when it was a “fantastic object” that fired peoples imagination. It would be a German empire with the periphery as the hinterland."
================================================================= ZH Said
"The euro zone would eventually need a financial authority that could take over much of individual countries' solvency risk.
Soros said that the financial system in Europe was fragmenting and reorganising itself along national lines, which in a few years time may make an orderly euro break up possible.
But "an earlier breakup is bound to be disorderly," almost certainly leading to a collapse of the EU itself, he said.
He said it would take German authorities "an extraordinary effort" to gather public support in the coming three months for the measures which are needed to halt current trends.
"We need to do whatever we can to convince Germany to show leadership and preserve the European Union as the fantastic object that it used to be," he said.
There is one problem with all of this: for the decade or so that the EMU worked, Germany was the sole true beneficiary. What the world is in effect asking Germany is to unwind ........ And as a reminder, Germany said, okalie dokalie: just first pledge your gold to Herr Pawn Shop operator in case you still go broke after we bail you out.
So far it has been everyone else in Europe, those who demand to be bailed out that is, that has been rather mum on this response from Germany."
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