Wednesday, 25 February 2009

EURO: a sleeper

Odd, the Euro is steadily losing ground against the Dollar. Even excessive printing, huge debts and lower interest rates make the greenback more attractive than the artificial youngster among the leading currencies.

Remember DM times? I remember the days when the DM became stronger and stronger; while Germany made exporting its number one priority the other EC currencies had to be devalued constantly to cope with the pressure in EC-land. That pressure relief valve was closed when EC-land was wiped out for EURO-land.

Where has the pressure gone since? It builds up steadily and is now reflected in hugely spread debts and inflation rates within the EURO zone, countries that have to pay premium interest in order to place bonds to keep afloat and the growing threat that some members will need to be bailed out rather sooner than later by the EURO community, who else? Adding up “some members” might soon represent the majority of all members – raising the pressure to where the EURO might implode. Who knows how big the exposure of tiny Austria in Eastern European countries really is; good old Schilling would not have allowed anything comparable.

The coup where by the artificial currency was put over totally different wonna-be-partners now takes revenge; while bailing out member countries was never part of the currency contract there will be no alternative but protect the EURO and keep DM, FF and Lira from being revitalized – most would love to go for it, however, with unimaginable consequences. On the other hand the bailing out will have an effect like cutting hedges: all plants will be cut down to the one smallest in size - a feeling rather like Socialism.

The pound might have to celebrate a come back, soon.

Carpe diem!


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