Will the euro crack in 2012?

The Telegraph ^ | 1/6/2012 | Mats Persson

[bruinbirdman]

The euro is in such a poor state that asking this question has become almost cliché.

In truth, as the crisis is overwhelmingly about erratic domestic politics, it’s absolutely impossible to predict when the euro will bite the dust. What’s clear is that in the absence of some sort of fiscal union (likely to be collective borrowing amongst euro states in return for German-style budget rules), the single currency is doomed in the long-term. In the short term, however, there is still scope for plenty of muddling through – which is to say that there’s a strong chance that the euro survives 2012. So what is the likely good (an expression used loosely here) and bad news for the eurozone moving in 2012? And what would, to complete the phrase, an “ugly” scenario look like?

The “good”

The ECB stepping up: Arguably the biggest threat to the survival of the eurozone in 2012 is a deep freeze in the banking system. That is, banks get so incredibly nervous that they completely stop lending money to each other, leaving some banks bust. Governments would find it very hard to refinance themselves and credit to the wider economy would be choked off.

Now, for those who think short-term (which is most people), the good news is that the ECB has stepped in to offer ridiculously cheap loans to any bank in the eurozone that asks for it (under a new euro acronym known as the LTRO), giving them the cash and confidence to continue lending this year – at least in theory. There is a catch of course: as with all other ECB intervention, the LTRO serves to transfer more risks from private creditors to European taxpayers (as the ECB is ultimately taxpayer-backed) and there are little

[LibLieSlayer]

That is not the question... the question is when in 2012 will the euro collapse?

LLS

[ronnie raygun]

Yes it will we are holding it up for the right moment, right around the election and the suspension of it.