With all the inflation and imploding Euro, there is a new currency on the horizon...
Posted on 10/26/2011 11:17:46 AM PDT by little jeremiah
I posted the article and the other two (snips of course) hoping more financially astute people would know what it all means.
Personally I have no clue other than the Eurozone and Euro money is doomed of course, how soon I don’t know; nor do I know what it means for us in the US. Hope I’ll learn something by checking back today and reading peoples’ comments.
Remember that valuation is relative. The dollar and euro are in a years long race to see which can lose value the fastest.
Politicians all over the world love a weak currency policy because it means they can spend money they don't have to buy votes.
I don’t worry about that stuff because I don’t have any money.
:-)
I remember that relatively high Dollar and low D-Mark period well. Had a lot of distributors adding German lines equivalent (hand and power tools - they were better quality, to be honest) to our US products to take advantage. At that time (mid 80’s) the DM/$ exchange rate was hovering around 3 to 1. If they re-launch the D-Mark it might start out at par or better. Welcome to Interesting Times.
You are absolutely correct. Our US crash was primarily from a real estate bubble that everyone contributed to including the public, banks, government and not from government spending. The Euro crash will be from government spending funding social welfare systems no productive society can afford. And the Eurosocialist gimme stuff populus are out in the streets as usual blaming it on the banks when they should really be looking in the mirror at the real culprit.With Obama, we are not very far behind them.
Yes, the Germans would lose about 40% of their ON PAPER net worth, but how much of that Euro debt is actually collectable. The Germans may just decide to write off that 40% of their net worth to insure it does not become a 60% write off down the line.
Never know. There could be lot of big and little bangs when it all falls down.
Germany relies on a thriving export business of hard goods.
It also relies heavily on imports of raw materials.
The big three exporters are China, Germany and the U.S., in that order.
As the Euro declines in value relative to the dollar and yuan, being dragged down by all the less productive nations in the Eurozone, Euro-denominated German assets are losing value because of the currency devaluation.
If Germany changed back to the Deutschmark, allowing both currencies for a year or so and then phasing out the Euro, it’s currency would certainly hold it’s own very well relative to the yuan and dollar, perhaps outperforming both of them.
The other nations in the Eurozone would undoubtedly quickly follow suit, as the Euro would drop like a rock relative to other currencies. On the upside, this would make exports of those other countries a bit more attractive.
Each European nation then, most notably France, could do a one-shot money creation of their own currency, buying shares in and lending to their own major banks, possibly nationalizing them for a while, designed to make up for the haircut (expensing the loss) on poor-quality sovereign debt issued in Euros. It would not take very many Francs and the write off would be done and the problem would be over.
Each nation then would simply go back to taking care of itself. The less productive ones would have to adjust their living standards, but at least there would not be the myth and tension created by politicians making promises to other nations on behalf of their nation that their nation can’t or does not want to keep. Any government debt instruments or bonds that the individual nations then issued, going forward, would be evaluated by buyers of the debt solely on that each nation’s ability to generate tax revenue, not based on the vagaries of international political wrangling.
This just has to be sold politically in each European nation as the friendliest, most honest way out; hailed as a wonderful solution that will restore all of Europe to it’s historic wonderful tradition of excellence, etc.
If politicians can politically “sell” the idea of going into debt for centuries, they certainly should be able to politically “sell” the idea of getting debt paid off within a few years.
Aww, you’re so cute and funny.
No doubt... Greece has rioters demanding more, more, more; Germany knows that they are the only ones that “could” provide it, and they’re issuing a big fat F.U. to anyone who thinks they’re going to come in and take his wealth.
I often wonder what military spending has been doing around the world. Seems to me that dozens of countries must be thinking that the era of America is coming to an end and that the free military ride is no longer so sure, and that they’ll need to be prepared for whatever comes after.
Mr. Obama, Tear Down This Ideological Wall!
I was a junior Officer when the Euro started. It was a big topic of discussion around the Wing and a point of many of our Intelligence Briefings.
I made the mistake of opening my mouth and telling the "Brass" during discussions the Euro would fail in 20 to 25 years because of the lazy socialist countries.
I was not thought very highly of by the brass as most of them were already too PC to understand history and see the writing on the wall.
Strange you should mention that and I happened to have just come across this article. It seems your question is on a lot of European's minds......
Merkel wants 'permanent' supervision of Greece, warns of war
Excerpt:
Peace should not be taken for granted if the euro fails, German chancellor Merkel told MPs Wednesday (26 October) ahead of the eurozone summit where an increase of the bail-out fund firepower may lead to Germany's own state assets being taken as collateral.
'Nobody should take peace for granted,' says Merkel in a dark blue jacket reflecting the mood in and about the eurozone, Merkel abandoned her usual cautious rhetoric warned outright of a war.
"Nobody should take for granted another 50 years of peace and prosperity in Europe. They are not for granted. That's why I say: If the euro fails, Europe fails," Merkel said, followed by a long applause from all political groups.
"We have a historical obligation: To protect by all means Europe's unification process begun by our forefathers after centuries of hatred and blood spill. None of us can foresee what the consequences would be if we were to fail."
Very interesting.
Some local currencies have still continued to exist as a sort of shadow currency: for example, in Spain, things are denominated in Euros...and pesetas. Many people still calculate in pesetas. It may be true in other parts of Europe, as well, that people are still calculating in their former national currency.
This wouldn’t be true in Germany, because it was essentially the German currency that was used as the standard for the Euro.
I think a uniform currency, from a consumer point of view, is a wonderful thing. One of the biggest problems in the past was the need to convert currencies at every border. If you live in the US, imagine having to get a special currency every time you crossed into another state.
But the difference is that Europe has never been and cannot be a single state, so perhaps the currency approach has to be revised.
The Euro was established well before the advent of computerization. Perhaps to make it easier for transition between national currencies, a new form of currency conversion could be worked out. All currencies could use a certain standard (a decimal standard understood by just about everybody) for conversion, and conversion could be virtually automatic at the borders.
When goods and services do not cross borders, armies will......
It seems to me like a nation’s currency is a big part of its national identity, and it was LOST with the stupid euro. Francs, Deutschmarks, Lira and Drachmas etc., it was colorful. I liked it. I hope they do revert. Good for the British for refusing to convert.
But you know how liberals react when their grand designs fail......they double-down.
I, and many others, believe a collapse of the EU will drag the US and other western nations down as well, providing the excuse for a global currency under a UN-like authority.
Just as the EU suppressed the individual nations under it, so would this new global authority----rendering things like our Constitution irrelevant (in their eyes).
A region where everyone wants everyone else unified with them, but refuses to be unified with anyone else.
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