EURUSD has moved lockstep with IR differentials, a relationship in place for some time now. Periphery issues did not drive real money outflows like most active participants anticipated. Eurozone inflows remained steady, even favorable. Differential interest rates have simply favored euro. This has reversed course as of late with latest ECB cut, with German-US IR differentials moving lower again. White: EURUSD Red: German 5yr vs US 5yr Credit: GMT
Because Italy must refinance 40 billion euro of its expiring debt in 2012 and the market will not be willing to lent any money at reasonable rates. ---> default This happens because the EU is setup with a monetary system like that of the gold standard. Via accumulation of surpluses Germany has a current account surplus of $182 billion with the PIGS having a deficit of $183 billion, i.e. a zero-sum game. http://krugman.blogs.nytimes.com/2011/11/07/wishful-thinking-and-the-road-to-eurogeddon/ The Germans have passed legislation to prohibit the ECB from monetizing debt because they want to control the EU and be the lender. Most of the money supply in the EU is debt and the EU banks have an average 36% leverage, as opposed to a 10% leverage in the US. Result --> Chaos will strike soon (unless they monetize). US will be the only real financial power with China dependent on US prosperity.
Europe should allow all cash into their banks no questions asked about where it came from. Hundreds of Billions will flow back into European banks overnight, The likes of Switserland and the UK will be hit in the heart and it won't cost the people one penny.
You probably think drug dealers are stupid people and they will put their money in institutions that are ready to be nationalized all over the EU.
Operations like the one I suggest have been taking place all over Europe bringing home tens of Billions but obviously the fine scared off a lot of people. A no questions asked amnesty would certainly bring home a multitude of that.
Are you saying it is okay for Europeans who have made a lot of noise about human rights to accept blood money/dirty cash?
An immoral act for sure, as such amnesty essentially legalizes crime receipts. The easy way out is for the EU to print some money. Germans cannot rule everyone else for much longer.
Europe will be irrelevant, and the USA and China will be CO-DEPENDENT on each other ushering in a multi-polar world order.
Heaven & Hell HEAVEN is where: The police are British The chefs Italian The mechanics are German The lovers are French and it's all organised by the Swiss HELL is where: The police are German The chefs are British The mechanics are French The lovers are Swiss and it's all organised by the Italians!!