the fact remains that if germany overnite had the mark back german industry would immediately have a 20% disadvantage. of course in time the south being the south would fritter it away. as the US will learn no country has ever devalue its way to prosperity.
If you give your money to the bank, it is open to credit risk. Same thing with corporate bonds. They should not touch the insured funds, which they have done. The only difference is that, in US, bond holders can drag down the bankruptcy and get some in return. But the bank depositors are not bond holders and the government has decided on their fates. It is sad, but....
There was no deposit insurance until it was created in reaction to the widespread bank failures of the Great Depression. Prior to that time large depositors shopped their banks for solvency and were often directly involved in those banks. Under that system the banks with large depositor, business clientel, were ultra solvent and generally looked to their big business depositors for loan business. The invention of insured deposits, with the Government standing behind the banks, ruined the business model of the super solvent banks...so they evolved more leverage and different more 'democratisation of capital' business models. James Grant does a great job on the evolution of U.S. banking in this regard in his book, "Money of the Mind." It's lively read and shows how we got where we are in banking today. So, Big money has no incentive to stay with weak banks in the EU given the policy that has been communicated through the Cyprus experience. Dijsselbloam is fumbling dope....'Frizzle, Frazzle, Frozzle, Frome; time for Dijesselbloam to go home.' Business depositors and other large and institutional depositors must now move deposit funds into the most secure banks in Northern Euorpe or the U.S. or Japan. To do otherwise could be seen as actionally imprudent for CFO's and those charged with a fiduciary duty in the safekeeping of deposit funds. It might not happen on Thursday...but funds will start to move and keep moving from the South to best banks of the North and elsewhere...and those strong Banks will be increasing capital, reducing loan assets, to qualify for those deposits, increasing demand for Bunds and TBonds.
again, you are pulling numbers out of your arse without the slightest backup. 20%? Immediate? What means immediate? Sales will plunge 20% immediately? Well by your math that means all German companies will immediately have 20% more buying power to snap up whole countries including your sorry state of affairs. What a moron!!!
if the euro exchange rate is a mixture of the performance of various economies then a 20% revaluation is not unreasonable. or take the mirror image but you don't understand basic economics if you ask will business drop 20%. "Well by your math that means all German companies will immediately have 20% more buying power to snap up whole countries including your sorry state of affairs not necessarily. they will not receive german marks for euros located outside of germany and they might be holding $US. study price elasticity. you have a temper. control it.
You mix everything up to mask your ignorance at best and utter lack of understanding of economics at worst. You have never traded professionally at an investment bank, fund house, nor hedge fund, you have never worked as professional analyst anywhere, I highly doubt you even have a CFA designation to at least show you tried to learn economics, YET, you make all those claims. Its also not unreasonable to believe Gold should be trading at way above 2000 given the insane money printing going on around us, yet look where we are, a full 20% below such mark. So, please do not pretend you understand where the Deutsch Mark should be trading at against the dollar, it could be anywhere +-50%. My point about a sales decrease is supported by evidence, the precise reason for the close relationship between exchange rates and trade balances over the medium to long term. I called you a moron because you wipe aside any and all evidence, instead you introduce HUNCHES, GUESSES, and IDEAS at best, and mask your stupidity at worst by wiggling and sneaking around ideas. All just guesswork picked up at SeakingAlpha if at all.
I'm pretty sure there is a synthetic DM rate that would remove any guesses to where it would relate in comparison to the USD.
...which I pointed to several pages ago. But its obviously only adjusting for the DM/EUR peg rate. The issue I have with guys like zdreg is that they run around with their sniper rifles and aim at targets such as Germany and how that country enjoys such ridiculous advantages due to its peg to the EUR. The problem, unfortunately is that he does not see the big picture nor accepts facts, even when his bloody nose is dipped right into it.
and here we are, at the same place that Jack Hersey would take you, MILLION MILES away from the topic. Thanks. You are an idiot who has not responded to a SINGLE OF MY ARGUMENTS against your idiotic belief of Germany owing to the rest of the world due to rigged exchange rate pegs. Not one argument have you been able to pick up on. On ignore!