what are the possibilities that Germany, Finland,Austria , netherlands exit the euro to form a new northern euro. greece and the latin nations exit and form a southern euro. the remaining nations divy themselves between the new currencies. this plan is executed by secret agreement and is then sprung upon the public.
Spain............ its GDP is smaller than the assets of JPMorgan Chase, Bank of America, or Citigroup. Spain is about to collapse........ the prime minister just said he's not going to allow it to happen. Rajoy said, "We are not going to let any regional government fall, or any bank fall, because they can't⦠If that happens, the country will fall." sort of like when a government says it won't devalue its currency. like saying, "The check is in the mail." Rajoy might as well have said, "Spain is toast.........." the Spanish government injected 19 billion euros (about $23.6 billion) into Bankia, the country's second-largest bank. the market isn't buying it. share prices of Spain's three largest banks are all down today. yields on Spanish 10-year debt surged over 6.5%, very close to the 7% levels where Greece, Portugal, and Ireland needed bailouts. spreads on Spanish 10-year bonds over German bunds hit 5.11%, their widest in the history of the euro. Spanish government has about $917.5 billion in debt, more than half of it due within the next few years. Spanish bond yields are rising as investors flee the country's debt and U.S. bond yields are falling as investors seek the perceived safety of U.S. Treasury debt. The 10-year Treasury bond yield hit 1.75%. express elevator due south. hop on for the ride. s
Catalonia province has just asked for a bail out from the central govt. Catalonia calls for help from central government to pay debts European stock markets tumbled and Spain's borrowing costs shot up as the country's wealthiest autonomous region, Catalonia, called for assistance from central government to pay its bills. Catalonia, which represents one fifth of the Spanish economy, has more than â¬13bn in debt to refinance this year, as well as its deficit. All of the regions together have â¬36bn to refinance this year, as well as an authorised deficit of â¬15bn. Catalonia's deficit was supposed to be cut last year to 1.3pc of gross domestic product, but the regional government overshot that by close to three times. http://www.telegraph.co.uk/finance/...elp-from-central-government-to-pay-debts.html
Not surprised. A province in spain where the people cant even speak spanish right asking for a bailout.
They'll wind up restarting their own currencies. It's the only sensible thing to do. The "core", so called, might stay in, purely for the prestige factor. After a few years, more for some, less for others, they'll be forced to drop out in favor of the strongest one in the union. Between them, Finland is probably the weakest and would be out first. Among the remainder, they'd drop one by one until it was only the Germans and the Dutch. It'd be a tough fight between them, the former having the weight of numbers on its side, the latter the advantage of being small and therefore swifter. It'd be interesting, but of no significance to the global economy or even the future of the EU.
Europe is found itself today on recession while unemployment is very high. Although that fact European Central Bank do nothing about it, here are some facts: 1) Euro interest rate is at 1.25% while US Dollar is at 0.25! 2) Euro is very strong and that keep Eurozone export expensive 3) No measures have been taken from to support market demand which is diminishing Euro is very expensive and that gives reasons for the South European countries to suffer, see the historical chart with 180 days average: http://tradingcenter.org/index.php/84-learn/140-technical-analysis-on-eurusd European Central Bank has the power to reverse the picture in the European Economy. It will certainly try before Eurozone collapses.
It is more complicated than that. All the debt that exists is in euro's so all the mortgages and other debt is paid back in euro's. If the debt was transfered to another currency then depreciated to pay it back the result is the same default. What they are more likely to do it to introduce the old currency back in tangent with the euro. The old currency would be used to trade and then they will keep the existing debts in euro's so that they do not collapse the contract. This may work because it would make the deprecation needed to attract business in the countries and enable trade from outside the eurozone. But it will not have to default on the debt contracts that exist in the euro. Also you are forgetting the success of the stronger states in the Euro is dependent on the weaker states in the Euro. Read this article I wrote it explains it. http://morganisteconomics.blogspot.co.uk/2012/04/eurozone-is-polarised-economic-model.html
A 2 currency Euro would be the sensible solution but I don't know how you get 17 countries to agree to it ... How do you create a split for the debts that are outstanding ? How do you get 17 countries to agree on anything ? What about all the trading instruments ? are they in the new Euro or the old Euro ? A Greek exit is 100% going to happen IMO - just a matter of when. The Euros need to create an FDIC to stop the bank runs. It'd be interesting to see what happens if they announced something like a 2 Euro system like 3 months out, and started trading it early. Would there be a 20% gap ? I think that would be better then having Greece drop out and have their own 50% gap ... The market hates uncertainty - I don't see how 2012 can be an up year until some of the Euro issues resolve themselves. Oh and OTM FXF calls are the way I'm playing a 2 Euro possibility.
merkel puts berlin in the middle of russia, which signals the annexation of those territories soon. i call for the federalization of the euro zone and euro-bonds still this year. uk and eastern europe throw in the towel and join the euro bandwagon by Y14. greece, spain, portugal and south of italy to become country wide resorts for hard working nordics and chinese tycoons, while germany will keep euro-zone productivity levels through the roof with their merkel-auchwits behavioral dogma. monetization of euro bonds will be defacto standard in this new era. fed will start taking lessons with his new master.
Reintroduce the original currency of the country and run it along side the euro. That would enable the old debts to be satisfied and the economy to work again.