The Coming Crash of the Euro
Why huge profits await investors who position themselves for the euro's inevitable bust!
Are you interested in what may be the greatest money making opportunity of your lifetime?
I'm going to tell you something you may or may not already know...the European monetary system is on the brink of collapse and this could mean a fortune to you if you play it right..
When world famous speculator George Soros made one billion dollars back in 1992 he bet that the British Pound would plummet. He knew that Britain would be forced to pull out of the Exchange Rate Mechanism, a system of fixed exchange rates that existed in Europe at the time. Pressures had been mounting in the British economy and it was forced to de-peg its currency from the other European currencies and allow it to float freely in order to avoid skyrocketing interest rates and an economic crash.
Soros shorted the Pound and cleaned up to the tune of ONE BILLION DOLLARS!
A similar thing is about to happen with the euro, only much, much, bigger!
The Euro is a flawed currency
Let me give you a little background. Back in the 1980s the leaders of Germany and France conceived an idea for a single currency. On the surface and in their speeches and rhetoric they said that having a single currency would unite the European economy and make it more efficient and productive. But really, their motive was political. It was to create a currency that would challenge the U.S. dollar.
Under a single currency all countries that adopted the euro would have to give up their own monetary sovereignty. In other words, countries like
France and Germany would have to stop issuing French francs and Deutsche marks and as such, they could no longer conduct independent monetary and fiscal policy. They went from being currency issuers (a status that has enormous benefits) to being currency users.
Eurozone countries are like states in the United States
What the economic crisis exposed so clearly was that the European countries no longer had the power to employ fiscal policy to support collapsing demand. Where countries like the U.S. and China have the ability to come in and stimulate their economies to whatever degree necessary to avoid a true depression, European nations can't. In essence they have become like states in the United States and simply aren't able to issue currency to "print" their way out of a major downturn.
Strapped for cash and with no overriding fiscal authority to support their economies, European countries are now finding themselves in deep, deep, trouble. That is setting up a goldmine of an opportunity for smart investors.
When push comes to shove only the Federal
Government can bail out a state, but that's the difference. In the
United States there is an overriding fiscal authority in the Federal
Government that can come to the aid of an individual state, but in
Europe there is none! There is no
"Federal Government of Europe." This means if countries like Spain,
Greece, Portugal, Italy or even France or Germany for that matter are strapped for cash they are in
serious trouble with very little recourse.
And the situation is
getting bad...real bad.
Remember Argentina in 2002...
Right now the country facing the most difficulty is Greece, which has a small economy, but it's of big importance because it is viewed as the weakest link in the chain. Greece is struggling with high debt and no means to stimulate its way out. It is being forced to adopt austerity measures and that is triggering layoffs and cuts in services.
As the crisis continues to unfold we are now seeing protests and riots erupting in the streets of Athens. The very fabric of society is fraying and the government is trying to maintain calm, but the clashes are becoming more frequent and more violent.
Back in 2002 this was happening in Argentina. At the time Argentina's currency was pegged to the U.S. dollar, which meant that its monetary and fiscal policy was effectively neutralized. By pegging to the dollar Argentina did not have the power to create money and stimulate the economy. That was effectively transferred to the Federal Reserve and the U.S. Treasury, which were the monopoly issuer of dollars.
The problem for Argentina,
however, was that neither the Fed nor the U.S. Congress and the Treasury
were concerned about its economy. Rather, they were only concerned with the economy in the U.S. and when the Fed starting raising interest rates it drove up the value of the dollar and that caused Argentina's exports to collapse, causing a domino effect of economic contraction and bank
Europe will be the new Argentina!
Violence erupting in the streets!
Now we see the same sort of thing happening in Greece. People are rioting in the streets and protesting the imposition of austerity
measures that are leaving families without the means of support, even without food in some cases. It's getting worse by the day. The
politicians are forcing this on the Greek people, but it can only be done
with heavy handed crackdowns, which are not working because we see that the
protests are escalating.
Where do the Europeans get the
money to bail out
Greece or if necessary, the others that are on life support? The answer is, they have to borrow it or take it from the savings of the people in wealthier nations like Germany.
But even Germany no longer has a truly independent fiscal authority that
can create money. The amount of money they have to lend or to be used to
bail anyone out another anyone, let alone another nation is
limited. They are done!
Milton Friedman said that the euro would never last!
We hear talk of a bailout, but by whom? Only the ECB can truly bailout Greece or one of the other European nations, but it's precluded to do so by the Maastricht Treaty, which is the framework of European governance. So where will the money come from? From investors around the world who are now asking for ever higher interest rates because of the risk that goes with lending to these shaky economies? These are loans that Europe surely can't afford!
Some people believe Germany will step up to save the weaker peripheral countries of Europe. But even Germany, the largest economy in Europe, is no longer a currency issuer. It cannot simply "print money" as it could in the old days of German reunification to help Greece and the others that are in trouble. Germany would have use the savings and wealth of its own citizens to save a non-German state. Let me ask you...how popular, politically, do you think that would be? I can tell you this, it's not like Americans in New York helping out Americans in California. We're all Americans, but in Europe, national pride still runs deep and there is populist resistance to this type of a bailout.. It's no wonder, then, why German Chancellor Andrea Merkel throws cold water on the idea every time you hear her comment on some new report that Germany was about to write a check for Greece.
What if we don't get a bailout? Then that means Greece simply
knuckles under to the demands of the bureaucrats and the financial markets and
it will have to continue to cut spending dramatically. This will lead to
a cycle of collapsing demand in an already weak economy, which will lead to spiraling lower economic activity and
a further rise in deficits. That prescription is painful and bound to
increase the level of unrest. It's a no win situation. It will fail.
No choice...the euro must devalue!
At the moment it appears as if exit from the euro is the choice of last resort for Greece and the other nations in question, however, like the path chosen by Argentina back in 2002 it's the fastest and easiest route to recovery. Ego and pride are keeping the Greeks and the Europeans from allowing this to happen. Political leaders are trying everything to put the best face on this and hold the euro together, but is there really any chance of saving the euro from collapse? It seems unlikely. In fact, it is becoming very obvious to some of the world's most savvy investors that the euro cannot exist under the current structure.
This means there will soon be huge profits to be made!
Even if the European countries all toe the line and impose austerity measures to reduce deficits it will only make things worse. It would lead to collapsing demand across the continuant and economic growth would plunge, thereby raising deficits even higher and causing credit downgrades. This in itself would trigger a selloff in the euro, as investors react to this death spiral. The European Central Bank would be forced to inject huge amounts of liquidity into the financial system to avoid a total payments crisis. The euro would plunge in response.
Speculators swarming in!
Turn a $5,000 investment into 100 grand!
The scenario I've just described is inevitable...it's going to happen; it's just a matter of time and the time is coming. That's why you need to get on board now if you expect to make the big money.
If the euro falls to $1.00 as the savvy group of
speculators believe I can show you how you can make 10 times your
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The speculative sharks are circling and the nations of Europe and they are helpless. They cannot combat this attack. They do not have the means anymore at the disposal to sustain their collective economies and ward off the predators...the barbarians at the gates.
And even if the speculators found reason to leave the euro alone it wouldn't make any difference. A global recession is weighing down on these economies with crushing force and the deflationary pressures are increasing every day.
When you think about it, the collapse of the euro will be as normal and natural as the an earthquake or an avalanche in the physical world. When the pressure builds up along the tectonic plates of continents or when massive amounts of fresh new snow lay precariously along the side of a mountain something gives. That pressure has to be released; there is no force that can hold it back.
The fate of the euro has already been decided. It was decided, as Milton Friedman predicted, at the moment of its creation when the architects of the currency decided to forego creating a strong and unchallengeable fiscal authority as a foundation. Perhaps they thought that it wouldn't be necessary or that this day would never come. More likely, it was their zeal to create a rival to the dollar that caused them to make choices that would make the euro a currency destined to fail.
Some members of the European Parliament already concede this. They see the writing on the wall. Read the comment of Parliament member, David Campbell Bannerman:
A major currency collapse has already begun!
A major collapse of one of the world's most important currencies is already occurring. This is not the Argentine peso or the Turkish lira or the Russian ruble or even the British pound in 1992. Those currencies never had the stature that the euro currently enjoys. Indeed about 22% of all forex transactions in the world today are denominated in euro. That compares to about 12%
for the yen and only about 9% for the British pound. The U.S. dollar comprises about 50% of all foreign exchange transactions.
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