Thursday, November 24, 2011

Is This the End for the Euro?

Economist magazine poses the question on their cover:

The magazine writes:

The risk that the currency disintegrates within weeks is alarmingly high.

FIRST Greece; then Ireland and Portugal; then Italy and Spain. Month by month, the crisis in the euro area has crept from the vulnerable periphery of the currency zone towards its core, helped by denial, misdiagnosis and procrastination by the euro-zone’s policymakers. Recently Belgian and French government bonds have been in the financial markets’ bad books. Investors are even sniffy about German bonds: an auction of ten-year Bunds on November 23rd shifted only €3.6 billion-worth ($4.8 billion) of the €6 billion-worth on offer.

Worse, there are signs that the euro zone’s economy is heading for recession, if it is not there already. Industrial orders in the euro zone fell by 6.4% in September, the steepest decline since the dark days of December 2008. A closely watched index of euro-zone sentiment, based on surveys of purchasing managers in manufacturing and services, is also signalling contraction, with a reading of 47.2: anything below 50 suggests activity is shrinking. The European Commission’s index of consumer confidence fell in November for the fifth month in a row.

Now an even bigger calamity is looking likelier. The intensifying financial pressure raises the chances of a disorderly default by a government, a run of retail deposits on banks short of cash, or a revolt against austerity that would mark the start of the break-up of the euro zone.
As I have said before, only European Central Bank money printing, which will be highly price inflationary, can hold the eurozone together, at this point. This remains the most likely scenario, though a total break up can not be ruled out.


  1. The scare tactics are going to be in our face so that when the money printing starts the imbecilic tax slaves are going to cheer them on.

  2. Love the blog rw.

    Ecb will most likely print; as u've said all along, it's really the only option left. Question remains when not if an announcement will be made. I'd be shocked if a choice is made that would undermine what the EU/ECB have worked towards...

  3. What we are really asking is how long the German taxpayer/voter will keep on paying reparations to the rest of Europe for a united Germany? my bet is yes,but only for a short while.

  4. In early 2009 I was kicked off an online debate (Norway) for saying that OECD countries were and would be printing money for the next 10 years, with subsequent rise in share prices, basic goods and especially gold.

    The reason from moderator: Money printing would not happen and I was potentially leading other people into wrong investments.

    Last night on state television evening news they used the phrase 'money printing' four times in a 100 second clip on the Euro Zone.