Comments on: Markets vote for the euro http://blogs.reuters.com/breakingviews/2012/05/24/markets-vote-for-the-euro/ Mon, 26 Sep 2016 03:26:00 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Chelgates http://blogs.reuters.com/breakingviews/2012/05/24/markets-vote-for-the-euro/comment-page-1/#comment-9319 Tue, 05 Jun 2012 22:55:41 +0000 http://blogs.reuters.com/breakingviews/?p=11707#comment-9319 The Euro was ill conceived and has been poorly managed from the outset. It’s sole real objective was to topple the dollar. What it has done is to accelerate the economic demise of Europe and make it a laughing stock. It has shown the world the true tribal nature of the continent and has strengthened the £ and moved the UK further and further away from a block with which we had little real empathy anyway. Soon after the creation of the Euro (I hestitate to call it a currency) I was at lunch with the minister of finance of one of Africa’s strongest economies. He produced several bank notes including £s, $s etc and a Euro. He read the inscriptions on the bank notes, commenting that he was happy that the Bank of England and thus the UK government was guaranteeing the note and so on with the $ etc until he came to the Euro. There was no declaration as to it’s value – he said until some government or serious bank takes responsibility for this piece of paper it has as much credibility as Monopoly money, it is worth only what confidence and thus value that anyone is willing to place on it. When it comes under pressure there is nothing to prevent it from becoming rapidly worthless. Until the Europeans establish some sort of meaningful financial guarantee to support this item, it will not form any significant part of my reserves. It was so obvious to people, even then, that the Euro was not a serious financial instrument. Osborne and others have warned the Europeans, especially the Germans that they either step up and support it or it will fail and the real losers will not be outside the Eurozone, despite the political rhetoric no-one needs it. It will be the Germans, who have enjoyed the benefit of an undervalued currency from the outset. The Eurozone members and the UK have been supporting the German economy for far too long. The answer is simple – kick the Germans out of the Euro or wind it up. If they don’t, the rest of Europe will continue it’s rapid decline into third world status, whilst the Germans refuse to face up to the realities of living in the present international, financial environment. Progressively, the Germans will lose more and more foreign investment until, eventually, they have bled the Eurozone members completely dry and then we shall see an insignificant Europe descend into the warring and bickering it knows best but by then the world (including the UK) won’t care because the Eurozone will be of little more importance than a second rate African State (my apologies to the Africans, the analagy is purely for presents day comparisons). As for Germany, she’ll have to clean off those wheel barrows again and start begging, only this time there will be little sympathy from the international community ! It is not really a question of if this will happen more a matter of when. I guess the answer to that is when the members of the international community are satisfied that they have reduced their individual exposure, sufficiently, to write off their Euro asset positions and that could be very soon at the rate that the Euro is falling.

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