Community | January 05, 2012 | 4 comments

Look Out Below - The Nightmarish Decline Of The Euro Has Begun

source: http://theeconomiccollapseblog.com/archives/look-out-below-the-nightmarish-decline-of-the-eu...

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Revelation1217
The euro is a dying currency. On Thursday, the EUR/USD fell below 1.28 for the first time since September 2010. In fact, as I write this the EUR/USD is sitting at 1.2791. Back in July, the EUR/USD was over 1.45. But this is just the beginning. The euro is going to go a lot lower. At this point, there are several major European nations that are on the verge of default, the European financial system is overflowing with debt and toxic assets, and most major European banks are leveraged about as badly as Lehman Brothers was when it collapsed. Most Americans simply do not grasp the gravity of what is happening. Just because the Dow is sitting above 12000 and a few U.S. economic numbers have improved slightly does not mean that everything is going to be okay. As I wrote about recently, the EU has a bigger economy than we do and they have a bigger banking system than we do. U.S. banks are massively exposed to European sovereign debt and European banking debt. When the financial system of Europe collapses and the euro falls apart it is going to rock the entire planet. So you better look out below - the euro is coming down and it is coming down hard. After the euro implodes, nothing is every going to be the same again.
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4 comments // Look Out Below - The Nightmarish Decline Of The Euro Has Begun

  • Vierotchka
    • 0
      Vierotchka  

    • The Euro hasn't declined half as much as has the US dollar which went from 1.20 Swiss Francs to 0.70 Swiss Francs in just a few months. The European financial system will not collapse, or if it does it will do so well after the collapse of the US financial system.

    • 5 months ago
  • Dagum
    • 0
      Dagum  
    • Vierotchka:

      Yeah...You do realize that the U.S. Federal Reserve (as well as the Bank of England ) are deliberately devaluing their respective currencies to make their exports cheaper?

    • 5 months ago
  • Vierotchka
    • 0
      Vierotchka  
    • Dagum:

      As are European central banks as well as the European central bank - not that the US is exporting anything except for death and destruction at a huge cost to the American taxpayers. Tell me something I don't know.

    • 5 months ago
  • Dagum
    • +1
      Dagum  
    • Vierotchka:

      "Tell me something I don't know."

      How about this: the European Central Bank (ECB) isn't devaluing the Euro because legally it can't. Furthermore, it's not a lender of last resort like the Federal Reserve System and the ECB can't monetize debt like the Federal Reserve, (i.e. endlessly print money to buy sovereigns debts.)

      ECB and European System of Central Banks (ESCB) powers come from the "Treaty on the Functioning of the European Union", Articles 123-125 and and Articles 127-130 respectively.

      Article 123

      1. "Overdraft facilities or any other type of credit facility with the European Central Bank or with
      the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Union institutions, bodies, offices or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national central banks of debt instruments."

      Article 125

      1. "The Union shall not be liable for or assume the commitments of central governments, regional,local or other public authorities, other bodies governed by public law, or public undertakings of any Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project. A Member State shall not be liable for or assume the commitments of central governments,regional, local or other public authorities, other bodies governed by public law, or public undertakings of another Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project."

      So you see unlike the Federal Reserve the ECB can't legally engage in devaluation programs like the Feds quantitative easing. Furthermore Greece, Portugal, Spain, and Italy will die on the vine as the ECB can't legally be the lender of last resort. Their sovereign bonds markets are being raided and their governments will default on their debt obligations.

      http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2008:115:0047:0199:en:PDF

    • 5 months ago
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