Ex-Bush Adviser: Germany Prints Old Currency in Case Euro Ditched ……….

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Tuesday, 04 Oct 2011 01:06 PM

By Michael Kling

Germany is printing deutsche marks in preparation to leave the euro common currency, says Philippa Malmgren, a former economics adviser to George W. Bush.”My view is that it is Germany that will have to pull out of the euro,” Malmgren said at an investors’ conference in London recently, according to the Citywire news website.

“The decision has already been made by the government that leaving the euro is a possibility. I think they have already got the printing machines going and are bringing out the old deutsche marks they have left over from when the euro was introduced.”

Malmgren, co-founder of Principalis Asset Management, acknowledged that leaving the euro would be a radical move that would cause Germany’s export prices to jump, but said German industries are strong enough to handle price increases, Citywire reported.

Other countries have let currency unions before, Malmgren said, citing the report, “Checking Out: Exits from Currency Unions.”

Countries leaving currency unions are usually larger, wealthier, and more democratic and typically have higher inflation than their partners, according to the report, published by the Monetary Authority of Singapore.

Malmgren predicts that more eurozone countries will default, causing deep changes in society, Citywire reported. “It is important to begin preparing the public to deal with this situation.”

Malmgren isn’t the only one saying the euro is in trouble.

“The euro is nearing its ugly end,” said Stefan Homburg, head of Germany’s Institute for Public Finance, according to The Telegraph. “A collapse of monetary union now appears unavoidable.”

The Bundestag, Germany’s legislature, approved more bailout funds for Greece but the growing rescue fund is becoming increasingly unpopular in Germany. Many economists and investment professionals say the fund is not large enough to save Greece and other eurozone countries from defaulting.

Meanwhile, Ireland’s central bank reportedly is printing Ireland’s old currency in case that country leaves the eurozone. At least that’s the rumor circulating in Dublin, notes Alan McQuaid, chief economist at Bloxham stockbrokers in that city.

McQuaid, writing a guest commentary for The Guardian, says he’s not sure if the rumor is true. But he does hope Ireland has contingency plans in case the euro disintegrates.
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Eurozone Break-Up

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http://telegraph.co.uk/finance/financetopics/financialcrisis/8215358/Pimco-says-untenable-policies-will-lead-to-eurozone-break-up.html
20 Dec 2010

Greece, Ireland and Portugal cannot get back on their feet without either their own currency

Pimco says ‘untenable’ policies will lead to eurozone break-up

Pimco, the world’s largest bond fund, has called on Greece, Ireland and Portugal to step outside the eurozone temporarily and restructure their debts unless the currency bloc agrees to a radical change of course.

By Ambrose Evans-Pritchard

Andrew Bosomworth, head of Pimco’s portfolio management in Europe, said current policies are untenable in the absence of fiscal union and will lead to a break-up of the euro.

“Greece, Ireland and Portugal cannot get back on their feet without either their own currency or large transfer payments,” he told German newspaper Die Welt.

He said these countries could rejoin EMU “after an appropriate debt restructuring”, adding that devaluation would let them export their way back to health.

Mr Bosomworth said EU leaders were too quick to congratulate themselves on saving the euro last week with a deal for a permanent bail-out fund from 2013.

“The euro crisis is not over by a long shot. Market tensions will continue into 2011. The mechanism comes far too late,” he said.

The bond fund argues that the EU strategy of forcing heavily indebted countries to undergo draconian fiscal austerity without offsetting stimulus is unworkable.

The austerity policies are stifling the growth needed to stabilise debt levels.

“Can countries inside a fixed exchange-rate system like the euro grow and tighten budget policy at the same time? I don’t think so. It didn’t work in Argentina,” Mr Bosomworth said.

Pimco also gave warning that the bond vigilantes have lost faith in the policy and are trying to liquidate their holdings of peripheral EMU faster than the European Central Bank (ECB) can buy the debt, causing a relentless rise in yields, and a vicious circle.

Despite this, the ECB said on Monday that it had cut purchases of government debt last week, settling €603m (£509m), down from €2.68bn a week earlier. The withering comments from the world’s top investor in EMU sovereign debt is a blow for Portugal and Spain. Both nations are hoping bond spreads will start to narrow before they face a funding crunch in the first quarter of next year.

Jacques Cailloux, chief Europe economist at RBS, agreed that last week’s European summit had failed to grasp the nettle.

“None of the policy responses put in place in Europe since the start of the crisis provides a credible backstop to prevent further contagion,” Mr Cailloux said.

“We remain most concerned about an escalation of the sovereign debt crisis hitting larger economies in the euro area. Markets continue to underestimate the potential disruption via financial transmission channels that such an event could trigger.”

Meanwhile, Spain must cut harder and deeper to rein in its finances, the OECD has warned, calling for an overhaul of its labour laws and employment practices. Madrid is already in the midst of harsh austerity measures, but the influential Paris-based think-tank said more must be done. The Spanish economy should be able to shrink its budget deficit from 11pc of GDP last year to the 6pc target next year, the OECD believes.

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‘The Euro Game Is Up! Who the hell do you think you are?’ – Nigel Farage MEP

i.m.h.o.:

Farage  is the Man of the Hour in Europe .

 

A Surprise Boost for Euro from China

http://www.voltairenet.orgby F. William Engdahl* The embattled Euro has gotten a surprise boost from an unexpected quarter―China. The country with the world’s largest foreign exchange currency reserves, China, has pledged to support Greek debt as well as the Euro in what is clearly a geopolitical decision. In doing so, China has signaled it seeks to prevent the US financial warfare attack on Europe and to play the EU off against the USA in a geopolitical chess game of a fascinating dimension.

 

6 October 2010 From Frankfurt (Germany) Tools Print Send Countries China Greece Themes Economic globalisation

China’s Premier Wen Jiabao is congratulated by his Greek counterpart George Papandreou, left, and President of Greek Parliament Philippos Petsalnikos, right, after receiving the gold medal of the Parliament in Athens on Sunday, 3 October 2010. Photo: AFP Chinese Prime Minister, Wen Jiabao, on an unusual visit to tiny Greece, a country which normally would never warrant such a high-level visit from the world’s fastest growing economic giant, has pledged support for Greece and for the Euro. According to the official Chinese Xinhua News Agency (and China Daily), “China supports Greece in firmly carrying out structural reforms and cutting its fiscal deficits to improve competitiveness. China welcomes the EU and the IMF’s rescue package for Greece and stands ready to help Greece out of recession.” What it means concretely was made clear by Wen Jiabao at a press conference early October in Athens when he stated, “‘China is holding Greek bonds and will keep buying bonds that Greece issues. We will undertake to support eurozone countries and Greece to overcome the crisis.” The last statement is far the most significant. It indicates that China has made a strategic decision to counter any future attempt by US-based hedge funds and banks to attack the weak countries of the Eurozone, including Ireland, Spain, Portugal or Greece. Early this year, as we noted at the time, Wall Street banks such as Goldman Sachs, working in tandem with the US-based credit rating agencies, Standard & Poors and Moodys and Fitch, exploded the Greece financial crisis at the precise time China and other major investors were beginning to have serious doubts about the fiscal stability of the United States and of the dollar. Let me be clear. The Euro as it stands, the supranational European Central Bank and the EU approach to international financial stability is not merely a flawed construct. It is inherently programmed to crises. It was born as the product of flawed rotten political compromises in te 1990’s through the Treaty of Maastricht as an attempt by France and Italy and Britain to control an emerging German economic colossus after German unification. However, the concerted attack by a group of New York hedge funds such as George Soros’ and Paulson’s earlier this year and the precisely timed credit downgrade of Greece to “junk” status were part of a concerted US strategy of financial warfare against that Eurozone, the only potential alternative to the dollar as world reserve currency. Should the US dollar lose its status as the world leading reserve currency—today it still counts for some 65% of central bank currency reserves—the United States would be ultimately doomed as world sole Superpower. Now the surprise announcement by China of plans to support Greece and the euro give an unexpected boost to the embattled country and to the euro and expose the dollar even more to possible selloff. Greece desperately needs foreign investment to help it meet terms of a €110 billion bailout from eurozone members and the international monetary Fund that saved it this spring from state debt default.” I am convinced that with my visit to Greece our bilateral relations and cooperation in all spheres will be further developed,” Wen said on his way to Brussels for an EU-China Summit. Like most things that China does these days, it is part of a shrewd political calculation. Greece has agreed to support EU recognition of full market economy status for China within the EU, while China agrees to back Greece’s call for UN mediation over Cyprus. The two countries will will cooperate on development as well of Piraeus Pier, upgrading it to a distributing and transfer center for Asian exports to Europe, the Mediterranean, and the Black Sea. As if specially timed, US hedge fund speculator, George Soros, who is currently appealing a French court conviction for insider trading, [1] has come out publicly blaming the German government of Angela Merkel for austerity measures he says will lead the Euro Zone into a “deflation spiral,” demanding instead more of a US-style fiscal stimulus. US financial warfare against euroland? Notably, Soros has been one of the strongest voices against the Euro at a time when the world, at the end of 2009 was losing confidence in not the euro but the US dollar. On February 26, the Wall Street Journal reported details of a secret New York meeting involving billionaire hedge fund speculator George Soros of the $27 billion Soros Fund Management, along with SAC Capital Advisors LP, Greenlight Capital and undisclosed others. Accoording to the Journal report, they agreed on a concerted attack on the Euro, using the Greek financial crisis as the lever to make the attack credible. Earlier this year, speaking at the Davos World Economic Forum, the same Soros boosted the potential of the secretly planned collusion against the Euro, when he told press there was “no attractive alternative” to the dollar, a signal for a de facto attack on the Euro which was regarded six months ago as an alternative to the dollar as world reserve currency. He added that the Euro’s “problems” made it an unviable substitute reserve currency. Soros’ anti-Euro remarks were followed by prominent New York economist Nouriel Roubini, who said that Europe’s fiscal woes were creating “a rising risk” that its single-currency alliance will splinter. “Down the line, not this year or two years from now, we could have a breakup of the monetary union,” Both Roubini and Soros are close to the Obama Administration. Soros was one of the first financial backers of Obama and Roubini is reported very close to Treasury Secretary Tim Geithner. Following his hedge fund “chat” about the future of the euro, on February 22, Soros wrote an OpEd article in London’s Financial Times, the world’s most prominent financial daily in which he stated, “The survival of Greece would still leave the future of the euro in question.” The attack on Greece and the euro early this year also involved the most powerful players on Wall Street, the Gods of Money as I term them in my new book. The politically powerful Wall Street bank, Goldman Sachs, has been in the middle of the Greek financial manipulations since Greece entered the Euro in 2001. They were also involved in the January 2010 Greek crisis attack. On January 29, Goldman Sachs went with a number of top Wall Street firms to Greece where they met the Greek deputy finance minister and the National Bank of Greece. The Soros hedge fund attacks began several days after that. According to the Wall Street Journal report, Goldman Sachs, Bank of America and London’s Barclays Bank joined Soros and the hedge funds, making bets against the Euro at the same time Goldman Sachs is acting as an advisor to the Papandreou government, which would appear to be a rather clear conflict of interest. The US-based credit rating agencies, Moodys and Standard & Poors also played a critical role in weakening the Euro earlier this year. At the time the EU governments announced agreement in principle on a Greek bailout package in order to stabilize the speculative attacks on the euro, on Appril 27, Standard & Poors announced an unprecedented rating downgrade of Greek government debt by three-levels to “junk grade.” That move insured that pension funds and other investors would be forced to panic sell Greek bonds, a move that greatly exacerbated the pressures on the Euro. Asia Crisis and British Pound EMU crisis The pattern of the hedge fund attacks on the Euro follows the financial warfare strategy carried out by select US hedge funds previously. In 1992, on what many market professionals believe must have been insider information, Soros claimed to have made $1 billion speculating against the British Pound Sterling and forcing the British government to abandon plans to bring Britain into the emerging Eurozone. Had Britain and the powerful financial resources of the City of London come into the new Eurozone, many in Wall Street and Washington privately feared that could spell the death knell for the dollar as world reserve currency. The fact that the dollar is world reserve currency has been one of two strategic props for American power in the world, the other being the Pentagon. Were the dollar to lose that, the future of the American Century, the sole superpower would be mortally in doubt. Similarly, in May 1997, it was a concerted hedge fund attack again led by George Soros’s Quantum Fund, joined by Moore Capital Management and Julian Robertson’s Tiger Management Group and his Jaguar and Tiger funds, against the currencies of the Asian “Tiger” economies that turned Korea, Indonesia, Philippines, Malaysia. The wrecking of the Tiger economies in 1997-1998 turned those economies from self-sustaining dynamic economic growth, largely financially independent of US or IMF control, into de facto buyers of US Government debt as Asia tried to defend against future attacks. Like the Sterling crisis of 1992 the 1997-1998 Asia Crisis also served to give a few more years of life support to the fragile dollar. Now, as the US depression deepens and the dimension of the banking problems worsens by the Day; the dollar’s future is threatened as never before. To counter this, clearly the most powerful circles of Wall Street and the Treasury and Federal Reserve are magnifying the small Greek crisis into an exaggerated picture of “collapse of the EU” in hopes of ruining the Euro as a potential alternative to the dollar for foreign central banks. This is not to say that the Euro and the Maastricht Treaty are a model for a healthy alternative to the problems of the dollar region. Far from it. It is merely to identify the geopolitical power battle going on behind the scenes to keep the dollar Titanic from sinking. China has evidently decided to weigh in on that battle on the side of the euro. Share this F. William Engdahl Author of Gods of Money: Wall Street and the Death of the American Century and Full Spectrum Dominance: Totalitarian Democracy in the New World Order. His other books include Seeds of Destruction: The Hidden Agenda of Genetic Manipulation. and A Century of War: Anglo-American Oil Politics and the New World Order.