Posted on 02/17/2009 1:18:34 PM PST by americanophile
Investors sold equities and piled into gold and U.S. Treasurys, a measure of the greenback against a trade-weighted basket of currencies, rose to 87.570 from 86.095 in late North American trade Friday. U.S. financial markets were closed for a holiday Monday. In recent weeks, the dollar and yen have benefited from safe-haven flows that are a reaction to the ongoing financial market crisis and economic slowdown, as investors shun riskier, higher-yielding investments in favor of lower-yielding funds. But news of the resignation of Japan's finance minister weighed on the yen Tuesday, giving the dollar an edge over its Japanese counterpart. The "U.S. dollar was the king of the castle, as (the) Japanese yen, which has tended to outperform during outbreaks of stress, felt the sting of an unraveling economic and political situation" in Japan, said David Watt, senior currency strategist at RBC Capital Markets, in a note to clients Tuesday. The euro dropped 1.4% to $1.2622 after sliding as low as $1.2561. The euro extended its plunge against a broadly stronger dollar after the Moody's report. Austria, Italy, France, Belgium and Germany are among euro-zone countries with banks heavily exposed to Eastern European difficulties, the report said. Outside the euro zone, Sweden is also heavily exposed. "It is unlikely that the euro will make it through the week without printing below the October low at $1.2330 as investors collectively work out that, no matter how bad the U.S. economy looks, Europe is behind - how far, we can't say," said Andrew Wilkinson, senior market analyst at Interactive Brokers Group in Greenwich, Conn.
(Excerpt) Read more at marketwatch.com ...
Of course it is, the europeans have been kidding themselves, but at the same time we have this team of clowns running our own economy into the ground...the fact that the dollar is the currency of last reserve, knowing what we know about U.S. debt levels, is a terrifying statement about the rest of the global economy and monetary system.
What happens if a country tries to pull out of the Euro? I mean is there even a precedent for it? If someone (say Luxemborg) does pull out do German soldiers go marching in to make them change it back?
I don’t know really. There was a buzz a few years back about Germany doing so itself. It won’t result in a war, but it might result in harsh economic sanctions that could cripple whichever country left.
Here’s an article on the subjecty: http://www.iht.com/articles/ap/2009/02/12/business/Europe-Euro-Woes-Glance.php
It will be French Soldiers
Given that, what happens when all the other countries that's shifting their funds into dollars realize that the dollar is quickly becoming just as worthless as all the rest? Do they all panic run to gold as the last reserve of value? Just wondering out loud.
Bingo - ping.
Yes, it does, but it also make a strong statement about the American system of currency and banking.
The rest of the world lacks a Federal Reserve, they lack our experience, they lack our flexibility.
The Euro, especially, is a very queer duck of a currency. They have a central bank, but it cannot act as a lender of last resort easily. They don’t have a single treasury, they have over a dozen of them. They don’t have one banking system, they have over a dozen of them. They don’t have one consistent code of banking, finance or market regulation - they have over a dozen.
As bad as our liabilities are, the liabilities in the Euro-zone are worse. Much worse.
There is no provision for a country pulling out of the Maastricht Treaty. That is what increasingly worries outsiders - the Euro-zone has not planned for a crisis such as this. There is no provision for a country leaving in an orderly manner, or for tossing out a non-compliant country in an orderly manner.
This is one of the problems with the Euro: there is no “plan B.”
A sad day when even the good news is terrifying, LOL.
If gold is going to make it to $5,000.00 an ounce as I've seen predicted, something like that will have to happen. Right?
agreed
indeed.
It's looking more plausible every day in my book.
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