Okay, Germany calls for a reformulation of the terms of the European Union. A constitutional convention if you will. During the convention, new standards are formulated, which, son of a gun, exclude spendthrift nations like Italy and Greece. The excluded nations can become members as soon as they get their budget problems in check (yeah right). This happens so quickly and unexpectedly, that almost everyone is taken by suprise. A new currency the Northern Euro or Neuro, comes into being. The old Euro collapses, and the resulting hyperinflation devestates the economies of Greece, Spain and Italy. Germany reiterates that the Mediterranean countries are more than welcome into the Northern European Union, as soon as they achieve fiscal reponsibilty (yeah right). China converts as many dollars as it can into Neuros, causing the dollar to collapse. Interest rates are driven up to stop the sell off. The United States economy goes into free-fall. Stop me if you have heard enough...
See my tagline.
You can stop. If southern Europe goes into the tank, Germany is right behind them. Those countries represent a large market for Germany’s export based economy and German banks have billions in loans there. That is why Merkel is desparate to find a solution. I don’t think there is a solution other than to let the countries go bankrupt, revert to soverign currencies and let the market work things out. Anyway, the dollar is going to the winner in this even though we are bystanders.