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Eddie Hobbs(Ireland) on Euro Collapse

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Economic Collapse a Mathematical Certainty! Top Five Places Not to Be

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The end of the euro is nigh

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According to David McWilliams

 
“Thinking of the endless crises within the Euro whether it is Greece, Italy, Belgium, Ireland or Spain, whether it is bank debt, household debt or sovereign debt, whether it is Germany’s taxpayers of France’s banking system – Stein’s law comes to mind. This can’t go on forever, so it will stop one way or another.
Increasingly, as events overtake and eclipse all previous “bailout”/”rescues”, it is becoming evident that the option of the two-speed euro is now on the cards. Ireland will be firmly in the “softer” euro camp.”

he goes on to say

“Apocalypse – in the guise of a country being ejected from the euro – is not a political option because the risk of everything falling apart are simply too high. In addition, a two-speed euro, with a hard euro for the core and a soft euro for the countries in trouble, relieves the pressure on the whole European financial system.

Arguably, for the average citizen such a deal is preferable to the choice we face now. That choice is either a complete, chaotic break up of the system with huge negative implications for savers; or ten years of austerity with huge negative implications for borrowers.

A two-speed euro – involving two distinct but related currencies – keeps the entire euro project together and gives the EU donkey the carrot of moving forward and the stick of promised economic reform.”

finally David mentions in relation to Ireland a debt writedown with a new euro

“So we need debt forgiveness or some debt deal. Accompanying the new euro would be mass debt write downs because if you reduce the value of the currency that the people get paid in but you don’t commensurately reduce the value of their outstanding debts, the people will simply not be able to pay and the country will default after the devaluation. This would not be clever. Everything must be done together.

So let’s think about the new euro. The new soft euro would trade at 70% of the old one (my figure plucked out of the air). This would mean that relative to Germans, our standard of living would be cut by one third overnight. We would achieve in one night what the present policy seeks to do in five years.
We would be extremely attractive place to investment in because our labour would be much cheaper. But don’t forget that this reduces our income by the same amount.

All our debts would be reduced by 30% because they would be in a new currency. Obviously, the banks that lent in hard euros and would now get paid in soft euros would carry a huge exchange rate loss. This would need to be dealt with. Possibly, the banks in each country could issue bonds backed by the EU and redeemable for new euros at the ECB. These bonds could be considered capital so that the banks didn’t go bust.”

 

Gold to take off

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According to Martin Armstrong on an interview with King World News

“Since World War II these countries have been borrowing and politicians have been promising things to their people.  If you would have asked them, ‘How are you going to pay for this?’  They would have responded, ‘It doesn’t matter because somebody will 25 years down the road.’  Well, now we’re at that point. Everything is falling apart and the politicians will not address it because it means having to change the system and that’s what they do not want to do.”

he continues…

“The way it’s going, eventually 100% of everything the government spends will go to interest and then how is it going to function?  This is a classic, historical moment.  I don’t want to get people scared because I don’t think we will get to that point, but this is like the fall of Rome.  That’s how serious things are.”

When asked about gold, Armstrong responded, “Basically what you are doing is you are building a sideways type of base.  Eventually gold is going to take off to the upside, but largely when people begin to see the Emperor has no clothes and we’re getting close to that.  I would only give it a few more months.”

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