A Euro and Dollar collapse.

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huanga
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A Euro and Dollar collapse.

Post by huanga »

I have been reading an article of interest and I must admit, I don't fully understand it. I know there is at least one economist that is a member of this board, and I would assume there would be an accountant here as well. Perhaps either could explain:

What would happen to our national currencies if the Euro and the US dollar collapsed, as at the moment seems likely? What effect would this have on the Australian New Zealand and Canadian Dollar, and on the UK Sterling.

Huanga.

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Re: A Euro and Dollar collapse.

Post by dukeprince »

The short answer is , we will come to realize how the rest of the world lives , priority one is where is todays food comming from.

When buyers of any thing , houses, cars , toys, stamps, disapear so does the money. this applies to every country in the world not just some , like we all thought for too long, oh no, it wont happen here , well it has.

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Re: A Euro and Dollar collapse.

Post by mcgooley »

I'm no economist; but I think that the way things are going, if our (AU & NZ) dollar continues to firm against the greenback and the euro, we're going to be in for a bumpy ride. It's been over 5 years since I've taken any notice of anything except the AU <-> UK exchange rate, and the only thing that frightens me is the thought of Oz reaching parity with the UK. :?
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Re: A Euro and Dollar collapse.

Post by bazza4338 »

huanga wrote:I have been reading an article of interest ........

Huanga.
What was the article?

Can you copy it here or post a link?

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Re: A Euro and Dollar collapse.

Post by mcgooley »

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Re: A Euro and Dollar collapse.

Post by Allanswood »

I to found an article of interest while searching for "euro collapse 2011".

But the most popluar article was by some ex (or current) religious pastor with an axe to grind about the oil running out and the Russians having found a secrect self replenishing source of oil. He said its all going to crash.

But my brain went into loopy mode so I didn't want to post it here! :roll:

I also found articles from as far back as 2006 saying the euro was going to fail.

As far as I understand it - the euro won't collapse, they will cut Greece adrift and perhaps Italy and Spain as well. One problem is that Greece can never pay back the over 300 billion it now owes and looks to be another Brazil basket case. But also Brazil is now heading for a boom time. Boom-bust-boom, it never ends.


As for food, Australia and New Zealand are perhaps the last great, untarnished by desease, food producing countries in the world. Wars start over food and water.
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Re: A Euro and Dollar collapse.

Post by bazza4338 »

I have been working for exporting and importing companies for nearly 46 years.

My current employer is a manufacturer of machinery based on the Gold Coast.

Half of our sales are in US$. Primarily to USA, Canada and Sweden.

The balance is in A$ - and the buyers are hard presed to find more local money to buy our product.

Today we are getting less A$ for our product for every US$ sale.

So, we look to manufacture overseas.

Equals loss of local jobs.

Gold Coast tourism is suffering as it is too expensive to visit here.

Importers in Australia, however, are having a field day. Their US$-denominated imports are cheaper than ever.

But nobody is buying.

Retail is suffering with downturns in sales and profitability.

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Re: A Euro and Dollar collapse.

Post by mcgooley »

Sadly - and to any economist; please step up to the plate and tell me I'm wrong - even if the EU ditched all the basket-cases doesn't mean (to me) that the euro will be any more stable than the $US.

The way that I understand the state of play is that IMF policy is as much to blame as any individual country. To my (limited) knowledge, most countries around the globe have gone through boom-bust cycles in the past, but in every instance these have been localized occurrences. The problems of one country's finances are exacerbated when you combine them with multiple economies which are all facing the same problems - drought, "military conflict" (there's no such thing as "WAR" anymore :roll: ), or whatever - in the same geographic region.

Our friends Freddie and Fanny only highlighted the inter-dependence that economies around the globe have developed with one another. And it is this inter-dependence which is the most worrying aspect.

To my mind, all it would take is for China to get the collywobbles and call in her investments in the US, and that would make the events of the GFC look like a teddy-bear's picnic.

bazza, it is always going to be our export businesses which will be hit worst. For several years I've banged my head against the brickwall of ignorance which doesn't seem to understand that the higher our dollar, the less clout we have in the export world.

That we have a high exchange rate now is not our fault.....we were heading that way when everybody's favourite martian (Paul Keating) attempted a level paying field. And it worked for a few years.....

As a child, working in the dairy industry, I well remember butter and cheese being dumped in harbours around Australia because no country could afford our produce.

Same old, same old. :?
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Re: A Euro and Dollar collapse.

Post by huanga »

Dukeprince. I live on the West Coast, South Island, and as far as I know. It has not actually happened, but then news usually gets here late!

McGooley. Why does parity frighten you? I would think for the Australian consumer that parity is a good thing. Not for exporters of course, but apart from minerals and sheep, what else do you export?

Bazza4338. The article was in the UK daily Telegraph, and was about a possible return to the gold standard.

allanwood. I'm inclined to agree with you on Greece, and I'm familiar with the potential of Brazilian resources.

The question is still open and while the answers to date have been interesting. I don't think the question has been answered?

Huanga.

Mcgooley. I had not seen your last post before putting a response in. I'm reading it now.

That makes interesting reading, and I dare say if I had a mortgage and a young family and worked in an export related business I might be worried. As it is, I'm like many on this board. Retired and the higher the dollar goes, the better it is for 'me'. The only thing that would bother me, hence the question, is the collapse of the currencies I use on travel.

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Re: A Euro and Dollar collapse.

Post by mcgooley »

AU parity against the UK, to me, is the worst possible scenario - as long as the UK holds out against the euro. Why? Because the pound is still a 'stand-alone' currency.

The fact that, to my knowledge, there is not one currency on Earth with any solid backing (i.e. gold in the bank) means that - as has happened in the past - if push comes to shove, anyone with gold bullion will have it stripped from them without so much as a bye-your-leave when the crunch cometh.

Your point about Aussie exports is valid, but I might say the same about NZ. Both countries have relied on our primary products for many years now - we've totalled our scientific and research bases by flogging them off for peanuts - either that, or forced them off-shore through indifference - and we're now reaping the "benefits".
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Re: A Euro and Dollar collapse.

Post by huanga »

mcgooley. What prompted my question in the first place was an article I was reading in the UK Daily Telegraph. It was about a return to a gold standard as a possible option to back a currency. I went back and reread it, and I'm still confused!!

However.........It seems to me that Sterling like the Euro and the Dollar, appears to becoming to their end as an investment currency. So I wonder by what means any of the above could find the gold to back their currency. I'm not an economist, nor am I an accountant, and I'm still confused.

It depends of course on your interpretation of the word bullion, but do you really believe that an Australian and a New Zealander would allow a Goverment to strip them of anything. Apart from taxes.

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Re: A Euro and Dollar collapse.

Post by wolseley16/60 »

The only good thing to come out of a strong NZ dollar is that items bought in from overseas are costing us less.....

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Re: A Euro and Dollar collapse.

Post by mcgooley »

During our WW (1 & 2), currency equated 'hard' items. Ask anyone who lived through those times about the calls on saucepans, kettles, and other metals.

Anything of the precious metal variety - including teeth :shock: - could be commandeered without redress.

The 'gold standard' as the basis for currency was done away with in the 1970s - ergo, governments had a license to print money without any backing (eg, Fort Knox is bereft of the shiny stuff) - and since then anyone placing their faith in any economy has to have rocks in their heads.

It is still a fact of life that bullion in any country can be commandeered by the ruling junta.

Returning to a gold standard, on a global scale, would immediately place most economies in the red. That includes most of the major players on the financial scene. Do you really want to see the Statue of Liberty roll over and lift her skirt?-----Not a pretty sight :shock:
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Re: A Euro and Dollar collapse.

Post by mcgooley »

Further to my last post.

Imagine you are the bread-winner in the household. Your take-home pay is supposed to cover all debts, and still provide the residents with some pocket-money.

Not possible? Get a credit-card. Try to to keep the residents demands within your budget.

See how long that lasts.
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Re: A Euro and Dollar collapse.

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mcgooley. I could be wrong, but to the best of my knowledge. My mothers saucepans are buried somewhere on a Goverment scrape heap. The excercise was a public confidence booster, rather than any desperate need for metals.

We don't now and never have lived under a junta, and I doubt we ever will. I think I should remind you we live in the South Pacific and not the South Atlantic. As to the statue lifting her skirts. Thank you, in the unlikely event of it ever happening.....I'll pass.

Huanga.

I don't have to imagine I'm the bread-winner in a family. Been there, done that! and other peoples problems are not mine. However I think this is straying from the question. Interesting...but not revelent.

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Re: A Euro and Dollar collapse.

Post by sukhothai »

The real problem to me seems to be that China wants to peg it's currency to the Gold or Silver standard sometime over the next couple of years, as soon as that happens investors will pour out of the fiat currencies overnight.
Under the IMF's first amendment to Article IV of Agreement (1978) participating countries are not allowed to peg their currency to gold but..... China holds nearly 1,100 tons of gold and around $2.9 trillon in foreign reserves so buying enough gold and silver to legitimise their currency and make it a more viable global option to the ever weakening dollar.

For if China refuse to sell/trade for dollars and demand gold or silver instead, things will not get any better.

China has also been telling its citizens to buy gold, promoting different gold funds, giving investors access to overseas products and launching a global gold contract based in yuan by Chinese Gold & Silver Exchange. The ICBC and World Gold Council recently teamed up for the creation of the Only Gold Gift Bar in China, where a customer can buy gold as a gift, complete with engraving, and can sell it back to the ICBC for cash.

The Chinese are looking ahead, (and the Arabs/Africans are mooting the Dinar)...we have to get away from these fiat tokens before it is too late. Oh.. and follow Brazils example and kick out the IMF usually helps recovery too.

Just my two-penneth :)
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Re: A Euro and Dollar collapse.

Post by sukhothai »

Just been trawling and found this in this weeks Telegraph...

http://www.telegraph.co.uk/finance/comment/ambroseevans_prit ... avels.html

Seems the wheels are in motion..

Mr Bernanke himself was grilled by Congress this week on the role of gold. Why do people by gold? "As protection against of what we call tail risks: really, really bad outcomes," he replied.
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Re: A Euro and Dollar collapse.

Post by huanga »

I'm not sure what you mean by fiat currency, but would guess it refers to the Euro? The article I read was about a number of options open to the US and to the EU, and seemed to be suggesting a return to the gold standard was the only way to stabilize the US$ and the Euro.

My reasons for interest is 'self preseveration.' I do not want to wake up one morning, switch on the radio, and have some plastic voice tell me my saving and investments have suddenly become monopoly money. Perhaps I should be paying more attention to Asia.

China certainly seems to the weight behind it if it intends to enter the financial arena, and I wonder if Europe and the US see that as a blessing or a blunder? I'm not sure I could become used to paying my visa in Yuan.

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Re: A Euro and Dollar collapse.

Post by dukeprince »

I must admit I had to look up Fiat Money, scared the hell out of me .

Fiat money is what we are all using , its paper printed purely on trust , they trust we will be happy to use it forever , we trust , oh! it must be good it has our counties name on it.

IF you buy a T shirt with Gods name on it so you will feel protected , it actually has the same effect as holding a Note with your Countries name on it , it is just Faith alone.

Now do you see why those who can , are buying Gold it has no name on it , but it has been what every body reverts to for the last 3000 years when all the paper money fails.

Will todays Paper money fail , well all the Gold Buyers are thinking it may, they are putting their money where their mouth is.

Opposition Political non thinkers in USA are saying no we dont want the wealthy to pay more Tax , get real who else in the US can afford to pay more tax , they are the only Cow in the paddock with Milk still left inside .

You can march all the others thru the dairy for what , a small bucket of Milk , grow up and get real and protect your way of life , Maybe the Chinese are the next natural world leaders , they use their brains better, thats how I see it anyhow , you can call me anything you like including stupid , but first read it twice.

Just ask yourself would the Chinese sell you a House and if you are not happy for any reason just post the keys back to me , all is ended , you owe me nothing .

I dont actually know as I am an Aussie , I only know what I read , but unlikely surely, I stopped breathing for a while when I first found this out about the US Housing crisis , just does not make sense , and would not have even when I was 10 years old.

Here in Australia we seem to follow US trends but say 5 or 6 years behind , our Government is starting to make weird moves all over the place in multiple directions , Various pressure groups want this, want that.

I really hope we can take off one of our blinkers and get one of our eyes on Asia to rediscover adult thinking.

Whats adult thinking , Adult thinking is when you do what is needed, not what you feel might be warm and fuzzy for a while , warm and fuzzy does not cut it in this world, others are doing it right and doing whats needed, if you have read this all , you will know who it is.
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Re: A Euro and Dollar collapse.

Post by sukhothai »

You are so right! It is frightening...Fiat currency refers to ANY currency that is pegged to nothing...it's worthless!

Every extra note that is printed that isn't backed by reserves, reduces the value of the currency in circulation.

Though the Central Banks and the IMF have outlawed participating countries from pegging to gold, it is the only way to get out of this Fiat system which is failing.

Boom/bust since the 30's..now they have bled dry the middle-classes of America.

The dollar was pegged to gold at around 20.65 an ounce from the 1830's to the 1930's, those kleptocrats have made the value of the dollar PLUMMET in real terms. Previous American presidents are repeatedly quoted in their stern determination to keep the Greenback free of Central Bank Control..it is clear to most of Americans now that when President Woodrow Wilson signed the Central Banking Act he lamented...

"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men."

This sytem for profit at the hands of the people is a fraud, the U.S government is run by Wall Street..They bullied the congress into passing a bill that took the peoples money and gave it to the fraudulant banks with NO recourse for investigation by ANY law department...untracable and truly shocking.
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Re: A Euro and Dollar collapse.

Post by huanga »

No. Stupid is something I would call no one. I think anyone today with assets cannot afford to ignore what seems to be a growing financial crisis, and the more information that I can source. The better able I would be placed to weather it. As I said above, it self preseveration.

I actually live in region that has quite a few gold mines. In fact I have found the odd flake here and there on my own land, and I spend most of the summer months fishing the rivers that surround me. To date I have more or less ignored the quartz and traces in the rivers. I think I might just pay a little more attention to what I see in the future.

I was not aware that the IMF had so much power. In fact until a month or so, If asked what the IMF was. I would have made a guess at something along the lines of a fertility drug! You live and learn!!

Huanga

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Re: A Euro and Dollar collapse.

Post by Jack »

'AU parity against the UK, to me, is the worst possible scenario - as long as the UK holds out against the euro. Why? Because the pound is still a 'stand-alone' currency.'

Only in the sense that the Uk does not use the Euro , but 75% of all UK exports go to Euro countries, and the banks have incredible exposure to Euro banks. So, the Uk is heavily involved with whether or not the Euro survives. If it goes down the impact on the UK will be massive.

And thinking of the Euro, don't forget the success of countries like Germany. It's not all gloom...

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Re: A Euro and Dollar collapse.

Post by dukeprince »

Jack wrote:'AU parity against the UK, to me, is the worst possible scenario - as long as the UK holds out against the euro. Why? Because the pound is still a 'stand-alone' currency.'

Only in the sense that the Uk does not use the Euro , but 75% of all UK exports go to Euro countries, and the banks have incredible exposure to Euro banks. So, the Uk is heavily involved with whether or not the Euro survives. If it goes down the impact on the UK will be massive.

And thinking of the Euro, don't forget the success of countries like Germany. It's not all gloom...

Yes , but is Germany like the successful brother with 10 other Brothers to feed because they are useless , by the time he has fed them all , will he still be what he was?

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Re: A Euro and Dollar collapse.

Post by sukhothai »

It doesn't really matter which country is doing well, it is a global system. Unless you let the insolvent banks naturally fail (Iceland), and make the (rich) take the hit on their risky hedges(not so risky if there is NO risk, due to ALL losses being reimbursed by the taxpayer, you and I).

The problem is the system, fractional reserve banking only works if the reserve is in say a commodity that gains value over time. If the reserve is in the very same currency that is being devalued by quantitive easing then common sense tells you their will be a huge shortfall.

WE the people have to re-write the system, even economists can't really make head nor tail of the 'Modern Money mechanics' guide (that the FED put together for Congress), without remarking that the whole financial market is basically a huge pyramid system.

You go to a bank..
Depost $100..
They can lend(create electronic funds out of thin air) another $900 dollars out, on the strength of your $100 deposit.

To pay back the borrowed $900, Joe Shmuck has to earn say $1,230 after tax.

And all this Fiat, worthless paper has to be injected into the system to make it work. Profit and Debt, the system needs to be able to devaluate and deflate as and when it needs, but.... Modern Money Mechanics, the Federal Reserve and this 'only profit' system doesn't allow for these common sense things to happen.

The choice that Wall street is giving to the government this week... Default OR raise the debt ceiling..here we go again.....
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Re: A Euro and Dollar collapse.

Post by dukeprince »

I once owned a Fiat car it was rusting so bad I had to sweep my garage twice a week , little did I know they were named after paper money.

I used to think people that bought Gold were old fashioned , now I think they are actually buying the only real money left to buy.

This thread has enlightened me , no I am not buying Gold as I only have a little bit of fiat money , But I now know what to buy if I had some reasonable quantity of fiat money.

The first step is always to obtain the knowledge , further sensible steps are then possible.

It will of course be possible to lose money on gold , but you will only lose it if the world comes good , at the end of the day you may need a fistfull of both Fiat Paper and Gold , bit like an each way bet.

Throughout history some fertile acres of land has enabled man to live , on grain , vegetables , chicken , pigs and a rudimentary dwelling , there you have it , forget Gold and paper , but us white Men will now need to work for real , not pretend work like half of us are doing now.
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Re: A Euro and Dollar collapse.

Post by sukhothai »

The people should forget gold,(unless you can afford it) buy silver!

Ive only been buying a coin a month for a couple of years.

5,000 under your bed...in ten years= 3,500ish in real spending terms.

5,000 in a bank....0.5% interest=laughable.

5,000 in silver= real progression.

silver is at $39 now, most analysts think that $100 silver in 10 years is clearly underestimated.

And forget silver stocks, it is as laughable as fiat currency, it is a promise to release stock IF and only if the market is favorable. The run on Silver 6 weeks ago was know in the market as a raid...it is a ploy to drive the market down. The amount of Silver futures and stock moved that night was staggering, if only 5% of that nights stock was asked to be released it would've taken ALL of the silver reserves. The market is vunerable to silver because Lehman and Morgan took on Bear Stearn losses when they collapsed on the very day when silver reached $21 an ounce.

The shorts in silver could burden Lehman and J.P Morgan to the point of collapse if they go much beyond $50 an ounce due to their exposure to the futures market.

Those that want to enlighten themselves about the market.. Checkout Max Keiser and go through some of his interviews with major players in the market. here is his interview with Sprott ~~(THE major player in silver) http://www.youtube.com/watch?v=PM-LrMimRys
and here is his you tube channel, or catch him on RT. Funny, crazy but very informative.
http://www.youtube.com/user/maxkeisertv?blend=1&ob=4
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Re: A Euro and Dollar collapse.

Post by dukeprince »

Yes, Silver does seem to make as equal sense as gold. Will other things also work ?
Last edited by dukeprince on 18 Jul 2011 01:51, edited 1 time in total.

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Re: A Euro and Dollar collapse.

Post by Jack »

'Yes , but is Germany like the successful brother with 10 other Brothers to feed because they are useless , by the time he has fed them all , will he still be what he was?'

Yes - to continue the analogy - because he will own all the possessions the brothers currently own.

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Re: A Euro and Dollar collapse.

Post by sukhothai »

Other things? YES!!!! Anything that you can hold in your hand. Since that Ice maiden took over Lehmans investment dept, she has single handedly turned the paper market to shreds.

Advised ALL stock to be sold and to buy Sugar, Wheat, Coal, Coffee etc as well as infrastructure like Water boards, Penal systems, Toll roads etc as their stock and entire futures would be, at the event of another downturn...worthless.

Boliva had riots a while ago when these IMF backed companies tried to raise the water tax.
There are riots all over the middle east due to Wheat speculation.
Don't be fooled by apparent trader action at the Stock Markets, these are mostly just companies moving stock from one to another. The public are NOT buying the stock, so who is? Themselves.

So any commodity is advisable to buy,anything is better than that fiat toilet paper in our pockets. Check out this link for todays prices.....
http://www.kitco.com/gold.londonfix.html
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Re: A Euro and Dollar collapse.

Post by Jack »

I'm old enough to remember previous gold booms (and busts)

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Re: A Euro and Dollar collapse.

Post by 60022Mallard »

The basic problem with the Euro that it only had political traction and never economic traction. How can you put a tight money, export led economy like Germany into the same currency as basket case economies like Greece which was invited to join the Euro despite plainly fiddled books so as not to make them feel left out. The previous answer to the disparity between German and Greek economies did not matter greatly because over time the value of the drachma steadily fell against the Deutschmark meaning imports from Germany were more expensive and Greek holidays for German cheaper and it all balanced out.

If the U.K. had joined the Euro we would be a basket case like the Irish and Greeks with the only way to gain competitiveness against the German exports being to actually reduce wages in Euros until production costs get down to German levels. The U.K. has been able to devalue its currency against the Euro and Dollar by about 20% which means our exports are suddenly much more competitive in the world yet we still pay ourselves the same in £s. It does mean, of course that we now pay 90p to buy a Euro rather than 70p of old and Euro country destination holidays and BMWs are suddenly much more expensive!

The Messiah in the U.S. is still following a borrow to spend policy at the moment increasing the nation's debt hand over fist. That means every year the interest bill to pay grows before you worry about finding the money to spend on healthcare.

Post war governments of the first and second world have borrowed to finance excessive expenditure on the principle it will be somebody else's problem to sort it out.

We seem to be rapidly approaching the time when the national credit cards have been maxed out and the whole world financial system is in danger of a catastrophe.

Take for an example what happened in Germany between the wars as an example of what could happen on a much larger scale (the million mark stamp overprints). Those who had nothing still had nothing, those who owned land, farms etc survived reasonably but the mass in the middle (the stamp collectors of today?) basically lost their jobs and had all their savings etc. wiped out.

You can see why gold, silver etc. prices are so high today, while property, that old fall back, is not what it was if you cannot sell it or only for substantially less than you paid for it. Ditto that sheet of PUC £1s you tucked away at what proved to be the peak of the market!

Worrying times ahead.

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Re: A Euro and Dollar collapse.

Post by mozzerb »

As the article quoted says: "Fortunately, it's highly unlikely that the dollar will collapse." Gradually decline in value, very possibly, but that's not a short-term crisis event. Big economies have a LOT of inertia. The euro may lose some members which will cause dislocation, but again probably short of catastrophe.

Countries have recovered from currency pegs breaking down before now without taking irreparable damage, whether the UK in the Exchange Rate Mechanism in the 1990s (a moderate jolt) or Argentina more recently when they let the peso float against the dollar again and actually defaulted (grim for a year or two, but now they're doing OK again).

Oh, and let's be realistic: gold as a source of wealth? It only has value because people agree to say it has value, as does a fiat currency. And of course that value varies. A return to the gold standard is merely substituting a cumbersome artificiality for a workable one -- there are no magically fixed and universal sources of wealth.

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Re: A Euro and Dollar collapse.

Post by mcgooley »

And to para-phrase an old (American) Indian saying:

Only when the last tree has been cut down,
Only when the last fish has been taken,
Only then will you realise you can't eat gold.
FORESTS OLD, PASTURES NEW
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Re: A Euro and Dollar collapse.

Post by robertlyon777 »

I imagine the amount of actual gold bars that exist in the world currently would not be enough to cover the fiat money if countries/banks wanted to switch to that.

Gold has value due to it's rarity - eg one can't just go an print more - and it is this rarity that means there probably won't be enough to become the international standard currency and I suspect a reason why countries moved away from it in the first place.

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Re: A Euro and Dollar collapse.

Post by Jack »

I agree with the earlier comment about gold; I cant eat it so why should I bother? If you go to basics it's land, infrastructure and utilities which we all need.

Hey, it's not Armageddon now, nor will it be. Yes, there may well be major problems caused by the USA finally realising it's a second rate country and economy but the rest of the world has known that for some time. China owns the USA. Watch the USA Military / Industrial complex paranoid Republicans saying less government spending bar on military matters...

Dollar collapse on UK; awkward but manageable.

Euro collapse? Not likely, some Euro countries collapsing yes. Basic result; quite likely a stronger EU with federal powers over the economy. fine.

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Re: A Euro and Dollar collapse.

Post by sukhothai »

It doesn't all mean gold! Any resource has value in a resource based economy just like Silver, Gold, Bronze, Copper, Stone, Foodstuffs, labour etc. Countries that have no gold whatsoever would still have other resources to trade.

The Indians valued Gold very much, the quote is actually...

"Only when the last tree has died and the last river been poisoned and the last fish been caught will we realize we cannot eat MONEY" ~ Cree Indian Proverb

You don't need enough gold to equal the mountains of debt that we have accumilated, those levels of debt should never have been reached and chucking more money at a system that requires infinate growth for infinity is madness.

A resource based economy requires nations to live within their means but wouldn't probably allow for $100 million bonuses year on year. Bonus paid on short gains and high risks with what turned out to be our money.

The Dollar will never collapse as long as it has the backing of the world trade markets, if they start shifting their reserves and favoured trading currency away from the Dollar then it will drop like a stone. China also won't want the U.S just to print off 500 billion to clear some of the debt bonds, they will take it in commodities.
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Re: A Euro and Dollar collapse.

Post by PeterS »

The A$-US$ exchange rate has been pretty much stable (+/- 1c on US$1.07 to A$1) for months now. There has been no collapse in the US$ and there won't be one for the foreseeable future. The EURO is, perhaps, another matter. I wouldn't be surprised to see it's demise in a few years, but not just yet.

In the event of bad world economic news there has always been, and will be again, a 'flight to quality' in the form of the US$. You would then see a relative collapse in other western currencies (such as the A$, C$ and NZ$).

China has absolutely no interest in seeing its currency appreciate, relative to the US$. It does not have a floating currency and any suggestion it would, anytime soon, either float or peg to gold, is (in my opinion) fanciful.
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Re: A Euro and Dollar collapse.

Post by PeterS »

Jack wrote: Yes, there may well be major problems caused by the USA finally realising it's a second rate country and economy but the rest of the world has known that for some time. China owns the USA. Watch the USA Military / Industrial complex paranoid Republicans saying less government spending bar on military matters...
In your dreams! The US still has the largest economy on the planet and will for a quite a while yet. As for China 'owning' the USA, what complete and utter rubbish. It is a never-ending source of amazement to me that people look at the world purely through glasses coloured by their political views. It might make them feel good, but is a very poor way of understanding what is actually going on!

The US and Australia made the same mistake with regards to the Japanese in WWII. Apparently Japanese had poor night vision and lacked the skills to be good pilots or fight at night! Such attitudes cost many lives. Closer to home, African Americans were considered to not possible to train as fighter pilots. The Tuskegee trained pilots proved the lie of that as well! It is said of those African American pilots that they never lost a bomber from any group they escorted against the Germans in Europe. Perhaps a bit better than entrenched positions allowed for?

So Jack, you stick with your red coloured (dare I say, anti-American) glasses. It will, no doubt, make you feel better but will do you no service in understanding the operation of economies in the real world. :roll:
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Re: A Euro and Dollar collapse.

Post by GlenStephens »

I think Italy will go under before Xmas, and if that occurs, the relatively minor Greek hiccup will look like a mozzie bite.

That will domino into Spain next and of course Portugal, and the Euro is effectively gone. Italy and Spain are far too big to prop up with BandAids.

Euro was a silly idea in the first place. The only strong economies are Germany and France, and both were mad to get involved.

That will make world markets nervous, and the $US will sink a lot further and due to that, Gold will go up.

US retail sales are deadsville, and unemployment will keep getting worse.

We could well see $US2000 Gold by Q4 of this year.

Australia will be impacted, but we will as usual keeping digging dirt from the ground, and exporting it to others, so we will be be largely insulated.

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Re: A Euro and Dollar collapse.

Post by PeterS »

Italy has pre-empted the problems of Greece by already passing an austerity budget to cut debt and spending. I suspect Italy will survive albeit with further pain. Greece will survive (if you can call it surviving) simply because their debt will be restructured and go on the never never.

Italy is also a much larger economy than Greece and will almost certainly weather the storm. Portugal and Ireland are probably more problematic and more likely to follow Greece than Italy is.

Of course, if Germany and/or France (and, to a lesser extent, the IMF) decided they had had enough and stopped stumping up money...well, then all bets are off.
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Re: A Euro and Dollar collapse.

Post by PeterS »

GlenStephens wrote:
Euro was a silly idea in the first place. The only strong economies are Germany and France, and both were mad to get involved.

That will make world markets nervous, and the $US will sink a lot further and due to that, Gold will go up.
BTW, I have to take issue with you here. Gold will likely go up, yes. But there will be a significant flight to quality, in the form of US$, in the event of any major collapse in the Euro zone. The A$, along with all other traded currencies, will depreciate against the US$ in such circumstances.

Gold is certainly an alternative investment, but it pays no interest and the available supply is limited.

And it is no good arguing that teh US economy is in trouble and that the US Government already owes over US$12 trillion. In the event of an upheaval, it is US Treasuries that the world will want. Happened during the GFC and will happen next time as well. The US economy is still the largest on earth and the US$ is still the world's reserve currency.

And finally, as I said earlier, the US$ has not been sinking against most of the worlds currencies. It has barely moved, in A$ terms, for months now. It reached a peak of US$1.0971 on 30/04/11 and is currently at pretty much it was on 12/05/11 (US$1.065). Th US$ has been appreciating against the EURO, a currency once being touted as an alternative to the US$ as a reserve currency (pity Chavez didn't follow through with his threat to switch to EUROs, he would be looking pretty silly now).
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Re: A Euro and Dollar collapse.

Post by GlenStephens »

Peter I did a lot of reading on planes in the past week - (100s of hours in seems!) and the inside view seems that Italy is gone already.

Greenback will keep sliding seems a prevailing view as well.

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Re: A Euro and Dollar collapse.

Post by PeterS »

Glen, are you sure you weren't reading old magazines? What currencies has the US$ being sliding against? Certainly not the EURO, not the A$, not the YEN and not the GBP. The C$ perhaps? Not sure.

I just reiterate that there has been very little movement (the US$ is marginally stronger) in the last couple of months against the A$, as an example.

Italy passed some budget measures last week that stripped tens of billions of dollars out of their deficits and borrowings. The interest they have to pay on bonds they issue has actually come down since. The last bond issue they had (last week, I think) was oversubscribed. Greece is in a situation where the market doesn't want their bonds at almost any price.
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Re: A Euro and Dollar collapse.

Post by GlenStephens »

Peter little rags like the WSJ and the FT and NYT etc. :)

And current ones sadly.

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Re: A Euro and Dollar collapse.

Post by PeterS »

I'd love to see their definition of what happened to the US$ earlier this year, if they think it is sliding now! :!:
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Re: A Euro and Dollar collapse.

Post by GlenStephens »

Peter, I did say it will KEEP sliding, which it has been for a year or so now.

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Re: A Euro and Dollar collapse.

Post by huanga »

Thank you all, there is quite a few opinions here and some very revelant facts for me to ponder, although I'm not sure Peter what Black and Asian pilots have to do with the original question. I do appreciate your experience in the world of business finance, and have taken on board what you say.

I really must change my reading habits Glen. At one time I was an avid reader of publications similiar to the ones you mention. However since I retired I seem to have allowed them to drop of my radar. Perhaps that was a mistake, because I certainly did not see this potential crisis coming.

I was fishing early this year with a friend of mine from Coff's harbour. He asked what I thought he should invest in and I gave him a sort of, 'of the cuff' answer. From memory it was. Whatever Company is manufacturing and servicing desalination equipment, that and soya bean production. It might be time to listen to my own advice.

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Re: A Euro and Dollar collapse.

Post by PeterS »

GlenStephens wrote:Peter, I did say it will KEEP sliding, which it has been for a year or so now.
Glen, given what is happening in Europe, I expect the US$ to strengthen somewhat over the coming months. There simply isn't an alternative currency to be in, if the EURO is in trouble. It might appreciate less against the A$ than some currencies, but that will depend on the appetite for risk.

There is no getting away from the fact that the US$ is seen as low risk. Much lower than the A$, with it's exposure to commodities almost exclusively. If the world economy goes bad again, the flood of money into the safe haven US$ will see a real slide in currencies like the A$.

I still don't think that is likely. Greece is a basket case and the likelihood there of a default is already implicit in the rates it has to pay on borrowings (should anyone other than the ECB and IMF actually be willing to lend to them). I firmly believe Italy is safe, absent some overwhelming disaster. Portugal is my pick for the next Greece. But, like Greece, the economy is small and the debt (whilst large) is not terribly material in the overall economy of Europe. It is sentiment that will be the biggest problem for Europe. The EURO is on the nose and will be for quite a while yet.

BTW, a fall in the US$/A$ exchange rate would be very beneficial to the Australian economy. :D
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Re: A Euro and Dollar collapse.

Post by dukeprince »

Senator Tom Coburn has just come up with a US solution, according to Fox news this morning.

Austerity now for future normality

But and its a big but , will US citizens have the courage and forsight to go for it, and kill that deficit that may bring them to their knees in time , some pain now or goodbye the future.

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Re: A Euro and Dollar collapse.

Post by PeterS »

The problem with the US situation right now is that both sides are playing chicken. There needs to be a sensible combination of spending cuts and revenue raising. There are people that can afford to be paying more tax and there are spending initiatives that could be shaved. Eventually a deal will be done, just hope it is a sensible one!
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