until the lira makes a comeback, i'm short Italian cobblers. if you think it's all a joke to which hoi polloi are not privy, live accordingly and good luck.
I'm not sure I understand what you're saying...
Could Italy go back to the Lira? Sure, it's possible, in order to "inflate away the debts", following the path chosen by USA. In an era when fiscal irresponsibility among western economies is almost the norm rather than the exception, I guess we could see more of this.
Personally, I think that the chance of this happening is rather slim, but even if it does, what difference does it make?
So investors should take note and demand higher premium for Italian debt, much like the 1990s (when Italian gov was using the good services of LTCM to try to push down its costs).
Also, why would one buy CHF instead of EUR? You can tell that Swiss gov won't let CHF get too far away from whatever currency Germany is using, because their real economy is heavily intertwined.
If people are concerned about the future of the Euro, they should just buy tangibles like gold. I have hedged 30% of my portfolio with gold/silver.
I try not to predict, but trade the market. Still, if I HAD to predict, i'd say EUR/USD will see 1.40 over the next 2yr. I don't think ECB will be dragged into a competitive devaluation of Euro, until/unless it reaches 1.50. And it would still depend on what others are doing (Asia, Canada, Australia). |
