NEW EURO PATHWAY
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Germany and France are examining a Two-Tier Euro currency structure.
The creation of a Super-Euro zone would initially include Germany, France, the Netherlands, Austria, Denmark, and Finland.
The Spanish banking implosion scares the central banks witless, and it should. Spain has a distinction of denying its bank corrosion reality.
The Two-Tiered Euro currency system is intended to cut out and remove the damaged insolvent nations they can no longer afford to bail out.
France has lent $750 billion and Germany $500 billion to Spain respectively.
And Italian Govt debt to be refinanced before the end of 2011 is 10 times that of Greece.
PRECURSOR TO NEW NORDIC EURO
Witness the precursor to the New Nordic Euro.
In time, my full expectation is for each Southern Europe nation to opt to go it alone, to revert to the old native currency, to devalue it more, and inflate with abandon with spectacular deficits incurred, incite some nationalism, and slide badly from prosperity into poverty.
Gold satisfies the above criteria when attached formally to a monetary currency vehicle the strength, durability, credibility, and freedom from debt.
After installation, the New Nordic Euro will serve as a Dollar Killer in my view.
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The two new Euro initiatives serve as systemic threats, delivered from outside the power center, as attacks to the fragile fiat flanks. The mere split of the Euro into two tiers, a seemingly sensible maneuver, avoids difficult decisions like bank-held bond writedowns, bank shutdowns, the whiplash effect of a fast rising new currency, and much more.
Germany and France are examining a Two-Tier Euro currency structure.
The intermediate stage of the new Northern Euro currency is in progress.
The motive is to create a firewall of protection from the Southern imploding PIGS nations.
German and French finance ministers are attempting to design a Two-Tier Euro currency system to separate stronger Northern European countries, protecting them from being dragged down by the weaker insolvent Southern states.
A collectivist Southern solution protects banks exposed to sovereign debt, rather than a single nation being expelled. However, they will tend to sink together rather than alone. The UK Daily Telegraph is the news source for the dramatic option. See the article.
Senior European politicians do not believe they can withstand another crisis, but they must prepare for Spain and Italy next, with assured bigger shocks.
The creation of a Super-Euro zone would initially include Germany, France, the Netherlands, Austria, Denmark, and Finland.
The broken parts in Portugal, Italy, Greece, and Spain, even Ireland, would be relegated to the Mediterranean under-class.
The Spanish banking implosion scares the central banks witless, and it should. Spain has a distinction of denying its bank corrosion reality.
They have not written down much of any bank credit assets in two years, and have not reduced prices of properties in any sensible constructive fashion.
They therefore have left themselves exposed to gigantic airpockets, where sudden shocks are assured.
The Two-Tiered Euro currency system is intended to cut out and remove the damaged insolvent nations they can no longer afford to bail out.
Regard the haphazard solution as lacking substance and planning, replete with desperation.
The PIGS sovereign debt is dragging down all of Central Europe.
The pursuit of solutions is motivated by staring into the abyss, threatened by contagion of insolvency and default.
France has lent $750 billion and Germany $500 billion to Spain respectively.
And Italian Govt debt to be refinanced before the end of 2011 is 10 times that of Greece.
Lead nations are frustrated by being attached by a ball & chain to the wrecked PIGS nations. Politicians have suffered lost support in elections, are deeply concerned about lost power, and seek alternative solutions of radical type, since their finances are being ruined slowly. This Two-Tiered initiative is NOT a solution, but rather a step away from centralization that will not avert the tumble step toward sovereign debt default.
The Two-Tiered approach serves mainly to develop the psychology, in my view, to condition the mindset for reform with substance, to embark on a new path with some hint of innovation, and to light a fire under the process. It urges a solution out of the box.
PRECURSOR TO NEW NORDIC EURO
Witness the precursor to the New Nordic Euro.
This is the much more realistic lasting solution, with systems being put in place, with important contracts being signed for installation of support systems.
The wealthier Northern European nations seek to protect themselves, while simultaneously setting up the necessary structure that would enable reform and restructure to the indebted Southern Europeans.
Take the concept of a forked split, but put different meat on the bones. Germany would lead a group of countries out of the existing Euro into a new single currency. The old Euro would become the Latin Euro or Southern Euro, whatever name suits them.
The Latin Euro currency after the split would decline sharply against the newly hatched German-centric Euro. The devaluation would render great economic stimulus to the Southern nations. Important difficult decisions would have to be made regarding debt writedowns, forgiveness, and restructure.
A perceived driving motive in the plan is to provide Southern nations some security from remaining within a group, so individual distressed nations like Spain or Italy would be spared the stress of being forced to contend with their situations alone.
The bunker mentality will not spare them of continued deep distress. The consequences for any expelled nation would be catastrophic to bankers holding any sovereign PIGS debt, a problem not mitigated by any bicameral plan. The only assurance in this chaotic crisis is change coming to the EuroZone, radical change.
In time, my full expectation is for each Southern Europe nation to opt to go it alone, to revert to the old native currency, to devalue it more, and inflate with abandon with spectacular deficits incurred, incite some nationalism, and slide badly from prosperity into poverty.
When practicality and feasibility dictate very difficult decisions to be made, with actual full implementation made final, a simple split of the current Euro will not be possible.
It sounds good, and has value primarily in altering the psychology toward even more aggressive reform. Finally, the design of the New Nordic Euro will be on the table, with its radical but extremely necessary and obligatory requirements. A simple Euro currency split cannot work, since it does not solve the shared debt problem.
A new currency must have a rock solid foundation built of hard assets, not a floating raft of papyrus built still of paper money.
For those who believe the New Euro is a ruse or dream, consider this.
A Hat Trick Letter subscriber in Copenhagen Denmark offered a note with meat, for which the Jackass is grateful.
He confirms the New Nordic Euro is coming into reality, as a result of conversation with his banker.
By email, the man sent the message, "It is amazing to see how things play out like a script! I recently talked to the German chief economist of Barclays Thorsten Polleit. When confronted with the Nordic Euro currency idea, he nodded silently, with a strange look of having a secret cover blown away.
He did not comment on it even though we were having a quite informal talk. The warmest of greetings from the heart of Copenhagen." Word is spreading, impossible to contain, since too important.
So the European innovations on currency reform and redesign have some formidable challenges. The simple Two-Tier Euro split has many obstacles to overcome:
restructure sovereign PIGS debt and East European debt
protect from unstable shifts between standing currencies
protect from unstable shifts in price of major assets like crude oil and copper
detach from new debt driven by fresh government deficits
permit more autonomy to central banks from individual nations
restore confidence in currency itself
install payment systems for international commerce, starting with OPEC crude oil
integrate with European trade partners (e.g. Russia, Scandinavia, Asia, Arab world).
Gold satisfies the above criteria when attached formally to a monetary currency vehicle the strength, durability, credibility, and freedom from debt.
Germany plays a role filled with intrigue.
They cooperate with the Wall Street and London bankers, whose prestige has vanished from the $trillion mortgage bond fraud, aggravated by their nasty attacks against sovereign bonds.
German consultants advised Switzerland and Dubai to remove gold bullion from custodial accounts at the New York Fed.
The Germans led the campaign for the Saudis to herald future crude oil payments outside the USDollar framework.
Now German parties are the primary proponents, designers, architects, and engineers to a new revolutionary currency.
After installation, the New Nordic Euro will serve as a Dollar Killer in my view.
Americans are blind to the upcoming broadside assault, arrogant to the end that the King Dollar will live forever, oblivious to the Paradigm Shift in progress.
The irony is thick. The Germans, home of the failed Nazi Third Reich, are the champions for establishment of a monetary system free from the tentacles of the last relics of the current Fascist Business Model where power lines connect to New York and London.
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