Europe
by
Alasdair Macleod
Executive Summary
- Why Greece is unlikely to release a new drachma
- Why globally-coordinated money printing is the most likely resolution to the Greek & Spanish crises
- Why the magnitude of derivative risk makes a Eurozone collapse much more frightening
- Why capital flight will get worse, and why gold will benefit from this
- Why Germany's odds for leaving the Eurozone are lower than most assume
- Why the time left before extreme action must be taken is than a few months – possibly only weeks
If you have not yet read Part I: Abandoning Ship, available free to all readers, please click here to read it first.
Here are some key points to bear in mind as the crisis progresses:
Greece: new drachma?
The Greeks would be crazy to embrace a new drachma, as recommended by neoclassical economists. A new drachma would be backed by nothing, unless it comes with full convertibility into Greece’s 111.6 tonnes of gold, assuming that actually exists. The complete lack of faith in any Greek government’s economic credentials would mean a new drachma in the absence of gold convertibility would rapidly descend towards its intrinsic value, which is zero. Interestingly, recent polls suggest that the Greek people understand this and prefer to remain with the euro.
The legality of changing deposits from euros to drachmas is highly questionable. Assuming the Greek government can force this through on domestic deposits that will leave an open question over loans, likely to be challenged through the courts. And in the past non-Greek banks lending money to Greek businesses have as a matter of course stipulated contracts to be governed by the laws of another jurisdiction.
Message: do not buy into the siren attractions of an independent drachma…
The Most Predictable Next Events
PREVIEW by Alasdair MacleodExecutive Summary
- Why Greece is unlikely to release a new drachma
- Why globally-coordinated money printing is the most likely resolution to the Greek & Spanish crises
- Why the magnitude of derivative risk makes a Eurozone collapse much more frightening
- Why capital flight will get worse, and why gold will benefit from this
- Why Germany's odds for leaving the Eurozone are lower than most assume
- Why the time left before extreme action must be taken is than a few months – possibly only weeks
If you have not yet read Part I: Abandoning Ship, available free to all readers, please click here to read it first.
Here are some key points to bear in mind as the crisis progresses:
Greece: new drachma?
The Greeks would be crazy to embrace a new drachma, as recommended by neoclassical economists. A new drachma would be backed by nothing, unless it comes with full convertibility into Greece’s 111.6 tonnes of gold, assuming that actually exists. The complete lack of faith in any Greek government’s economic credentials would mean a new drachma in the absence of gold convertibility would rapidly descend towards its intrinsic value, which is zero. Interestingly, recent polls suggest that the Greek people understand this and prefer to remain with the euro.
The legality of changing deposits from euros to drachmas is highly questionable. Assuming the Greek government can force this through on domestic deposits that will leave an open question over loans, likely to be challenged through the courts. And in the past non-Greek banks lending money to Greek businesses have as a matter of course stipulated contracts to be governed by the laws of another jurisdiction.
Message: do not buy into the siren attractions of an independent drachma…
by
Chris Martenson
This week we bring back Alasdair Macleod, publisher of FinanceAndEconomics.org, because, as he puts it, "every horror that we discussed last time we spoke is coming about." This is especially scary since our previous conversation with Alasdair was less than three weeks ago…
Today's interview continues building on his excellent synopsis from last month that detailed the origins of the Eurozone crisis. The fundamental shortcomings warned of at the euro's creation in 1997, combined with the excessive sovereign debts run up since then, have finally expressed themselves at a scale too large to be contained any longer.
Today, Alasdair details in depth the huge and serious challenges facing Greece and the major Eurozone countries and the likely impacts of the fast-dwindling options left remaining.
He sees no happy ending to this story, no outcome in which serious pain and permanent behavior change can be avoided. And for those looking for shelter from the unfolding economic storm, he sees few options besides the precious metals (which he believes are severely underpriced at the moment):
Alasdair Macleod: All Roads in Europe Lead to Gold
by Chris MartensonThis week we bring back Alasdair Macleod, publisher of FinanceAndEconomics.org, because, as he puts it, "every horror that we discussed last time we spoke is coming about." This is especially scary since our previous conversation with Alasdair was less than three weeks ago…
Today's interview continues building on his excellent synopsis from last month that detailed the origins of the Eurozone crisis. The fundamental shortcomings warned of at the euro's creation in 1997, combined with the excessive sovereign debts run up since then, have finally expressed themselves at a scale too large to be contained any longer.
Today, Alasdair details in depth the huge and serious challenges facing Greece and the major Eurozone countries and the likely impacts of the fast-dwindling options left remaining.
He sees no happy ending to this story, no outcome in which serious pain and permanent behavior change can be avoided. And for those looking for shelter from the unfolding economic storm, he sees few options besides the precious metals (which he believes are severely underpriced at the moment):
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