Euro meltdown imminent?

http://www.reuters.com/article/2011/09/ ... 4R20110913

Euro meltdown getting closer? Greece is nearing default and the rest might fall like dominoes. This appears to be coming to a head, and not much news coverage. Wonder what it means for the US markets and economy?

Her economy minister said earlier this week that there should be no taboos in stabilizing the euro, including an orderly bankruptcy of Greece. And lawmakers from her coalition have said in recent days that Greece may have to leave the euro zone -- a move Citigroup's chief economist warned would lead to "financial and economic disaster."

"As soon as Greece has exited, we expect the markets will focus on the country or countries most likely to exit next from the euro area," Willem Buiter said in a note published on Tuesday.

According to the Money guy on Mike Rosen's show Greece is paying 25% for new debt.
Hopefully American money markets and banks stay away from that tempting payoff, since it is likely that Greece will default.

I checked Vanguard money market funds a few months ago, and it was about 18% in non-euro countries that are considered "safe". I'm not sure all US money markets are that way, any in France or Germany may have some risk.

Here is more news, looks like deposits have been coming out of these banks for awhile now.

http://www.bloomberg.com/news/2011-09-1 ... t-ecb.html

So the UK was smart not to go to the Euro. Switzerland never joined the EU and kept its Swiss Francs. I miss French Francs and Italian Lira, especially during inflation.

"That will be 23,000 Lira."

"$3.75 huh. OK, here you go."

Here's what they're saying on MarketWatch:

http://www.marketwatch.com/story/buying ... getting-cl
oser-2011-09-14

"Even a few weeks ago, most analysts would have argued that the euro could
struggle on for a few more years yet.

There was plenty of ammunition left in the armory. Moving to a common fiscal
policy, and jointly issued eurobonds, would help out the weaker members of
the single currency. A massive dose of quantitative easing from the European
Central Bank would lift the continent out of depression. Sure, neither would
be a long-term solution. But they would keep the show on the road.

This week, even a temporary fix looks increasingly unlikely. The German
constitutional court has tied up its government in knots, making it hard to
authorize more bailouts. The resignation of Juergen Stark from the ECB has
made clear the Bundesbank's opposition to printing money - and the ECB can't
do anything without the agreement of national central banks. And the Greek
economy is disappearing down a deflationary plughole, proving that the
rescue packages for the peripheral states are a complete failure.

But it will also open up one of the great buying opportunities of our
lifetimes. European shares will be dirt cheap, even though many of them are
in terrific fundamental shape."

Glad the US gets to watch this blow up before we were dumb enough to emulate it.

CriticalBill wrote: Glad the US gets to watch this blow up before we were dumb enough to emulate it.

Maybe. Some of the PIIIGS have lower debt ratios than the US does. They just don't have the ability to print money like we do. It must be very tempting for them to go back to the Lira and Drachma and win back control of their economies.

We have already been dumb enough to emulate it, like SS109 said, we can just print money to cover it up and set our interest rates to zero - for now. And I don't know if we are immune from the fallout from this, we need more exports.