You know that sound that bombs make as they fall?
Yeah, well, I’m hearing that sound from the direction of Europe. The only question is how big that bomb is and whether it will touch off explosions in the US.
No, let me rephrase that last bit.
…and HOW BIG the explosions will be in the US.
The US made a strategic decision to prop up the EU, and it may be about to pay dearly for that.
Read more from The Economic Collapse blog:
The euro is a dying currency. On Thursday, the EUR/USD fell below 1.28 for the first time since September 2010. In fact, as I write this the EUR/USD is sitting at 1.2791. Back in July, the EUR/USD was over 1.45. But this is just the beginning. The euro is going to go a lot lower. At this point, there are several major European nations that are on the verge of default, the European financial system is overflowing with debt and toxic assets, and most major European banks are leveraged about as badly as Lehman Brothers was when it collapsed. Most Americans simply do not grasp the gravity of what is happening. Just because the Dow is sitting above 12000 and a few U.S. economic numbers have improved slightly does not mean that everything is going to be okay. As I wrote about recently, the EU has a bigger economy than we do and they have a bigger banking system than we do. U.S. banks are massively exposed to European sovereign debt and European banking debt. When the financial system of Europe collapses and the euro falls apart it is going to rock the entire planet. So you better look out below – the euro is coming down and it is coming down hard. After the euro implodes, nothing is every going to be the same again.
So how far are we going to see the euro decline?
Julian Jessop of Capital Economics expects the euro to fall much further….
The relative strength of the recent economic data from the US is supporting the dollar more generally, and we expect this divergence to persist as the euro-zone slides into a deep and prolonged recession. Above all, doubts about the very survival of the euro itself are likely to remain a drag on the currency. We therefore continue to expect the euro to fall to around $1.10 by the end of the year.
Others are even more pessimistic.
“Parity with the dollar next year is not out of the question”
Can you imagine that?
1 dollar = 1 euro?
Don’t think that it can’t happen.
But the decline of the euro is just part of the story. The truth is that Europe is on the verge of a financial collapse that could end up dwarfing the financial crisis of 2008.
Sadly, most Americans have no idea what has been going on in Europe the past few days….