'Au Thou' in Euros

12 posts / 0 new
Last post
machinehead's picture
machinehead
Status: Diamond Member (Offline)
Joined: Mar 18 2008
Posts: 1077
'Au Thou' in Euros

The euro has slumped below $1.25, and gold has spiked through the €1,000 round number:

What an amazing week -- first, US dollar gold took out its Dec. 2009 high ('Gold Liberation Day'); today the legendary 'Euro Au Thou.'

Why, by next month, fiat currency may be dead as a doornail! LaughingSurprisedEmbarassed

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: 'Au Thou' in Euros

Deja vu

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: 'Au Thou' in Euros

[quote=machinehead]

Why, by next month, fiat currency may be dead as a doornail! 

[/quote]Why, by next month +/-, fiat currency will be dead as a doornail! (You are smarter than I but I'll be brave and give my view on it)

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5979
Re: 'Au Thou' in Euros

Zounds!  1000 Euros.

I don't know why I, of all people, should be surprised by the evident 'speeding up' that we are experiencing right now in the economic and monetary decay functions.  But I am.  I guess I always am - those non-linear functions truly are hard to appreciate on some gut level.

One things is for sure, the situation is far from stabilized.  The revelations recently posted about Sarkozy over in the member discussions were truly shocking.  No wonder he looked so abused in that picture showing Merkel and he leaving the weekend euro confab.

My guess is that French banks are mortally wounded and they put the screws to him just before that meeting.  I wonder what sorts of pressures they apply in France?   In the US we prefer hardball tactics like closing the door and having our politicians threatened by an appointed Treasury official (and ex-Goldman CEO) with "martial law" and "rioting in the streets" unless the banks are given a free pass on their most recent set of errors.

But in France?  Probably the same, I guess.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: 'Au Thou' in Euros

One Given: We can always bank on the morons to make a big mess of it. Ka-ching!

machinehead's picture
machinehead
Status: Diamond Member (Offline)
Joined: Mar 18 2008
Posts: 1077
Re: 'Au Thou' in Euros

Evidently our high-spirited, youthful mirth did not go over well in the capacious corner offices at JP Morgan. So their thick-necked enforcers have been called down to the Crimex to crack some gold bug skulls.

Look at this innocent, 24-karat draped creature. It's like crushing a butterfly on a wheel. Cry

agitating prop's picture
agitating prop
Status: Platinum Member (Offline)
Joined: May 28 2009
Posts: 864
Re: 'Au Thou' in Euros

I just checked the dollar/doornail index. Dollars definitely gaining on doornails. Damn!Yell

machinehead's picture
machinehead
Status: Diamond Member (Offline)
Joined: Mar 18 2008
Posts: 1077
Re: 'Au Thou' in Euros

Arrrgghhh -- the euro fell through $1.24 and kept sinking.

Bloomberg shows it at $1.2372. On its way to par?

Let's hope the PPT didn't take Friday off! Surprised

Mike Pilat's picture
Mike Pilat
Status: Platinum Member (Offline)
Joined: Sep 8 2008
Posts: 929
Re: 'Au Thou' in Euros

Our markets needed a strong rebound. After the bounce from the "flash crash" and after the EU meeting for the bailout there was at least an excuse for believing that things might resume upward motion in the near term. In reality, the only thing going up is gold. The only thing worse than a rising gold price is a gold price that is kept artificially low by propaganda, manipulation, and ignorance.

The Euro's break through support today, combined with 1,000 Euro gold, combined with the USD AND European combined market repudiation of the notion that the bounce from the flash crash will continue is very bearish overall. There are just so many times that people will tolerate this sort of financial and political abuse before they start changing their behavior. And behaviors can change almost as rapidly as mindsets can which is potentially instantaneous. Hyperinflations start abruptly. 

 

Lemonyellowschwin's picture
Lemonyellowschwin
Status: Platinum Member (Offline)
Joined: Apr 22 2008
Posts: 561
Can Someone Tell Me What Happens in a Euro Collapse?

What happens if the Euro cracks up?  Do the member countries revert to their own currencies?  If so, how?  How do Euros get changed back into Francs?  How does the situation get unwound?  What happens to all the hundreds of billions of Euros?  What are the global consequences?  I can't get my head around it! 

P.S.

Machinehead, your posts rock.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Can Someone Tell Me What Happens in a Euro Collapse?
Lemonyellowschwin wrote:

What happens if the Euro cracks up?  Do the member countries revert to their own currencies?  If so, how?  How do Euros get changed back into Francs?  How does the situation get unwound?  What happens to all the hundreds of billions of Euros?  What are the global consequences?  I can't get my head around it! 

P.S.

Machinehead, your posts rock.

Look for SDRs from the IMF. Paper they create/issue which can be redeemed for say a dollar or perhaps another new currency. Greece could go back to issuing Drachma's how much they'd be worth? Not much.

SDRs are probably going to be it until they figure out what to do. Don't hold your breath, you'll turn blue, purple and pass out. I sincerely doubt they know or best of all can agree quickly.

What will happen when it collapses. Greece, Argentina, Mexico, Zimbabwe, Iceland, the list goes on.

machinehead's picture
machinehead
Status: Diamond Member (Offline)
Joined: Mar 18 2008
Posts: 1077
Re: 'Au Thou' in Euros

When former national currencies were converted into euros on 1 Jan 1999, each was converted at a specific exchange rate given in this table:

http://www.ecb.int/press/pr/date/1998/html/pr981231_2.en.html

In principle, the process is reversible. They could deconvert at the same rate. The final 1999 domestic money supply, escalated by the growth in euro-based M2 in the 11 years since then, would provide a rough guide as to the size of domestic money supply needed now.

Probably the most complex matter would be negotiating the return of a seceding country's share of the ECB's assets to its national central bank. Legally, leaving the currency union is supposed to require a unanimous decision of all members. But if secession is declared unilaterally, is the EU prepared to use force to 'save the union,' a la Abraham Lincoln? I reckon not!

Greece is the most likely to leave unilaterally, for exigent reasons (its need to devalue). Ironically, Germany is the second most likely to depart, for opposite reasons -- it doesn't want to be a dues-paying member of an inflationists club.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments