Skip to main content

Pippa Malmgren | Commodity Online: Germany may in fact be preparing to abandon the Euro

So an 'insider', Pippa Malmgren, who is on the board of Deutch Bank among others, says that Germany has started printing the Deutsch Mark in a hurry. This is backed by public opinion in Germany where 71% see no future for the Euro.

Pippa Malmgren | Commodity Online: Germany may in fact be preparing to abandon the Euro:

I was surprised at first by the concept, but on second thought it makes huge sense: Germany strength IS Euro's main problem (lack of discipline by governments in peripheral countries obviously not far behind) and their removal would increase competitiveness of weaker European economies via corrective devaluation.

The widely discussed scenario of marginal countries such as Greece and Ireland dropping out of the Euro presented a serious issue: once their currency dropped in value, relative debt would increase proportionally because they were issued in the stronger currency. This would trigger mass defaults by the countries that left, and further destabilize the system (a.k.a. contagion).

The Germans most probably see their exit as the logical solution, and they are most probably right. Now, for people holding reserves (savings) in Euro, the question would be: how do I avoid my savings depreciating too badly if this occurs? I see two options, either opening a bank account in Germany in Euros, which should then be converted to DM after Germany's exit, or buy gold. However, gold carries significant risks.

Last time I checked, it was almost impossible for a non-resident to open an account in Germany. I wonder if this has changed?

Comment 10 Nov 2011: The International Business Editor of the Telegraph suggests Germany's departure as the best option for the Euro: http://goo.gl/0Afsq


Comment on  27 Jun 2012: Anatole Kaletsky, Reuters journalist now suggests Germany may have to be booted out http://blogs.reuters.com/anatole-kaletsky/2012/06/27/a-german-exit-from-the-euro-could-be-relatively-easy/

Comments

Post a Comment

Popular posts from this blog

Irish Education is Failing Our Kids

Screenshot of the drawing made during the video RSA Animate - Changing Education Paradigms (YouTube) My heart shrinks a little bit every day when I drop my kids to school, specially the younger ones. It shrinks because I know that their experience ought to be so much better than it is. While some benefits exist in how education is delivered today, much damage is also being caused, and even worse, the knowledge exists about how to improve things, but teachers and the catholic church control of education in Ireland are incredibly powerful points of resistance to change. Take my four year old daughter as an example. She started school last September. Within three weeks, she could recognize three letters of the alphabet, but she had already been taught to pray, word by word at least two prayers. My 13 year old, who is facing some challenges in secondary school recently was offered support. He had to give up one normal class during the week to meet a support teacher. The option...
Post a Comment
Read more

An unexpected exchange

I don't consider myself to be much of a creative person even though I love art. I frequently find myself alone in reacting with emotion to certain pieces, so I tend to hold back my enthusiasm, maybe to avoid looking foolish. Recently, I took a photo that somehow spoke to me. There was something about this one. I kept going back to it and enjoying it a lot. It is almost like a painting of a lonely person walking into the unknown - a bit how I feel these days. Out of pure impulse, today I shared it on Twitter, partly because I wanted to find a name for it and partly because I wanted to know if someone else would see what I saw in it. This was the tweet: I got a few suggestions, some good, others funny. But one stood out: "Solitary steps in marginal visibility". I didn't expect that! All I could answer back was "Impressive" to which I got the response "In essence this is a lovely photo of someone purposely striving forward alone in adverse c...
Post a Comment
Read more

Rating Agencies - Friends or Foes?

Talks about sovereign debt default by Greece, followed my a few other countries, are gaining credibility. The ECB is likely to start dropping interest rates fast, and in the not very far future we might see close-to-zero rates. With inflation at anything higher than the ECB rate, essentially they are paying for people to take the Euro. What I am interested in right now is how the ratings agencies that are followed and very respected by the investment 'community' as a tool to monitor investment risk (in spite of catastrophic misjudgements in the past), may be turning into one of the investors worst enemies. "A banker will lend you an umbrella when it is sunny and take it away when it starts raining. A ratings agency will ensure it rains as soon as there are enough clouds."  Well, rating agencies can and do make the rain pour when it is cloudy. i.e.,  Their actions result in higher costs of borrowing when what is necessary is the opposite, thus ensuring that the s...
Post a Comment
Read more