The euro was a doomed project from the start, and now we are starting to see the endgame play out. Today, the euro fell to an 11-month low against the U.S. dollar. As I write this, the EUR/USD is at 1.2983. Back in July, the EUR/USD was over 1.45. As panic has swept the financial markets, the euro has lost more than 3 percentover the past three days. But this is just the beginning. When the euro drops below 1.20, analysts will talk about the collapse of the euro. When the euro falls toward parity with the dollar, headlines around the world will scream about the death of the euro. But when the European financial system finally collapses, we may very well actually see the end of the euro. Yes, it actually could happen. The eurozone, as it is currently constructed, simply does not work. You just can’t take 17 different nations that have 17 different fiscal policies, 17 different tax policies and 17 different economic agendas and cram them all into a single currency and expect the thing to work. The euro is a doomed currency, and if a big nation like Germany decides to walk away at some point the game is going to be over.
It is not as if the euro is just having a bad week. Just check out this chart that shows what the euro has done relative to the U.S. dollar over the past 6 months.
The truth is that a collapse of the euro has already begun.
And a whole lot of investors expect it to continue. Right now, huge amounts of money are being poured into bets that the euro is going to go even lower.
All over the world, financial professionals are speculating about how far the euro will eventually fall. Scott Mather, the head of global bond portfolio management at PIMCO, says that he believes that the euro is going to go much, much lower….
“Parity with the dollar next year is not out of the question”
Of course the central banks of the world could step in at some point with coordinated action to help support the value of the euro. This kind of thing has happened before. But such support would only be temporary.
Central banks can manipulate the markets for a while, but in the end the long-term trends are going to prevail. Just look at what is happening with European bond yields.
European bond yields are rising once again even though the European Central Bank has already spent over 274 billion dollars buying up European government bonds.
There will be more efforts to try to prevent the death of the euro, but those efforts will be kind of like spitting into the wind.
A recent article posted on Crackerjack Finance talked about some of the fundamental problems that make the euro such a flawed currency….
The problems of the Eurozone’s flawed construct are now completely exposed. A block of 17 sovereign nations have adopted a common currency and outsourced monetary policy to a common central bank. Yet each of the 17 sovereign nations have different comparative advantages, industries, debt levels, interest rates, budget deficits, labor market rules, and tax policies. Reflecting on all the differences, it is amazing that the Eurozone has survived in the current construct for over a decade.
Greece would probably not be going through an economic depression right now if they had not joined the euro. But now, 100,000 businesses have closed since the beginning of the recent crisis and a third of the country is living in poverty.
As this crisis spreads throughout the rest of Europe, it is going to put an incredible amount of stress on the European financial system. Many now believe that the euro may not be able to make it through the tough times that are ahead.
The following comes from a report recently produced by Credit Suisse’s Fixed Income Research unit….
“We seem to have entered the last days of the euro as we currently know it. That doesn’t make a break-up very likely, but it does mean some extraordinary things will almost certainly need to happen – probably by mid-January – to prevent the progressive closure of all the euro zone sovereign bond markets, potentially accompanied by escalating runs on even the strongest banks.”
So will we actually see the end of the euro?
Only time will tell.
But one thing is for sure – the situation in Europe is rapidly getting worse.
In Greece, approximately 20 percent of all bank deposits have been withdrawn since the start of 2011.
If you still have money in a Greek bank, you might want to do something about it before the run on the banks gets even worse.
In fact, if you still have money in any European bank, you might want to consider your options.
Today it was revealed that Germany’s second largest bank is going to need a bailout.
The following comes from a Sky News report….
Germany’s second largest bank, Commerzbank, is reportedly in discussions with the German government about a bailout after regulators said it needed to raise more money to cope with a potential default on its loans to governments.
“Intense talks” have been going on for several days, according to sources who spoke to the news agency Reuters.
Let the bailouts begin!
European governments are going to save the banks that they want to save, and the rest they are going to let fail.
So who will live and who will die?
We just don’t know.
But without a doubt, a whole lot of European banks are in trouble. In fact, Fitch Ratings downgraded the credit ratings of five more major European banks on Wednesday.
The eurozone worked well for a while, but now the flaws in the system are becoming appallingly evident. To get an idea of just how badly the European financial system is unraveling, just check out this chart. European bond yields are not supposed to be acting like that.
In the end, someone is going to leave the euro. There has been a lot of talk about Greece or Italy leaving the euro, but the truth is that it is probably more likely that a strong nation such as Germany will be the first to make a move.
If Germany leaves the euro, will they start printing up new German currency?
No, I believe in that case that Germany would seek to establish an entirely new European currency for an entirely new European financial system. Germany is very committed to the idea of a “European superstate“, and just because the euro is a failure does not mean that they are ready to give up on the idea.
But time will tell who is right and who is wrong.
Brutal austerity + toxic levels of government debt + rising bond yields + a lack of confidence in the financial system + banks that are massively overleveraged + a massive credit crunch = A financial implosion of historic proportions
Unfortunately, the United States is not going to escape all of this chaos unscathed either.
The financial systems of the United States and Europe are more deeply tied together than ever before. When the financial crisis in Europe fully erupts, we are going to see lots of banks in the United States fail too.
The U.S. economy never recovered from the financial crisis of 2008, and this next financial crisis could send us into a huge tailspin.
2012 is going to be a very interesting year for the financial world. I hope that you all are ready for what is about to happen.
SUMMARY
HOW TO REVERSE WORLD RECESSION IN MATTER OF DAYS
A Method to Address Economic Recession, Remove Poverty, Terrorism, Improve Law and Order, Reduce Drug Abuse, Inflation And Taxes in an Interest Free Based Economy.
By: Dr. Niaz Ahmed Khan, FRCS, PhD
ABSTRACT:
I have developed a new financial instrument which will be much more valuable than the bonds or the treasury bills government sells in the open market to raise much needed funds to run the country. These are all interest based instruments and can only be used by institutions. The instrument I am proposing is without interest and will be used by everybody to purchase goods and services in the government and private sector resulting in up to 60% discounts. This is why these will be massively bought up front in large amounts in the shortest period of time of one month to run the country for at least a year and much more by the end of the year.
SUMMARY OF THE BOOK:
The world is facing many challenges with no solution in sight.
The main cause of all these ills is the POVERTY. Float bonds which can be used by everybody rich or poor and are not debt to the state so there is no question of interest.
How: Take the example of USA which is going through a great recession.
USA borrows money by selling treasury bills and the interest based bonds. The suggestion is to sell these bonds on non interest basis.
1. Buy all goods and services under govt control with these bonds and these bonds will replace dollar with bonds.
2.10 million duty waved off.
3.100 billion dollars prize draw from the bonds held by the public every day.
EXAMPLE: ONE dollar buys 5 bonds on the condition that the amount should be $100,000 or multiple of it. Fewer amounts will get the rate of four and three. This massive discount period is only for first month at the start of the implementation of this system. In the second month the rate will be 4 but the rate of 3 will apply to subsequent months for the same amount.
WHERE THESE BONDS WILL BE USED?
1. All state controlled services and commodities.
EXAMPLE: A bill of (any service or Commodity) $100 can be paid with 200 bonds and there will be no exception to this rule. A NET DISCOUNT OF 60%.
A simple formula will apply: Total bill in dollars x2 is the number of bonds surrendered. Price in bonds will not be less than the cost price but without the direct indirect taxes and the duties which are added to the present cost to make it very expensive.
It will attract at least 50 million people to take this opportunity as early as possible. And if one is sure of making 100% profit within 30 days there will be many more that will help themselves.
RESULT: Government gets at least $5 trillion within a very short period of time of few days and much more in the rest of the year. THIS IS NOT A DEBT AS STATE HAS SOLD BONDS (Commodity) WHICH IS AN ALTERNATE CURRENCY AND DO NOT CARRY ANY INTEREST. One immediately thinks who will bear the loss and this loss to the state will not be more than total year budget of $2.5 trillion which it collects in one year with all the taxes and the duties but the bond price is simply a cost price without any kind of tax or duty. So there is a net gain of approximately 2.5 trillion within a short period of time. First floodgate of money has been opened.
WHO WILL SELL THESE BONDS?
State will float tenders to select a private agency (USMF) UNITED STATES MONITORY FUND JUST A NAME GIVEN TO THIS ORGANIZATION with the lowest bid WHERE AS second, third and fourth bidders will be auditors of USMF. This agency will employ at least 20 million unemployed on 10% commission basis and without any salary. These agents will have to pay $500 as an annual fee to USMF in order to build the infrastructure for the sale of bonds. Agents’ quota will be $300,000 per month or they will be allowed to sell their whole year quota in one day or in a month. This will only materialize if the agent shares his commission with the buyer. Greater the share of commission quicker the sale. The investor or a buyer will sell these bonds at the same rate of 5 per dollar and his bonds will sell like hot cakes every day as there is no condition of the amount of money to purchase the bonds. In this way even the poorest person will get the same or near the same rate as the investor earns a profit from the commission which he takes from the agent and makes almost 100% profit by only investing $100,000. He will sell these bonds repeatedly and will keep almost 6% profit every day till the demand lasts. NOW THINK HOW MUCH FUNDS STATE HAS ACCUMULATED Much more than few years budget in matter of only one month.
FLOOD GATES OF MONEY AND TURNING POINT
This is the second flood gate of money and there are still four more floodgates of money yet to open. So at the end of 30 days or even much earlier the government declares tax free country for ever. With the removal of all kinds of direct and indirect taxes and duties the price of oil electricity telephone and of all other services under government control is now almost 60% less than before as these are being purchased by bonds (which is the cost price) and not with dollars. The production cost of everything has come down tremendously.
SECOND OPTION
STATE ALSO OFFERS 10 MILLION DUTY FREE IF ONE DEPOSITS $100,000 NON REFUNDABLE. THIS BRINGS OUT ALL THE BLACK AND SPARE MONEY WHICH STATE WAS NOT ABLE TO GET BEFORE AND AS THERE IS NO TAX AND HENCE NO TAX EVASION SO ALL THE MONEY IS WHITE AS IT IS BEING GIVEN TO GOVERNMENT.
This was the third floodgate of money which is even bigger than the first one and the exact amount is impossible to asses unless the system is implemented.
In order to provide cheap bonds throughout the year government offers three types of registration fees.
1. Pay $100,000 in the start of the year and get the rate of 5 for the rest of the year and this will suit the professional’s and salaried person’
2. Pay $10,000 yearly and get 20,000 new bonds at the rate 5 every month but one has to collect 10,000 bonds (equal to fee) to get this cheap rate throughout the year. Higher the registration fee more the entitlement of cheap bonds. This registration will suit any small time business who will sell his product cheaper provided 15% bonds are also paid with rest of cash money by the customer SEE THE NEXT REGISTRATION FOR FURTHER EXPLANATION OF15%BONDS. This will apply to all goods in private sector and does not apply to the government sector. This is a big incentive to accept bonds in the private sector as the business accepting more bonds will have more business than the trader not accepting the bonds so the bonds market will multiply and there will be a constant need for bonds in the open market.
3. Third type of registration will be of $100,000 which will entitle the business to sell its products through USMF. The value of merchandise sold through this source will help the business to get the 5 bond per dollar rate or opt for the duty free option equal the amount sold. But with one condition of surrendering 15% bonds at each sale in dollars.
EXAMPLE:
MERCHANDISED SOLD THROUGH USMF $1000. BONDS SURRENDERED 150 ARE DEPOSITED IN STATE ACCOUNT TO BE SOLD AGAIN SO THE CYCLE OF BONDS IS ESTABLISHED .A receipt of bonds surrendered is obtained from USMF for evidence of sale of merchandise and this receipt will entitle the traders to get cheap bonds or the duty free option throughout the year BUT THE SAME RECEIPT CAN BE USED ONCE ONLY.
WHAT IS THE BENEFIT TO BUSINESS?
1. CHEAP BONDS THROUGH OUT THE YEAR
2. DUTY FREE OPTION WILL HELP INDUSTRY.
3. The quota which can be sold is ten times the amount of Registration but not more unless the registration fee is increased. Now all the business will opt for this registration in order to reduce the cost of production. These 15% bonds the business will get back through a chain of dealers sub dealers and ultimately the customer will pay this bond portion as he will get the end product very cheap because of tremendous cut in the cost of production by the factors already mentioned. This will replace the GST or the VAT or the two price system seen all over USA. Almost everybody will sell their product through this channel as it will be much costlier to sell the product outside this system as cheap bonds are not available otherwise.
According to rough estimate at least $10 trillion transactions are carried out every day in US and at each transaction 15% bonds are being surrendered, the price 15 bonds is $3. So 3% of 10 trillion will be $300 billion which goes into government account without any compulsion every day (UNBELIEVABLE). This is the fourth floodgate of money AND IS CALLED THE GOLD MINE. Now the state is sitting in the driving seat and all the money in banks of private sector has been transferred into government account and banks are no more the lenders but are borrower from the state which is the only source left and will invest in business with sound feasibility study checked by the state bank. The state will offer to invest 80% and the bank will bring investor who is willing to pool rest 20%. This 20% will be deposited in the bank and the bank will oversee the running the business, running expenses will be given to the investor from its share of 20%. There will be no collateral and share of the profit and loss will be shared in the ratio of 60 and 40. The bank will share the 60% with the investor and 40% will go to state funds and the state will provide everything under its control below cost which will farther reduce the cost of production and at the same time will MARKEDLY improve the profit margins OF ALL THE BUSINESSES. No major business can refuse this offer. Any bank showing repeated loss will go out of business as there will be no more funds available from the government source and all other interest based sources are not available any more. Interest based banking is gone forever or it may be at a very small scale and the state will not offer loans on interest as these are not any more profitable and risk free as there is no collateral. The amount of profit government will share will be unimaginable and this is the 5th flood gate opened.
THEN WHY NOT INVEST ON PROFIT AND LOSS SHARING BASIS
Last but not the least government will acquire all the land on lease without any force and will provide all the needs to the formers THROUGH CORPORATE FARMING SECTOR HIRED BY THE STATE below cost and will become the shareholder according to the mutual contract with the land owner this is the 6th flood gate of money opened.
DRUG ABUSE ELIMINATED
When all the possible land is being cultivated by best agriculture engineers there will be much better yield and much more profit to land owner then who will not join hands with the government.
THE OBVIOUS BENEFIT WILL BE NO MORE POPPY CULTIVATION IN COUNTRIES WHICH ARE POOR AND LARGELY DEPEND ON THE POPPY CROP. NOW THERE IS NO MORE POPPY AND NO MORE DRUGS.
All the above claims have been proved to be true except the terrorism.
HOW TERRORISM WILL BE ELIMINATED?
We have to look at root cause and it is POVERTY and NOT the religion which is being falsely blamed. The going rate for a suicide bomber is $1,000 in Pakistan, Iraq and in Afghanistan. Can one believe that anyone having at least two meals a day will blow himself? Never the areas of the countries where these attacks are happening are extremely poor and the extremist elements who themselves are or were poor exploit these very poor people to carry out attacks for money to save their families dying from hunger and this is an open secret. Extreme elements has large force that is recruited from poor areas as there in no job anywhere and they provide these raw recruits with only food and shelter and at same time brainwash them and train some of them to carry out these attacks by giving them enough money in their lives to support their dependents. You might mention few isolated cases of being well to do and still carried out these attacks. Once the poverty is removed in these areas by implementing this system these attacks will come to an end immediately. This system is not only meant for USA but will be easily applicable to every country.