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Has concerns of the Euro devaluation actually subsided?

*Barron's, by William Thayer, August 17, 2013

”Don’t Ignore the Greek Problem

The ECB has put off a euro-zone crisis by printing bailout and bond money as fast as it can. The final cost: higher interest rates and tanking bonds.

Have you read anywhere that the Greeks will soon be requesting a third bailout? Probably not. Thus far this summer, the euro-zone leaders and the European Central Bank have successfully papered over the real problems in the south of Europe.

If only denial, smoke, and mirrors could solve the euro-zone crisis. The euro wasn’t a bad idea, but the euro zone should have been limited to those countries that can make it without bailouts. That list probably
does not include Greece, Ireland, Portugal, Spain, Italy, and Cyprus. Those countries will have to leave the euro, default on at least some of their debts, and institute their own devalued currencies. Then they can reform and hope to rejoin the euro at some future date.

In the middle of 2011, I published a book, Euro: How to Save It, in which I predicted that the first Greek bailout would not succeed, and that the Greeks would run out of money in early 2012. That’s exactly what happened. I also predicted that the euro zone would collapse because of the Greek default. I was wrong on that one – so far.

What I completely underestimated was the willingness of the stronger European countries to bail out every troubled country. They operate on classic Keynesian assumptions: If you can just throw in a little more money, demand will increase, and everyone will live happily ever after. It’s not working out that way, not even in Greece, which has received huge bailouts.”


*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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