The Euro skidded to 1.22 per US Dollar last night, as international investors scorned the $1 Trillion Dollar package put up by Trichet and the other Political Play Boys and Girls of Europe.
The FOREX market is a Global Game. Traders around the world exchange up to Eight Trillion Dollars worth of currencies and derivatives in one 24 hour period!
It is not a game for people who believe in fairy tales. The World’s Forex Traders have heard every song and dance ever written by politicians or their creative B.S. Artists. Obama’s Team, Merkel’s Team, Sarkozy’s Team, etc., have a long way to go, before they can convince these traders that they need to spend millions of dollars on pieces of paper that are essentially worthless. With their careers on the line, the Forex Traders are super skeptical.
I have been in the Forex Market since 1987, and I can vouch for their talent to ignore statements made by the World’s Politicos and their charming, but untruthful, media reports.
EUROPEAN LEADERS THREW DOWN THE GAUNTLET
We have a Trillion Dollars, the European Leaders said three days ago, And we are going to save the Euro! After those words were spoken, the Euro tanked!
Are the words of five actors more important than the behavior of six hundred million people? All the news from Europe indicates that the Southern Tier of countries: Greece, Italy, Spain and Portugal are suffering from unemployment and economic depression. They have no significant exports except food products.Â Their populations are inundated with cheap foreign labor which pays no taxes and forces local labor to demand governmental support.
In Spain, for example, Spanish farm workers are not wanted by the Spanish farm owners. The farm owners prefer foreign workers because the foreign workers work harder and are docile. Many of the foreign workers kick back part of their wages to the Farm Owners or their supervisors.
As a consequence, Spain is nearing a 27 percent unemployment rate in the area of Andalusia in the south.
There is no way that Spain can pay its foreign debts. It is following Greece into the Arena of Defaults.
HIDDEN DEBTS OF THE U.K.
In the last few days, the new government of the U.K., the Conservatives, have discovered that the preceding Government, Labor, had spent hundreds of billions of Pounds in Hidden Debt.
THE NEW DISEASE: DEBT
Once again, we see the new disease, Debt, pop up in an unexpected location.
The U.K. is not a south European nation, but it is a place where the people have little to say about how they are governed.
Here is an excerpt from the Daily Forex:
British Pound, Euro Extend Decline as Mounting Uncertainties Weigh on Market Sentiment
The British Pound extended the decline from the previous week and slipped to a fresh yearly low of 1.4255 on Monday as the uncertainties surrounding the prospects for fiscal policy weighs on the outlook for future growth.
GOLD – THE SAFE HAVEN
People, across the world are turning to Gold, as the only “currency” that is historically Safe. The price of gold hit $1250 this week, and many speculators are talking about $1500 within the year!
Here is a note from The Economic Times:
SINGAPORE: A climate of uncertainty fed by debt and currency crises is driving investors to take refuge in gold, raising prospects that investment demand for the precious metal will outstrip that from jewellery in 2010.
Gold’s use in jewellery has long been a key factor in determining its price, but analysts say investment could take center stage this year as investors’ faith in the euro is eroded by growing anxiety over contagion from the debt crisis in Greece.
Buying by investors via gold-backed exchange-traded funds sent gold to a lifetime high near $1,250 an ounce this month despite a lack of demand from jewelers, which highlights a structural change in the bullion market, analysts say.
And bullion prices could keep rising analysts say, with more and more raising forecasts towards $1,500 or higher as worries about the integrity of paper money and the strength of sovereign debtors drive investors into the ancient store of wealth.
There is one underlying economic force controlling the currency values of the West. That force is DEBT.
Debt is the manifestation of a agreement between lender and borrower that permits these two parties to enter into an unnatural relationship – that the borrower must work for the lender at a future time. As we all know, work is not a desirable form of behavior. People, instinctively, do not want to work – especially to pay for something they have already enjoyed.
All religions reject lending as unnatural and evil.
At the present time, almost every country in the West has debt that cannot be repaid within one decade!
The only countries that have no future commitments are the small countries of: Switzerland, Luxembourg, Netherlands and Denmark.
All the large countries, including Germany, have large debts. The Germans and Austrians, because they retained their manufacturing, are capable of repaying their debts.
This fissure between the weak and the strong may easily break up the Euro Zone. Speculators are taking sides, and, at the moment, they are betting on the reduction of the Euro.