Dear CIGAs,
When Harry speaks, I listen. I understand he is writing monthly for the Adens.
Dean Harry Schultz send us the following:
Buy euros because Greece, Spain and Portugal are going to default. Germany controls Europe.
Theme: The weak countries will be forced to leave the euro. The euro thus becomes stronger.
Recommendation: Buy and hoard euros.
This makes sense, or at least is ok for diversification of assets. Especially if you live in the EU.
Harry
Buy euros – the single currency is finished
The debt bill is too high for the Club Med nations and they will have to leave the zone, says Jeff Randall.
By Jeff Randall 5:58PM GMT 26 Jan 2011
Rather than work hard, live within his means and save for the future, a dissolute student decided to invent a system for beating the bank at roulette. After months of experimentation with betting patterns, his quest bore fruit: a foolproof way of creating riches – or so he thought.
The problem was, in order to exploit his genius a bankroll was required. At this point, a credulous father was inveigled into the scheme. Suspending disbelief, the hapless parent signed a six-figure cheque and wished his son good fortune as the boy left for Las Vegas.
After a few days with no contact, Dad started to fret and sent the lad a tentative message: “How are we doing?” No reply.
A week later, he tried again, only this time was rather more panicky: “What’s happening?” Still no reply.
Finally, the desperate man sent an ultimatum: “Get in touch – or else!”
His delusional offspring eventually replied: “Delighted to inform you system is working. Please send more money.”
This, now, is the position of the Club Med countries within the eurozone. The single currency is functioning so brilliantly, its vulnerable members are sliding towards bankruptcy. Frittering away their credibility in remorseless bond markets, they turn to Das Scheckbuch in Berlin for hard cash.
On current form, Greece will be paying nearly 10 per cent of its GDP in interest by 2015. Portugal’s 10-year borrowing costs are close to an unsustainable 7 per cent and would be even higher were it not for market manipulation by the European Central Bank. And Spain is sitting on 700,000 unsold homes, 20 per cent unemployment and a 33 per cent deterioration in competitiveness against Germany since the euro was formed.
Yes, the system is working a treat. No luck required, just more money. But from where will it come? The bail-out fund of 750 billion euros, cobbled together by the European Union and IMF, will not be enough. It may buy time, allowing Athens, Lisbon and Madrid to play the wheel for longer than they should, but their financial attrition grinds on.
