After Brexit, the rise of Eurosceptic parties in Italy could well shatter the Euro zone. While the Covid-19 crisis is once again highlighting the basket of crabs that is the European Union, the scenario of an Italexit no longer smiles at all.
The explosion of the euro zone, the second international currency, is something likely. On D-Day, the question will then arise of which currency will be the most suitable for paying international trade. Bitcoin is patiently waiting for its time.
The Euro, this aberrant yoke
The single currency exchange rate reflects Germany’s export power. The Germans are not afraid to sell dearly because competition is weak in its technological industrial niches. The strong euro behaves like a glove to Germany because the Mercedes will sell for both $ 50,000 and $ 60,000. It’s no more complicated than that…
On the other hand, such a price difference on olive oil will necessarily constrain Greek exports which will face fierce competition on the international market. It is easier to plant olive trees than to grow large sedans…
Adopting the Euro is like giving a soccer team cleats that all fit the same size …
It must be understood that the reason for an exchange rate between two currencies is to force the country with a trade deficit to take naturally the necessary decisions to adjust its economy.
Exchange rate ?
If country A has a chronic trade deficit with neighbor B, currency A will naturally depreciate versus currency B (the natural law of supply and demand). Country A is therefore forced to reduce its imports.
To put it another way, it takes 5 minutes for a country to buy your goods from you with paper (its currency) if it does not produce anything that interests you and you could then buy it with these same pieces of paper – which cannot be eaten…
The exchange rate helps prevent trade imbalances from persisting for too long and the inevitable adjustment from happening in pain.
Greece is a textbook case. Thanks to the single currency, the country has been able to run a chronic trade deficit without suffering from a depreciation of its currency. Nevertheless, who says trade deficit necessarily says that money leaves the banks of the deficit country to go to foreign banks. Logic.
German and French banks therefore had to lend to Greek banks for the economy to continue to turn. That was it (debt bubble) or let unemployment rise and / or lower wages. But that’s not what we promised the Greek or Italian citizens when we sold them the euro …
French and German banks knew very well that the Greek debt was going to skid. They bet on the hope that Athens would end up benefiting from European solidarity to fill the barrel of Danaids.
Except that solidarity is absolutely not part of the European treaties. When the eurozone debt crisis exploded in 2010, the head of the German insurance giant Allianz said:
” We torture the Greeks so that the Italians can hear their cries “
Teuton foreign minister made a kind of mea culpa last weekend :
“In this crisis, we need to act quickly, without instruments of torture or other austerity measures. “
But there will be no “coronabond”. The countries of the South have tried to bring the famous “eurobonds” up to date. The goal is to pool debts so that all countries in the euro zone can roll their debts at the same rate.
Germany, the Netherlands, Austria and Finland, too, refused – quite understandable, by the way. Italy – hard hit by the Covid-19 – is in danger of leaving the EU so that northern countries agree to post a bond “Without conditions”.
Greece will appreciate it, it who had to drink the austerity potion of the Troika (ECB, European Commission and IMF) to the chalice so that we agree to roll down our debt at low rates. The diktats of Germany put 40% of unemployed young Greeks (despite a massive exodus of the country’s living forces). A thousand primary and secondary schools have been closed. Thousands of suicides. 1/4 less GDP etc.
That said, the Italian case is not (yet) comparable to that of Greece. If the Eurogroup has just agreed to post a bond so that Rome can borrow at low rates, these funds will be used only for additional health expenses. We are far from a total pooling of the debt that Italy hoped to obtain …
A fate in the English or Greek for the Italians?
All European countries will have the same destiny. France, since 1990, has lost 36% of its jobs in industry while it has remained stable across the Rhine … Almost 100,000 French people fall into poverty every year … Will we have to sell Alsace to Germany one day?
The rich Lombardy finances Sicily and the Bavarian federation finances the Berlin Länder. But do the Germans intend to finance Italian unemployment insurance? Let’s be realistic, without budgetary transfers from the countries of the North to the countries of the South, the euro zone will implode.
It is in any case the opinion of the Italians since an Eumetra poll showed that 70% of Italians are convinced that Germany wants to strangle them …
The other solution that would allow the euro to last would be that the European central bank write off debts. The ECB already holds 18% of French debt (Thanks to Quantitative Easing). It is up to its president, Christine Lagarde, to push for a debt jubilee …
Italy is becoming more and more euroseptic and Chinese philosophy. Here is what the Italian foreign minister said on March 25:
“Those who made fun of us for the new Silk Road deal must admit that this friendship with China has saved us lives. “
Rate-rate will see his banker
Prisoners of a currency that is cut for Germany, European countries look with envy on the other side of the Channel. Boris Johnson’s government has just sidelined its central bank by forcing it to directly finance the government without paying interest.
This is a counter attack against retaliation for the system which deprived England of its AAA last month (Fitch ratings) to punish it for having left the EU. Indeed, the expulsion of the very restricted club from countries rated AAA by the three major rating agencies (Fitch, Standard & Poors, Moody’s) is synonymous with financial strangulation. The reason is that banks are forced to keep more money in reserve when they lend to a country rated AA- rather than triple A. This results in higher interest rates.
Remember that the European debt crisis was triggered by American rating agencies, which have relentlessly degraded the PIGS (Portugal, Italy, Greece, Spain) scores week after week. The Greek 10-year borrowing rate then increased to 30% and that of Italy to 7% … The rate is a financial weapon of mass destruction. Especially when you have, like Italy, the fourth highest debt in the world (135% of GDP). The third country is Lebanon, whose currency has been exploding in flight since the beginning of the year. Greece is in second position (181%). Japan is out of category with a debt which represents 238% of the GDP.
If the European bond to roll the debt – at low rates – must go through a Greek-style austerity cure, dictated by the IMF and Germany, all countries will end up doing the trunk and Italy first.
Let it be said, the boot is on the verge of slamming the door. Salvini’s government even unveiled a parallel currency last summer. The famous “Mini-Bot”. Its true nature has long remained unclear. It was presented as small debt securities issued directly by the government. Titles usable by companies to pay their taxes. But things get crystal clear when you look at the drafts of Mini-bot. It looks furiously like tickets. Big warning shot …
The message is clear to the ultra-liberal, ultra-corrupt Brussels fanatics who are ready for all human sacrifices to keep their monetary Frankenstein: Basta! The racketeering of states with usurious interests, the opening of borders to the four winds thanks to free trade treaties and the fiscal dumping of countries like Luxembourg no longer passes.
“There can be no democratic choice against European treaties”
JEAN-CLAUDE JUNCKER, former President of the European Commission and Prime Minister of Luxembourg, the largest European tax haven that organizes the tax evasion of hundreds of European multinationals …
Bitcoin in ambush
No, Italy will not make Bitcoin its new currency. That will never happen.
However, the Euro being the second international currency after the dollar, its disappearance will again demonstrate the impossibility of building a currency on a larger scale than a sovereign country..
The issue of a stateless, debt-free international currency that, in short, benefits no one in particular, will return to the front of the table. With the dollar in the terminal phase, Bitcoin will appear to be the best solution. No offense to the globalists who would like the IMF or the World Bank to issue a new international currency.
Pure chimera… The IMF already holds the international currency. Her name is SDR (special drawing right). This “currency” was created at the same time as the institution (1945) from a basket of currencies. This other monetary Frankenstein was to serve as an international currency but was never used. Americans obviously prefer to extend the empire of the dollar …
In the meantime, the IMF has turned into an armed wing of liberalism, authorizing loans only on the condition that the beneficiary countries remove all their customs barriers, allow themselves to loot their raw materials, etc.
An international currency will always be doomed to failure. Monetary hegemony is always a death struggle. Who can believe that the Russian Tsar, the treacherous Albion, the Middle Kingdom or Uncle Sam will accept a currency controlled by his geopolitical rivals.
Again, only a decentralized currency that does not offer benefits to anyone in particular will have a future. It must be the expression of fairness without which nothing lasts for a long time.
Leaving the eurozone, Italy will signal the end of the second international reserve currency. In a context of de-globalization and dedollarization, this call for air will have to be filled. It is hard to see how Bitcoin could not gain traction in this new world. Watch for Mini-bots …
Child of Satoshi, the alchemist who turned a cryptographic algorithm into gold.
I’m talking about monetary geopolitics, not shitcoins.