Counter-intuitive I know, but the fact is that the weaker member states leaving the euro effectively makes the euro the Deutschmark, which is worth more usd.
You will incur heavy losses betting against the euro. It can and will appreciate against the usd as weaker member states leave.
steveo say
So what happens to the "excess euros" that get abandoned by these weaker states, they also rocket up in value?
I think your basic premise the Euro is a weighted average of some phantom equivalent FX value is just wrong. There isn't any phantom equivalent currency. From a mathematical point of view I see the beauty of that as a simple equation, but I see no reason to think that it is true.
Your thesis makes sense, but it assumes 1, They don't print to save the eurosystem, and that 2. People don't flee the euro en masse to other currencies.
ReplyDeletePersonally, I wouldn't want to have my life savings in euro ATM... But I'm not like most people...
The top thesis was someone else's (skeptic84)....it was so contrarian to my thinking that I thought I would vet it a bit. Maybe he is born in 1984....lived entire life in an easy money bull market.
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