4 Possible Forks in the Euro’s Rocky Road

by Sean Brodrick on November 29, 2010

There’s a good read at the Baseline scenario today on four possible endgames for the euro.  The four potential futures boil down to …

1) The bailouts for Greece and Ireland work, and the panic stops there.

2) Greece probably leaves the eurozone and restructures its debt.  The deterioration continues on to Portugal and Spain, but a package of EU-IMF support stops the crisis there.

3) three or more sovereign defaults in the next five years — quickly priced into the market (a euro “mini-crash”) and dealt with.

4) The euro splits — with some (the “prudent” countries) having one euro and others (the “imprudent” countries) either sharing another form of the euro or starting their own currencies again.  The positive effects of exchange rate depreciation will be rediscovered, at least for those without too much debt.

All in all, this would seem to point to more weakness for the euro, but I think we may see a bounce first, probably this week.

{ 1 comment… read it below or add one }

Paul D Howard December 3, 2010 at 12:25 pm

Hello Sean,
I have been watching you for several years in fact it was because of your reports about Gold and Silver 21/2 years ago that I bought Silver &n Gold Proofs. I am changing my mind about proofs as the premium on proofs is too high and you rarely make the full value back on proofs. I am thinking on selling all my proofs and investing in ETFs for a package of minerals. I just wonder if you feel the same way about Proofs.

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