Virtual Money

The law of unintended consequences can sure hit you upside the head. Just like synthetic credit default swaps - essentially a bet on assets that do not exist-- helped create the financial disaster of 2008, the virtual money floating in Europe is building to a crisis since a noted economist has recently concluded that if the EU fails, Germany will be owed 500 Billion euros by the ECB which will no... [more]

The law of unintended consequences can sure hit you upside the head. Just like synthetic credit default swaps - essentially a bet on assets that do not exist-- helped create the financial disaster of 2008, the virtual money floating in Europe is building to a crisis since a noted economist has recently concluded that if the EU fails, Germany will be owed 500 Billion euros by the ECB which will no longer exist. (link below) So Germany must hold the EU together or face financial disaster. I have been following esteemed analysts such as Kyle Bass and Ray Dalio who have said (basically) that the only solvency in Europe is in the German banks and the German power base and its populace will never fork over the appropriate money to bail out Europe. Thus the EU is doomed. This new analysis concludes that if the EU fails, Germany goes down with it. With the new elections in Greece and France threatening the glue of the EU, the show is about to get very interesting. You can basically argue any side: The EU will fail, the EU will hold, the US will suffer, the US will prosper, there will be global decoupling or there will not. All in all, the mattress is looking like a cozy place for cash. No wonder there is so much money on the sidelines -- including my little nest egg. As much as I would like to sink it in a manhattan condo, I think there has never been a better time to wait out the maelstrom. http://www.spiegel.de/international/europe/0,1518,818966,00.html [less]