Analyst: The Euro is Already a ‘Zombie Currency’
- Posted on August 22, 2012 at 1:52pm by
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[Editor's note: the following is a cross post that originally appeared on CNBC]
The euro zone is currently in chaos with the euro no longer being functional and order will only be restored by giving struggling member states their currency back, according to Matthew Lynn founder of Strategy Economics.
“The euro is already dead. It no longer meets most of the criteria of a working form of money,” he said in a research note published Wednesday.
Politicians in the euro zone have begun a round of shuttle diplomacy this week in an attempt to find a solution to the crisis. Greek Prime Minister Antonis Samaras is holding talks with euro zone chief Jean-Claude Juncker on Wednesday to try and gain Greece more time to deliver the terms agreed on their 130 billion euro ($162 billion) bailout.
Lynn believes that any progress made by European politicians is irrelevant as the euro has already turned into a “zombie currency”.
He says countries can no longer use the single currency for imports meaning it is effectively ceasing to act like money.
“There are already reports that oil traders don’t want to supply clients in Greece,” Lynn said.
“Why not? Because in six months’ time when payment falls due they may not get paid in the currency the deal was struck in – but one worth much less.”
Lynn says that wealthy European investors are fleeing the euro to safe-havens such as the London property market.
He warns that the euro is de-monetizing because trade has stopped flowing, investment has been postponed, output has declined and unemployment has begun to rise.
He suggests that peripheral member states with high bond yields should be allowed to leave the euro and predicts that their recovery would be swift if they were allowed to do so.
“Once countries such as Italy and Spain get their currencies back, there will be a very rapid improvement,” he says.
“Having any kind of functioning currency, even if it is one that has hugely depreciated in value, and doesn’t have much respect in the currency markets, is a lot better than having no currency at all.”
Once weaker members have exited the euro zone, Lynn believes their equity markets will improve. He says the real question should be when investors should start buying European stocks again.
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- Austria’s AAA Rating Under Attack from East to West
- Yachts Raided by Tax Authorities in Italy
- ECB Bailouts Will Not be Unlimited for Euro Zone: El-Erian
© 2012 CNBC.com, Matt Clinch.
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Comments (52)
JUSTANOTHEROPINION
Posted on August 23, 2012 at 2:26amThe media rushed in to call Glenn Beck crazy. Now, instead of admitting he was right they are rushing to change the subject. Lies allways have a way of catching up to you and that will be the established medias down fall.
Report Post »universalphilos
Posted on August 23, 2012 at 1:13amJuly 21, 1978: “Yes, we see thy need. And we shall answer in this manner: glory be the name of the Lord; glory be the name of His children, forever and ever.
Report Post »We say unto you these words. The Anti-Christ now knows of his dominion and walks upon your Earth. A way is being prepared for his time and his rule. That of the recent conference between your European countries and your own [U.S.A.] was a major part in the power he shall draw from. The other side of the coin will be that power he shall draw from China and Russia….”
We warn you now, the war of Armageddon is about.”
http://www.angelfire.com/in4/aup_messiah/1978July21.audio.html
Marv Fox
Posted on August 22, 2012 at 7:08pmIf the European socialists hadn‘t been zombie politicians whose basic purpose is redistributing money that doesn’t exist, the Euro wouldn’t be a zombie currency. Socialists seem to be totally ignorant of why money has value, how the value is generated, and how to maintain and even increase the value of money. They want validation for their agenda, not the facts that prove its unworkability. We can not teach them, but we can get rid of them. November is the get rid of Marxists/Progressives/Socialists/Democrats month.
Report Post »A vote against any Democrat is a vote against every Marxist, whatever he calls himself.
Marvin E. Fox
lukerw
Posted on August 22, 2012 at 8:20pmThe History of Europe… is the history of Lords whom ruled over Illiterates. Effectively… the same today!
Value = Rarity; Wages = a storage of the Energy for Work Performed producing a Product or Service; Price = a Value for something given as a Supply, which is upheld by a Demand to pay in transfer of Wages; Money = the representation of increments of Wages, where the Value is established by Pricing. Yet, in fact, Money Markets set the actual Value of a Currency! Whereas, the Real Value of Money depends upon How much is printed, How much is in Circulation, and How much is being Saved. But, as a Debit & Credit causes Money to exist… Money actually has ZERO Value. So, it is all PERCEPTION!
Report Post »ginge
Posted on August 22, 2012 at 9:31pmThere is an easy solution to Europe’s financial crisis. Their debts are owed to other European countries. So if they want to keep the EU intact and stable they should all agree to forgive each other’s debt.
Report Post »We in America owe the Chinese and others like Japan,UK.Russia. I don’t see China forgiving our debts.
The truth is all the leaders of individual countries are working together to manipulate their economies into a crisis. At an agreed upon time these conspiring governments leaders will let global wide collapse occur thereby ushering a new world order. They keep everybody plied with newer bigger crisis announcements designed to make beg for help and all the while conditioning us to be grateful for their intervention. No matter the intervention will rob us of our wealth and our freedom. We and European countries have already lost our sovereignty. Greece is being rebuked for patrolling their borders as illegal migrating hordes threaten to overwhelm their ability to survive.
Here in the US we have huge numbers illegal immigrants coming across our unsecured border. Certainly the young immigrants given waiver from deportation and freedom to work he legally. On extension it is clear will wind up on unemployment. If there isn’t enough jobs for citizens. where are these new illegal immagrants going to find jobs.
Just giving them education and health care is going break state and local governments.
jwt
Posted on August 22, 2012 at 9:44pmthe modern US, is lords ruling over the dumbed down by the modern education system
Report Post »johnjamison
Posted on August 23, 2012 at 11:15amginge,
Report Post »What planet do you live on if debts are not paid they don’t go away. And the country hurt the worst in that scenerio are the country doing the best with the hardest work force and work ethic. More over debt once forgiven will be assumed to always be forgiven and even more will be demanded. Basicly you give a man a fish today he‘ll be back tomorrow wanting two fish and he’ll bring his freinds and family with him. Real change only happens when there are no more free options. Let the euro fail and let the country who people are willing to sacrifice to build a better country become stronger and let those will self center people collapse into third world country. You can’t fix stupid,lazy or vain..let them reap the whirlwind
ALL4FREEDOM
Posted on August 22, 2012 at 6:51pmAnybody remember all those Euros the Fed bought? Now what? Herman Cain has the answer in 9-9-9 An Army of Davids. Completely junk the existing tax codr. Flat tax of 9% on individuals and businesses and a 9% national sales tax. Eliminate all the other taxes; capital gains not taxed. 100% deduction for capital improvements in the first year, i.e., no depreciation schedules. Go back to sound money (gold standard). Cut, cap, and balance the budget. Announce this plan on election day and you will have a TSUNAMI of capital flowing into this country.
Report Post »pissantno.10
Posted on August 22, 2012 at 6:10pmwater if i was you id be moving to some super smart country. golly you gots it all figggger out dang it all.
Report Post »The_Cabrito_Goat
Posted on August 22, 2012 at 4:56pmWe aren’t nearly ready for any sort of economic crisis before this election, let alone before inaguration day.
Report Post »girlnurse
Posted on August 22, 2012 at 3:45pmMeanwhile…have you heard about Greece rounding up illegal immigrants???
Report Post »And here in America we are not only letting them come–we are ushering them in by the boatloads and paying their way!!
http://www.thegatewaypundit.com/2012/08/greece-continues-to-round-up-illegal-immigrants/
KeithOlberdink
Posted on August 27, 2012 at 1:49pmThe lines are forming now. Mass exterminations are on the way. Make no mistake, the political party in the oval office right now would exterminate 50% of the population in America based on their political beliefs (given the right environment). Obama, in the right environment could easily be a Hitler toward conservatives. We must not stick our heads in the sand and say (couldn’t happen) The jews said the same thing in WW 2. Support your local NRA.
Report Post »carpenb94m
Posted on August 22, 2012 at 3:19pmOff topic, has anyone noticed that there has been about five stories about “right wing extremists”? One on Nazis in the army, ruby ridge, Anders brevic, and a couple others I don’t remember off the top of my head. Something doesn’t seem right. Smells like a lead in.
Report Post »carpenb94m
Posted on August 22, 2012 at 3:35pmSorry, forgot to say stories were featured on Yahoo.
Report Post »David, the Constitutional Libertarian
Posted on August 22, 2012 at 3:05pmOnce they get their currencies back, things will improve. Bwahahahahhahahahahhahaha
Report Post »You do not fix something by changing the color of your fiat currency. The underlying disease has to be addressed, not the symptoms. I find some of these economists to be such morons.
lukerw
Posted on August 22, 2012 at 3:21pmExpertise in Formula… does not translate into a Useful Wisdom!
Report Post »South Philly Boy
Posted on August 22, 2012 at 2:58pmI knew that something list this would happen from day-one
Report Post »nobull14
Posted on August 22, 2012 at 2:56pmGlenn Beck said this was way it was going almost 2 years ago ?. If I remember right they were saying he was crazy. Look now the so called expert were wrong.If something is not done soon ? We are not far behind .
Report Post »Quixotic-911
Posted on August 22, 2012 at 2:44pmYou can’t use a one for one comparison between the U.S. and the Euro. It’s not like our currency will disintegrate into 50 different currencies. Of course we can still implode like they are.
Report Post »bum
Posted on August 22, 2012 at 2:34pmso, why is the euro 30% stronger than the dollar then?
Report Post »cemerius
Posted on August 22, 2012 at 2:46pmNever could understand WHY it has been valued more than the dollar from the beginning?!?!?!
Report Post »AintLIBSjuzGreat
Posted on August 22, 2012 at 2:51pmit has been pegged to the swiss franc .based on U.S. gdp vs. euro gdp it would be fare to say that the euro is min.20% over inflated
Report Post »watersRpeople
Posted on August 22, 2012 at 2:52pmWhen a fly is buzzing around inside your car while the car is driving 100 mph down the highway the fly has no idea it‘s traveling 100 mph because it doesn’t feel the wind. At that moment the flies world is all relative to the inside of the car. That probably doesn’t do much for you.
Report Post »Stoic one
Posted on August 22, 2012 at 2:30pmSo we see how the New World Order works when implemented…..like a clogged septic tank that has backed up into the house. Yep Pepi LaPew likes it a lot…..
Report Post »woodyee
Posted on August 22, 2012 at 2:24pmScenes I’d like to see (and probably coming soon) – droves of folks exchanging their euros dollars, and then depositing them in US or US-related banks for safety.
Scenes I’d hate to see – China sees our coffers filling and decide to cash in their chips…
Report Post »lukerw
Posted on August 22, 2012 at 2:19pmThe Rape of America is in Progress…. Thank you BILL CLINTON (you A$$) for starting it!
Report Post »watersRpeople
Posted on August 22, 2012 at 2:32pmYou’ll just sit there and whine as it happens, because you think some super-hero like Flash Gordon or Super-Man will come to the rescue. And the military will never help because there might not be a Bronze Star in it for them.
watersRpeople
Posted on August 22, 2012 at 2:41pmThe average American thinks life’s all about tail-gate parties, and the next time they can chug a beer. Not that there’s anything wrong with beer, the problem is that you [drink the strong-drink of life], and that’s all you think there is to living.
Report Post »watersRpeople
Posted on August 22, 2012 at 3:07pmThe good times come when you folks figure out life isn’t about getting the best job, the best salary, the best seat at the game. That’s when you drink the good wine. “This Bud’s for you.”
Report Post »lukerw
Posted on August 22, 2012 at 8:55pm@WATER…
Report Post »The point was: You cannot turn back Time; and Americans loved Clinton & Obama even though they Destroyed the Nation. So, there is no place to Run & Hide… or enough Booze to fix your Brain. SUCK IT UP!
copatriots
Posted on August 22, 2012 at 2:14pmIt’s difficult to believe that anyone thought the Euro was ever going to be a sustainable currency.
Report Post »lukerw
Posted on August 22, 2012 at 2:23pmJust the people in Power… Socialists in Europe; Liberals in America… whom agreed to Force the Will of the Elite upon their Populations!
Report Post »TEARS FOR AMERICA
Posted on August 22, 2012 at 2:14pmAnd we’re 16-trillion in debt with still NO BUDGET…heh, Harry, (not the naked one who had a little too much in Las Vegas) where’s the budget?
Report Post »starman70
Posted on August 22, 2012 at 2:58pmThe DOLLAR will soon be joining the Euro and the Deutschmarks of the pre world war II WEIMAR Republic era on the trash heaps of financial history.
Socialism has totally destroyed Europe and yet, the eggheads in Congress and the past few predicents can’t see it. We continue to follow the same paths. WHY?
Report Post »SREGN
Posted on August 22, 2012 at 2:12pmYet this is the model progressives want us to adopt.
Report Post »blazingaway
Posted on August 22, 2012 at 2:17pmyes so we can bail them out and then be left holding yet another bag of crap
Report Post »watersRpeople
Posted on August 22, 2012 at 2:06pmIt isn‘t rocket science that a Socialist spirited nation isn’t worth very much money.
Report Post »DimmuBorgir
Posted on August 22, 2012 at 2:04pmgood, screw europe
Report Post »watersRpeople
Posted on August 22, 2012 at 2:11pmWhat do you mean “Screw Europe?” Don’t you think that same thing is coming to the U.S too?
Report Post »lukerw
Posted on August 22, 2012 at 2:14pmThe Federal Reserve has TRILLIONS in Europe to Support it, and received Euro Assets… so as Europe goes… so goes America!
Report Post »watersRpeople
Posted on August 22, 2012 at 2:22pmEach U.S state and their municipalities have been often selling debt, and bonds almost as if they have their own currencies like European nations. Therefore the same thing in Europe is coming to the U.S, and those municipal-bonds won’t be worth hardly anything, and it will be much much worse if the world dumps the U.S dollar completely as the Reserve currency. The painful truth is that most people are good for picking beans and corn, that’s really just about it. It has been an illusion that has made you think you are what you are.
Report Post »watersRpeople
Posted on August 22, 2012 at 2:27pmFor the longest time Americans have had crap dumped in their heads even for some 50 years including the childhood songs they would even learn in elementary school that makes lying seem fun. The only Americanism that mattered came from the Founding Fathers and died a few years later, and for well over 150 years America hasn’t been worth a crap.
Report Post »watersRpeople
Posted on August 22, 2012 at 2:36pmAccording to my estimations – Americans have a lot of seeking God to do.
Report Post »DimmuBorgir
Posted on August 22, 2012 at 3:02pmI mean screw europe. I do care about our economy. But still, screw them
Report Post »watersRpeople
Posted on August 22, 2012 at 2:03pmWhen they get their currencies back the currencies won’t be worth very much, and some few rich who are left will come in and buy the entire nation and people.
Report Post »watersRpeople
Posted on August 22, 2012 at 2:13pmAnd maybe they will make all worship them as gods.
Report Post »cerebralyawn
Posted on August 22, 2012 at 6:48pmthat’ll be Soros
Report Post »progressiveslayer
Posted on August 22, 2012 at 2:03pmEuropeans don’t feel bad America will follow suit soon with our disastrous monetary policy brought to you by uncle Ben at the Fed.He‘ll keep printing until it’s worthless and ole Soros will make billions on your demise.
Report Post »Chakley
Posted on August 22, 2012 at 5:28pmThe madness of the fed counterfitting money to pay off promises elected officials make in order to get elected has to stop!!
Report Post »woodyee
Posted on August 22, 2012 at 2:03pmWhat?!?
Socialism FAILing? Yet AGAIN?!?!
Dan Blather must be trying desperately to squirm out of his dirty diaper – again. I think he first really messed himself when Romney chose Ryan…
Report Post »watersRpeople
Posted on August 22, 2012 at 2:00pmAnd when they get their currencies back the currencies won’t be worth very much.
Report Post »