Wednesday, April 4, 2012

Eurogedden Part One

The shift from an American centric to a global centric investment strategy for American banks and corporations has been a boon for them. Not so much for us. Bank of America is just one example of a bank that has invested a large amount of money in Europe and loans to European companies and nations. The fully intertwined economies of the dollar and the Euro is like two kids on a see-saw. Sometimes one is up and the other is down, sometimes vice versa. Sometimes it is an even keel. When the Euro collapses completely, it will send the dollar side of that see-saw straight up into the air, briefly.

What happens when one kid gets off the see saw and the other doesn't? There is a crash. Investors alternatively have been choosing to place their investments into either the dollar or the Euro, once the Euro is done, there will be a frantic move of all Euro backed investments to the closest similar type investment, or our Dollar. The dollar will enjoy a brief time at the top as everyone in the world is just trying to get out of the collapsing Euro then the Euro will be off the see saw.

Once the end results of the crash of the Euro are felt here in the US, it could be a week, a month or three months if we are lucky before the crash of the dollar begins. We would have a maximum of one business quarter before all the businesses in the US realize that exports from Europe are just not coming. If the FED institutes yet another QE attempt, that may delay the collapse beginning but will only deepen the effect once it happens.

Let's look a little forward in time this week, and assume that today we have seen the news that the Euro is history. What do we do? Where do we start? There IS a lot for us to do, and some of it will sound a little odd. If you have any additions or ideas, please feel free to share them below in the comments section.


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