Best of the Week
Most Popular
1.Will UK Interest Rate Rises Crash House Prices? - Nadeem_Walayat
2.Full on Crash Alert for Major World Stock Markets... - Clive_Maund
3.Gold And Silver Market Bottoming? Big Rally Imminent? Reality Check Says NO - Michael_Noonan
4.The Coming Silver Price Rally Will Outperform All Previous Ones - Hubert_Moolman
5.The Trigger For The Upcoming Stock Crash - Harry_Dent
6.Imploding Department Store Results - James_Quinn
7.Dr. Copper is Speaking, are you Listening? ... - Rambus_Chartology
8.Pandemonium in the Stock Market, Dow falls 1,000 points in a week - EWI
9.Asia's Whirling Dervish of Devaluations Has Encircled China's Exports - Keith_Hilden
10.China Weakens the Yuan; Rattles Global Stock and Financial Markets - Gary_Dorsch
Last 5 days
Aging Stocks Bull Market - 29th Aug 15
Economic Destabilization, Financial Meltdown and the Rigging of the Shanghai Stock Market? - 29th Aug 15
The Stocks You Should Be Buying After the Market Drop - 29th Aug 15
How I Learned to Stop Worrying and Love Market Fluctuations - 28th Aug 15
China's Yuan Devaluation: Why It Was "Expected" - 28th Aug 15
Stocks Go Nuts But the Question Remains – Will the Rally Stick? - 28th Aug 15
Fed’s Stock Market Levitation is Failing - 28th Aug 15
The Eight Energy Systems Driving The Stock Market Rout - 28th Aug 15
Silver Sold, then Squeezed - 28th Aug 15
U.S. Economic Fundamentals 'Look Good' - Bullard of St. Louis Fed - 28th Aug 15
Stock Market Margin Calls Mount - 28th Aug 15
Einstein, Physics, Gold and The Formula To End Economic Decay - 28th Aug 15
The 10 Best Stocks for Options Trading Plays in This Market - 28th Aug 15
Economics of a Stock Market Crash - 28th Aug 15
Currency Wars Detonate; Gold Refuses to Budge - 28th Aug 15
UK Immigration Crisis Hits New Record, Trending Towards Becoming a Catastrophe - 28th Aug 15
The Ultimate Cash-Management Guide - 27th Aug 15
Why a Fed Rate Hike Could Be a Blessing for Gold Prices - 27th Aug 15
Why Devaluing the Yuan Won't Help China's Economy - 27th Aug 15
Stock Market Trend & Trade Signal Of the Decade - 27th Aug 15
Keep Your Eye On the Gold and Silver Bear - 27th Aug 15
Refugees Expose Europe’s Lack Of Decency - 27th Aug 15
How to Profit from China's Currency War - 27th Aug 15
How China's Currency Policies Will Change the World - 27th Aug 15
Chinese Medicine not Impressing Dr Copper - 27th Aug 15
Novel Biotech Novel Technology Platforms with Dramatic Growth Potential - 27th Aug 15
China Stocks Bear Market Crash, Are We Near the Bottom Yet? - 27th Aug 15
Stock Market Crash Black Wednesday Rally Crushes the Bears - 26th Aug 15
VIX Shorts Being Squeezed While SPX Prepares for Another Decline - 26th Aug 15
Why China's Economy is Deteriorating - 26th Aug 15
Citizenship as a Weapon: Travel Controls and What You Can Do About It - 26th Aug 15
Gold and Silver - How To Manipulate a Market - 26th Aug 15
How to Make a Quick 20% When the Stock Market Crashes - 26th Aug 15
Why We Can’t Handle A Stocks Bear Market - State Budgets Will Implode - 26th Aug 15
Stocks Bear Market, Is This 1929 All Over Again? - 26th Aug 15
The One Trading Strategy You Needed for Stock Market Crash - 26th Aug 15
Second Chance To Buy Cheap Gold Mining Stocks - 25th Aug 15
Gold Facts and Gold Speculations - 25th Aug 15
The Stock Market Crash Season is Here… - 25th Aug 15
Liftoff Setback Leads to U.S. Dollar Pullback - 25th Aug 15
The Stock Markets Are Extraordinarily Volatile, Here's What to Do - 25th Aug 15
Israel: The Case Against Attacking Iran - 25th Aug 15
Saudis Could Face An Open Revolt At Next OPEC Oil Meeting - 25th Aug 15
How to Calmly Weather This Stock Market Downturn - 25th Aug 15
Stock Market Sound the Alarm - 25th Aug 15
Stock Market Meltdown - Dow Monday 1000 Point Crash then Rebound, What's Next? - 25th Aug 15
El-Erian: Stock Market Sell off Is Not 1998 or 2008 - 25th Aug 15
Gold the Ultimate Financial Crisis Insurance - 25th Aug 15
Stock Market Black Monday Crash Fizzles Out, Next Black Tuesday? - 25th Aug 15
Black Monday - Rolling A Wheelbarrow Of Dynamite Into A Crowd Of Fire Jugglers - 24th Aug 15
Playing the Chinese Trump Card - 24th Aug 15
Gold and Silver: Heading for a “Blue Screen of Death” Event? - 24th Aug 15
Japan Economy Clear Conclusions Concerning QE - 24th Aug 15
Stock Market Blockbuster Right From the Open... - 24th Aug 15
Silver And The Petrodollar - 24th Aug 15
Why the Stock Market Sell-Off Happened – and How to Make Money on It - 24th Aug 15
Stocks Correct, Panic Ensues. The End Of The World? - 24th Aug 15
Stock Market - The Sky IS Falling - 24th Aug 15
SP500, DAX, FTSE - When Stock Markets Talk, Pay Attention - 24th Aug 15
Stock Market Black Monday - Full Crash Alert! - 24th Aug 15
Stock Markets Implode as China Literally Explodes - 23rd Aug 15
Stock Market Bloodbath - The Feds Gonna Need A Bigger Balance Sheet - 23rd Aug 15
Stock Market Due For A Breather (But More To Go) - 23rd Aug 15
Stock Market 20% Bear Market in the Works - 23rd Aug 15
Ankara: the New Capital of Jihad, U.S. Policy for Strengthening ISIS - 23rd Aug 15
Will Rising Interest Rates Crash UK House Prices? - Video - 23rd Aug 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Global Stocks Slide

Eurozone 2013 Breakup Now Even More Likely

Politics / Eurozone Debt Crisis Dec 20, 2012 - 12:13 PM GMT

By: Money_Morning

Politics

Martin Hutchinson writes: To the complete shock of several analysts, the Eurozone managed to make it through 2012 without breaking up. However, 2013 is another story.

Now that Italy's Prime Minister Mario Monti has resigned, there's a good chance that Italy will be in the forefront of a new Eurozone crisis.


That means 2013 doesn't look to be a good year for the euro, either-especially with new Italian elections likely to take place in February.

Of course, the EU establishment hopes that Monti can remain in office, but with four very different candidates now jockeying for position, Italy is one of the continent's great question marks.

Here's why...

The leading candidates in this crucial contest include:

•Silvio Berlusconi, leading the remnants of his former rightist coalition,
•Monti himself, currently in negotiations with several centrist parties,
•Luigi Bersani, leading the left-wing Democrats, currently regarded as most likely to win
•And comedian Beppe Grillo, whose Five Star Movement is leftist and anti-authoritarian.

Of these four, only Monti and Bersani would represent the continuation of the status quo.

Meanwhile, the return of Berlusconi, whom the establishment forced out in 2011, would be a nightmare for the euro. That goes for the ascension of Grillo as well.

In the balance of this pivotal contest could be the fate of the Eurozone itself.

At the extreme, Berlusconi or Grillo (or a coalition between the two) would almost certainly take Italy out of the euro, since Italy is capable of surviving independently. After all, its current account deficit is only 1.4% of GDP.

What's more, any move toward independence by these two would allow Italy to throw off the EU-imposed "austerity" policies that have inevitably proved both unpopular and recession-causing.

At the other end of the spectrum, a Monti government (if one could be formed) would continue austerity and allow the euro to survive - at least until some other country such as France or Spain blew it up.

In the same vein, Bersani would attempt to keep Italy in the euro but would reject public spending cuts and demand even more handouts.

Judging by what Greece has been allowed to get away with, this might well work for a time, but one has to have real sympathy with the German, Finnish, Dutch and Estonian taxpayers who will be made to pay for all this.

2013 Eurozone Forecast: There's More To It Than Italy
And there's the sleeper problem, France. Even if Italy doesn't blow up the euro there's a good chance France will.

Don't be fooled by those bond yields, either. French 10-year government bonds currently yield only 1.97%, far below the 5-6% yields of equivalent Spanish and Italian government bonds - but that only proves that bond dealers can't recognize a crisis until it hits them in the face.

In 2006, after all, they were trading Greek bonds at less than 0.5% yield above German bonds. So much for rational markets.

What's also worrisome are the disappearing French millionaires. They are leaving the country in droves because of President Francois Hollande's ridiculous new tax policies.

It started when Bernard Arnault, France's richest man, made headlines when he renounced his French citizenship for Belgium in October.

However, this flight of wealth is not limited to the hyper-rich like Arnault. Last week it was revealed that French film star Gerard Depardieu had also moved to Belgium. Since Depardieu is a chevalier of the Legion d'honneur and of the Ordre national de Merite, it's not as if he doesn't have substantial ties to his homeland.

Anecdotally, many other wealthy Frenchmen, less well-known than Arnault and Depardieu, are making the same decision. It is tough to live in a country which not only taxes your income at 75%, but then adds an annual wealth tax of up to 2% on your capital.

Meanwhile, France currently has a budget deficit of only 4.5% of GDP, but that will go up, especially as the country is expected by the Economist team of forecasters to have only 0.1% economic growth in 2012 and none at all in 2013 - and given the exit of millionaires, the latter estimate is almost certainly too optimistic.

A Myriad of Reasons the End Is Near
If you want other reasons why the euro might break up in 2013, there is a laundry list of reasons why the end is near.

You can try Greece (even the Germans may someday get fed up of exorbitant Greek bailout demands.) Then there's Spain, which is pretty rickety but no more than that, provided its richest province, Catalonia, doesn't try to secede.

Or Cyprus, which is bust, but most likely to get a bailout from the Russian Mafia who dominate its economy. Or there's Portugal, which everyone's forgotten about and is trying manfully to solve its problems, but is expected to suffer 3% declines in GDP both this year and next - EU-imposed austerity is yet again proving very painful.

Then there's Slovenia, which ought to be rich and solvent, but through mismanagement has managed not to be solvent. And Ireland, which has got part way to solving its problems but isn't out of the woods yet.

You get the picture.

What's more, Germany has an election in September/October 2013.

Currently the Germans appear docile, likely to re-elect Angela Merkel, or possibly her Social Democrat opponents, who are committed to the euro and bailouts.

But if the road between now and then has been too rocky, even German voters may decide giving the government a blank check for four more years of bailouts isn't too smart.

In that case, they will doubtless find a German equivalent of Beppe Grillo and throw the EU into even more confusion.

It's possible that the euro will survive in its current form until next December. But I wouldn't put much money on it.

However, the eurozone's troubles and the United States' apparent strength should make it an excellent year for a European vacation!

Source :http://moneymorning.com/2012/12/20/2013-eurozon....

Money Morning/The Money Map Report

©2012 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Biggest Debt Bomb in History