Chaos Theory, or Why EJ Is My Favorite Meteorologist

[raja]

Re: Chaos Theory, or Why EJ Is My Favorite Meteorologist

My view is also that a Euro breakup is unlikely, but my reasoning is different.


Thus a 'breakup' of the EU must be defined as well: is Greece departing/being pushed from the EU considered a breakup? Germany?

c1ue,

If I understand your prediction correctly, you are saying that Germany will probably leave the EU, but the remainder of the members will stay unified. Does that include Greece?

A quesiton for anybody -- Has EJ weighed in on the possibility of an EU breakup?

[jiimbergin]

Re: Chaos Theory, or Why EJ Is My Favorite Meteorologist

I'm curious . . . how do EJ's predcitions influence your investment decisions?

I let my subscription lapse a couple of years ago because I didn't see any practical effect on my investment decisions. Maybe I should reconsider?

I went from an active trader to a very modest trader in 2008. Most of my non realestate assets are in gold and cash(treasuries). My only concern now is to know when to get out of gold and into what? I think EJ will be among, if not the first, to figure that out.

[c1ue]

Re: Chaos Theory, or Why EJ Is My Favorite Meteorologist

If I understand your prediction correctly, you are saying that Germany will probably leave the EU, but the remainder of the members will stay unified. Does that include Greece?

What I've said for a while is that Germany is a very different animal than the rest of the EU. It is possible that the rest of the EU will allow itself to be federalized enough for Germany to be willing to open its checkbooks, but I do not personally see any possibility of a continuation of the present situation where the rest of the EU essentially rides on Germany's credit rating.

Thus I do not have a specific prediction because there are several variables which are at least partly political: Will the rest of the EU accept a significant degree of federalization? Will populism overwhelm Eurocrat-ism in the federalization struggle?

As for what the EU might look post-Germany (if that indeed happens) - a much more likely scenario is a pullback of EU membership. Those nations which can pull their weight or look to be able to pull their weight soon will stay in; those like Greece who cannot will be out. Historically there is a good reason why the core European nations were closely involved with each other, but much less so with the periphery.

Thus while you can walk from Denmark to Greece in a couple months, the sheer geographic proximity doesn't equate to automatic economic synergy.

[DRumsfeld2000]

Re: Chaos Theory, or Why EJ Is My Favorite Meteorologist

Clue
I think that you see the situation pretty well. I also believe that Germany will leave and my German friends are becoming more and more angry with the situation. I do not think that Frau Merkel will survive the election in 2013.
In my view a small European core will get established. If it is based around Germany then those countries will have to be prepared to be subservient to Germany and the Budesbank. A hard thing to accept by many countries in Europe due to history, however, it is not impossible and many Europeans have a reluctant admiration for Germany. So Germany may go it alone. Germany itself is looking East towards Russia and China. Look at exports to China.

[aaron]

Re: Chaos Theory, or Why EJ Is My Favorite Meteorologist

Wow... think where that leads. Germany is forced out of the Euro because they work hard and are conservative. In doing so, may cause great pain to German citizens. Do the Euro countries have the same military forces as Germany? Do some countries think breaking treaties are acts of war? Do their leaders deflect blame as deftly as ours?

That road looks bleak.

Printing Euros, on the other hand, does not sound too bad in comparison.