Germany Prepares to Exit Euro as Sovereign Debt Crisis Grows

Thursday, 06 October 2011 10:12

'According to Pipi Malmgren, however, Germany will abandoned the euro and

re-introduce the Deutschmark mark and this will spell disaster for the beleaguered

euro. She claims the German government has already sent orders for the currency

to the printers.

“The markets are very likely to have to contend with the re-introduction of

Deutschmarks in the near future,” writes Malmgren, who is a consultant for

Deutsche Bank and is the former Special Assistant to the President of the

United States for Economic Policy on the National Economic Council and former

member of the U.S. President’s Working Group on Financial Markets.

“This is bound to mean a collapse in the value of the Euro for those countries

that will remain in it (devaluation for the rest of Europe). This step may seem

unthinkable but, I believe that the German government is telling us in multiple

ways that there is no other solution from their point of view.”'

Germany Prepares to Exit Euro as Sovereign Debt Crisis Grows

Kurt Nimmo

October 5, 2011

The results of a poll released today reveals that more than half of all Germans have

absolutely no confidence in the euro and want to bring back their national currency,

the Deutschmark.

A Forsa poll conducted for Stern magazine said that 54 percent of Germans favor a return

of their former currency, an identical figure to a poll taken in May 2010, according to

Reuters.

The debt crisis cancer continues to spread.

In the 1990s, the Chancellor Helmut Kohl’s government had a difficult time convincing

Germans that a switch from the mark to the euro was in the best interest of the country.

Despite the weakness of the currency amidst a rapidly spreading debt crisis,

Chancellor Angela Merkel has said she will defend the euro.

According to Pipi Malmgren, however, Germany will abandoned the euro and re-introduce

the Deutschmark mark and this will spell disaster for the beleaguered euro. She claims the

German government has already sent orders for the currency to the printers.

“The markets are very likely to have to contend with the re-introduction of Deutschmarks

in the near future,” writes Malmgren, who is a consultant for Deutsche Bank and is the

former Special Assistant to the President of the United States for Economic Policy on the

National Economic Council and former member of the U.S. President’s Working Group on

Financial Markets. “This is bound to mean a collapse in the value of the Euro for those

countries that will remain in it (devaluation for the rest of Europe). This step may

seem unthinkable but, I believe that the German government is telling us in multiple

ways that there is no other solution from their point of view.”

Malmgren notes that the crisis has spread and the Europeans are warning the United

States to devise a plan to nationalize Bank of America.

Following a downgrade by Moody’s Investors Service, the Bank of America’s stock

took a dive in August. The bank is currently battling a lawsuit by a stockholder

that alleges it failed to disclose it owes more than $10 billion to American

International Group Inc. in connection with mortgage-backed securities.

Bank of America’s problems are significant and have ominous implications for the economy.

The transnational banking and financial services behemoth is the largest bank holding

company by assets in the United States and the second largest bank by market

capitalization.

“The multiple lawsuits against Bofa and other banks alone will render the US banking system

vulnerable to any dramatic announcement out of Europe. But, no doubt US banks have

immense exposures to European institutions and some may even have sovereign credit

risk directly on their balance sheets,” writes Malmgren.

Malmgren also underscores the fact that there is very little willingness on the part

Germany to “write a check” to bailout teetering Eurozone members. She pointed out

that there is no meaningful collateral – short of nationalizing industry – to underwrite

such a bailout.

Not surprisingly, the corporate media in the United States has failed to mention Malmgren’s

commentary.

In response to the growing crisis and a contracting economy, the IMF has called on the

European Central Bank to slash key interest rates and reverse two earlier hikes. The

ECB “should lower its policy rate if downside risks to growth and inflation persist,” the

Washington-based IMF said in its biannual regional economic outlook for Europe, according

to Bloomberg.

Figures published today by the European Union’s official statistics agency Eurostat reveal

retail sales falling 0.3% in August from July, driven by a huge drop in Germany, the currency

area’s largest economy, the Wall Street Journalreports.

Malmgren predicted both the United States and Europe will experience growing stagflation

as living costs rise and high unemployment persists. Fed policy in the U.S. will vacillate

between fighting high inflation (as it did in the 1970s) and more ruinous Keynesian efforts

to stimulate the economy.

Thursday, 6 October 2011