Kicking Off the "Farewell Euro Tour"
Today’s issue of The Daily Reckoning features the first installment of the “Farewell Euro Tour” — a collection of on-the-street conversations with ordinary folks in Europe about the Greek crisis, and about what this crisis portends for the euro zone. The tour began in the Netherlands, then moved south to Switzerland and then to Italy.
Generally speaking, support for “saving Greece” was tepid at best. Although most folks expressed some vague notion that rescuing Greece was worth trying because it was probably in the public good, most folks also expressed a strong preference for their old national currencies. The Dutch, in particular, preferred their guilder. But the Germans preferred their marks and the French their francs too. Even the Italians preferred their liras.
In other words, as we pointed out a few days ago, “The EU’s bailout schemes seemed to have captured the minds of Europe (like a hostage), but very few hearts. Resignation is the dominant emotion, not resolve.” Take a look…
Watch the video here.
However bleak the prospects for the euro may be, it remains a viable currency for the moment. In fact, one euro will still buy one US dollar and 33 cents, which isn’t that much below its all-time high of $1.49. Furthermore, $1.33 is still very far above the euro’s all-time low of $0.82 — the point being that the euro crisis is not very crisis-like…yet.
But we think a genuine crisis is coming…and there will be no mistaking it when it arrives. The euro may not blow apart completely — although that outcome would not surprise us — but it will stumble noticeably…at least relative to gold.
The dollar may rally against the euro initially, but it, too, is facing a frightening future. The world’s faith-based monetary system is testing the faith of all participants. If that faith should fail, the consequences will not be pretty.
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