When the EU nations joined the EU, they lost the ability to independently print their own currencies. For the profligate welfare states like Greece and Italy and Spain, this was like an alcoholic moving to a dry county with no intention of sobering up. The only question here is, “What were they thinking?”.

I remember myself thinking in 1999, as the EU was launching the Euro, that this couldn’t possibly work … and I’m not even an economist and I have no direct statke in the success or failure of the European currency. How could this obviously flawed notion have gotten the approval of so many European legislatures and heads of state?

You are absolutely right that the U.S. has even bigger problems than Europe. California’s default will dwarf that of Greece, and our deficits and money printing guarantee that the dollar will eventually die the typical paper currency death.

The recent focus on Greece and Spain is because 1) their problems are coming to a head right now, making them breaking news, and 2) the euro and dollar are linked by our trading relationship. So what happens there matters here.

Europe’s problems are in part due to the euro’s strength in recent years. So as it falls versus the dollar, the problems (of exports being priced out of foreign markets) will migrate to the U.S., forcing us to devalue even more aggressively, which will cause the euro to rise, and so on, until both currencies wither away. The pound is toast regardless.

The focus of this site will probably shift according to which over-indebted state is imploding. If Europe gets its act together (a big if at this point) it will probably be at the expense of California, Illinois, and the U.S. Fed, so they’ll become the story. Or maybe Japan. There are so many possibilities…

But the main theme won’t change: fiat currency plus democracy equals hyperinflation.

By the way, the website you reference, LEAP2020, is excellent. One of its articles, Sudden Intensification of the Global Systemic Crisis, makes some good points on this subject. All DollarCollapse readers should check it out.

I like very much your site … but about Greece, Spain and the Eurozone you obviously have a US bias. In my opinion, you are indeed missing four key aspects of the situation:

1. Greece is known for three decades to be ‘the’ failed EU enlargement. So what is going on there is as much a crisis of the Greek debt as much as an intrumentalisation of the situation by other Eurozone member states to put Greece once for all on the right tracks.

2. for three years, the Eurozone leaders have been desesperately trying to find a way to prevent the Euro-Dollar rate to rocket till 1,60, 1,70 or more. And thanks to the very amateurish GoldmanSachs/hedge funds bets against the Greek bonds and the Euro, they are served on a silver plate with a Euro-Dollar rate at 1,36. So don’t expect the Eurozone leaders to hurry anything in order to get the Euro-Dollar rate back to 1,50. -)

3. despite the amazing propaganda machine around the Greek debt (snow storms on the East coast were the only recent things which were not put on the back of the ‘Greek bond fear’), the Euro-Dollar is stable at 1,36. Guess what will happen when the ‘Greek tragedy’ will pass fashion as it starts to do? by the way, with only 70 000 demonstrators in the streets of Athens two days ago (a very small number by Greek standarts), it is now clear that Greek public opinion will accept the austerity measures. Too bad for one of the ‘Greek tragedy’ scenario: political instability. You may read http://www.leap2020.eu for more on that aspect.

4. Spain got into the Eurozone in a fair way (not like Greece) and its exposure to real estate wounds is nothing compared to US or UK. Meanwhile in the Eurozone the heavyweight, like Germany, is sound … while in the US, it’s the heavyweighs (California, Florida, New York, Michigan, …) which are in trouble; and in UK, everything is in trouble. So, the day Spain will be suck into such problems will be the exact same day UK and US will be as well. I make a bet that on that very day, nobody will care of Spain and the Euro ‘problems’ … but everybody will run away from the Pound and the Dollar.

In conclusion, you are right to stick with your great website’s name, ‘Dollarcollapse’ : what we are seeing right now is the early stage of a major currency war. And after a big offensive against the Euro, the Pound is already sinking, and the Dollar has not gained much ground. The counter-attack is coming, thanks to US economy : with no recovery in sight, a Eurozone not falling apart, and the Chinese unloading T-Bonds, …. well, the result will indeed be the coming ‘Dollar Collapse’ …! -)

Best regards

Raid 3000