If € collapses, how much do I make?

[Masquerade]

If I sell eur/usd and the euro-zone collapses, how much do I stand to make? Will price go to 0 or will it get suspended on the market and then i'm left in limbo similar to when shares get suspended?

 

[Martinghoul]

Nobody knows... You're likely to have your EUR short replaced with some sort of a ECU basket short, so you're probably going to make a fair bit of money.

 

[Lord Flasheart]

If I sell eur/usd and the euro-zone collapses, how much do I stand to make? Will price go to 0 or will it get suspended on the market and then i'm left in limbo similar to when shares get suspended?

All very unlikely,the euro can survive with just germany and a few others using it,if greece pull out,stronger euro as less burden on Germany. Things may be different if germany pull out.then you have a problem.

 

[Masquerade]

Depends which is more likely....Germany leaving or cutting out the harmful components such as Greece/Italy. It's unlikely it'll end but losing 10%+ in a day in the near future is a strong possibility.

Thanks for the rapid response Martin, under 1 minute - I can't even get an ambulance that fast

 

[Lord Flasheart]

Depends which is more likely....Germany leaving or cutting out the harmful components such as Greece/Italy. It's unlikely it'll end but losing 10%+ in a day in the near future is a strong possibility.

Thanks for the rapid response Martin, under 1 minute - I can't even get an ambulance that fast

yep.i can see a scenario where theres a 10% move either way,just hope the sb firms honor the stops

 

[shewolf]

Depends which is more likely....Germany leaving or cutting out the harmful components such as Greece/Italy. It's unlikely it'll end but losing 10%+ in a day in the near future is a strong possibility.

My guess is that IF the euro breaks up, then it will be Germany that takes the walk. It would be much easier for Germany to leave and resurrect the Deutschmark than having all the PIIGS leave and return to all the various currencies.
I read somewhere yesterday that the new Deutschmark would be worth around $USD 2.00 The remnant Euro would therefore drop some 20%

 

[shewolf]

My guess is that IF the euro breaks up, then it will be Germany that takes the walk. It would be much easier for Germany to leave and resurrect the Deutschmark than having all the PIIGS leave and return to all the various currencies.
I read somewhere yesterday that the new Deutschmark would be worth around $USD 2.00 The remnant Euro would therefore drop some 20%

Also, there have been massive outflows from other Euro countries (especially Greece and France) to banks in Germany, Switzerland and the US in the last couple of weeks. (I saw that on Zerohedge earlier this week).
The smart money has already moved.

 

[Masquerade]

yep.i can see a scenario where theres a 10% move either way,just hope the sb firms honor the stops

Surely it'll depend if it gaps.

My guess is that IF the euro breaks up, then it will be Germany that takes the walk. It would be much easier for Germany to leave and resurrect the Deutschmark than having all the PIIGS leave and return to all the various currencies.
I read somewhere yesterday that the new Deutschmark would be worth around $USD 2.00 The remnant Euro would therefore drop some 20%

Germany and Greece are like Superman and Kryptonite. I don't see the two co-existing for much longer.

Going back to the question, it's really unlikely that one day euro will just completely collapse and go to 0 or be suspended by the looks of things.

 

[Atilla]

Surely it'll depend if it gaps.



Germany and Greece are like Superman and Kryptonite. I don't see the two co-existing for much longer.

Going back to the question, it's really unlikely that one day euro will just completely collapse and go to 0 or be suspended by the looks of things.

Euro will not collapse!

Germany will take it over and set rigid rules in her interest which all the other players would need to sign up to. France is already playing to Germany's tune with that rodent faced Sarkozy facing elections doing not much.

As for suggestion DM=$2 that's ridiculous. Someone is having a laf... Probably the Fed I'd imagine. Goldman Sachs even.

 

[counter_violent]

Euro will not collapse!

:arrowu::arrowu::arrowu::arrowu::arrowu:

:arrowu:Theres your signal to get short right there folks :arrowu:

Have you noticed yet that markets are dictating policy dude and they wont let up until they get what they want

 

[WATCH&CATCH]

if Euro collapses I dont care. Its ECB's business...

 

[Atilla]

:arrowu::arrowu::arrowu::arrowu::arrowu:

:arrowu:Theres your signal to get short right there folks :arrowu:

Have you noticed yet that markets are dictating policy dude and they wont let up until they get what they want

Maybe - but I've been waiting for the Euro to collapse all year and I reckon I'll be well chuffed if it breaches 1.30 against the $.

It's not happening. Despite all the bad news it's not happening. I'll be damned.

What do you think will do the trick?

Germany has already compromised by dropping rates and I think they will cave in to the EuroBond soon enough too. After some horse trading is taken out of the way.

You keep banging your drum about the markets but that's always going to be the case anyway. You can't buck the markets. In the long run we are all dead anyway.


So what's your point - forgive me but I may have missed it.

 

[Jerry Westerby]

They used to say that Lehman Brothers could never go Bankrupt. Or that the US AAA rating would never be downgraded.

 

[jthetrader]

Market participants have perceptions of the market's future direction and they act upon this and, collectively, they bring about those conditions, correct? It's interesting how, as Atilla has said, everyone seems to be predicting the end, or at the very least a lot of trouble ahead, for the € and yet nothing is really happening.

What do you think would happen, from a market perspective (obviously doing this would be illegal), if everyone on this board agreed we would all short the Euro against the U.S. Dollar at a certain time on a certain date just to see if it could jump start a precipitous fall and then everyone could activate put options bought beforehand? Effecitvely we would boycott the Euro in the retail markets. We can't do this of course since it is illegal and, anyway, I dunno whether anyone would make any money but it would just be interesting to see how powerful/less we all are.

@ OP if the Euro collpses wouldn't you just get to keep the currency you had shorted it against? You can't be expected to buy something which no longer exists.

 

[Atilla]

They used to say that Lehman Brothers could never go Bankrupt. Or that the US AAA rating would never be downgraded.

Really...

Never heard that about either of them. Didn't think it either. On the contrary it was on the cards for quite some time - in particular US debt. Since the start of the Iraqi war to be honest.

As for the rating agencies downgrading European ones - that's a bit of a laugh too as if they matter. Who do they work for by the way?

 

[counter_violent]

As for the rating agencies downgrading European ones - that's a bit of a laugh too as if they matter.

Well admittedly they are a bit late to the party, but nonetheless, they are here now and doing their bit to diminish confidence in all of these countries useless politicians.

 

[Atilla]

Market participants have perceptions of the market's future direction and they act upon this and, collectively, they bring about those conditions, correct? It's interesting how, as Atilla has said, everyone seems to be predicting the end, or at the very least a lot of trouble ahead, for the € and yet nothing is really happening.

What do you think would happen, from a market perspective (obviously doing this would be illegal), if everyone on this board agreed we would all short the Euro against the U.S. Dollar at a certain time on a certain date just to see if it could jump start a precipitous fall and then everyone could activate put options bought beforehand? Effecitvely we would boycott the Euro in the retail markets. We can't do this of course since it is illegal and, anyway, I dunno whether anyone would make any money but it would just be interesting to see how powerful/less we all are.

@ OP if the Euro collpses wouldn't you just get to keep the currency you had shorted it against? You can't be expected to buy something which no longer exists.

There is a nightmare scenario there but question I would raise be - What reason would cause the Germans to abandon the Euro?

If any country leaves say the French then the € would be revalued against the Frank and French debt will be calculated accordingly. Popandreu tried that trick and got a big slap from the Germans and the French. I think that made Germany stand up and realise they have real power. In fact the German bankers are so good the French, Italians and the Greeks and Spanish wouldn't mind them running their banks at all.

The Euro collapse is to the benefit of Germany as countries are jettisoned the Euro will rise as Germany is a powerhouse of manufacturing.

Who is going to trade in their Audi, Mercedes or BMW? Even if we do - there is plenty of demand in Asia.



My gripe against the Germans is that if they don't loosen up monetary policy and support sovereign debt the unfolding recession will ultimately impact their economy and financial liabilities extended to other countries. Catch 22 is their dilemma. Tricky hand to play.

 

[jthetrader]

There is a nightmare scenario there but question I would raise be - What reason would cause the Germans to abandon the Euro?

If any country leaves say the French then the € would be revalued against the Frank and French debt will be calculated accordingly. Popandreu tried that trick and got a big slap from the Germans and the French. I think that made Germany stand up and realise they have real power. In fact the German bankers are so good the French, Italians and the Greeks and Spanish wouldn't mind them running their banks at all.

The Euro collapse is to the benefit of Germany as countries are jettisoned the Euro will rise as Germany is a powerhouse of manufacturing.

Who is going to trade in their Audi, Mercedes or BMW? Even if we do - there is plenty of demand in Asia.



My gripe against the Germans is that if they don't loosen up monetary policy and support sovereign debt the unfolding recession will ultimately impact their economy and financial liabilities extended to other countries. Catch 22 is their dilemma. Tricky hand to play.

So it could go either way, if Germany retains the Euro and sheds itself off the baggage that is the PIIGS countries it could end up strengthening the Euro a great deal on the back of Germany's position as an economic powerhouse? Wouldn't the Euro have basically become a reconstituted DM if that happened?

The problem seems to be that shorting individual countries is complicated by this shared currency, as far as I know the only way to short a country available to retails investors is to short sell their bonds, which, in the case of PIIGS countries at least, are denominated in Euros. So that adds another dimension to things. It's impossible to say what will happen to Spanish debt, for example, because it's the Euro's health is linked to it.

I recently read about a German €6 billion gov't bond issue being severely undersubscribed (by 1/3rd IIRC), that can't be a good sign when we're talking about these countries having to assume hundreds of billions of debt to get by. And isn't the ECB's hands tied when it comes to just printing more money?

 

[Masquerade]

[youtube]yKaBSp18u2c[/youtube]

 

[Atilla]

So it could go either way, if Germany retains the Euro and sheds itself off the baggage that is the PIIGS countries it could end up strengthening the Euro a great deal on the back of Germany's position as an economic powerhouse? Wouldn't the Euro have basically become a reconstituted DM if that happened?

The problem seems to be that shorting individual countries is complicated by this shared currency, as far as I know the only way to short a country available to retails investors is to short sell their bonds, which, in the case of PIIGS countries at least, are denominated in Euros. So that adds another dimension to things. It's impossible to say what will happen to Spanish debt, for example, because it's the Euro's health is linked to it.

I recently read about a German €6 billion gov't bond issue being severely undersubscribed (by 1/3rd IIRC), that can't be a good sign when we're talking about these countries having to assume hundreds of billions of debt to get by. And isn't the ECB's hands tied when it comes to just printing more money?

That's the crux of it. Ultimately it will lead to that one way or another. IMF or not either way no matter. Once the ECB (Germans) are on the precipice of that cliff edge they'll soon wonder what on earth they were thinking rejecting that most desirable and attractive proposition from the French. Hang on a minute... did someone mention EuroBonds... :cheesy: