Monday, August 22, 2011

Why has Euro not collapsed yet?

I think I may have the answer.

The main reason why Euro has not collapsed yet is - CHINA.
If your largest customer needed a short-term loan to stay afloat, would you lend them the money? Of course you would, if your business greatly depended on them. Well, China's exports are going to Eurozone (their largest importer) and is the only reason China has such stellar growth. Their export-based economy is thriving while Europe is stagnant. China has not yet been able to generate domestic demand big enough to support itself. And even if it did, the only reason would be because of their new working class employed at factories which supply the goods to overseas. If Europe cuts back on their imports from China, it would be the game end. I do not even want to tell you the consequences of 1.3 billion of hungry people revolting all at once. So China has been buying everything in sight with a big E written on it - from Irish, Greek, Spanish, and Italian debt, to Euro currency on the open market. Euro is not dead because of China, to the dismay of so many traders who are betting against it. Big Panda's pockets are deep enough to overpower all of our Euro shorts.
My question is how much longer can they keep the Euro up? Unfortunately, I do not have the answer to this question...

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