Posted May 31, 2013 by Martin Armstrong
The Eu is like a guy in drag. All dressed up as a woman, but when you look under the dress you get more than a surprise in a Crackerjack Box. On the one hand they created a single currency, laws that allowed freedom of movement, and the right to receive social benefits from all countries if you moved. They were all dressed up, but underneath was the old Europe with barriers and the refusal to consolidate debts that prevent the Euro from being a serious reserve currency. Institutions investing buy the dollar through federal bonds parking reserves there. In Europe, they have to look at the credit rating of every state. That is no different than investing in state bonds in the USA. Yes a single currency, but are Texas and Louisiana bonds the same? You cannot make state bonds serve as reserves for the banks in the USA without risk and chaos. That is what Europe created, the old Europe merely in drag. They should have consolidated all the debts of members as did Hamilton making that the national debt of Europe, and then each member thereafter would be on their own like the states are in the USA. Failing to do so left the banks holding debt from varied members putting the banking industry at risk.
No the EU is taking the UK to court for not paying EU citizens in the UK benefits. Here is where the tensions start to rise. One debt – there would not have been an issue. Failure to do that forcing other states to bailout yet others, and you have chaos.