The Rolling Sovereign Debt Crisis:
Learn Currency Strategic Tactics
May 3rd 2010, By Dale Pinkert
It is my belief that The Greek default crisis is but the
first domino to take place in the Euro zone and after downgrades
of Portugal and Spain it doesn’t take being Nostradamus
to see this contagion rolling through Europe. If you believe
that the rescue of Greece will contain this then you also
believed the U.S. Federal Reserve chief Ben Bernanke when
he said the sub-prime crisis is contained to those junk
securities. We all know the outcome of that forecast and
the trillions of bailout funds that followed.
Let’s call Europe ground zero for this sovereign
debt crisis and to grasp the magnitude of this we need to
look no further than the definition of “sovereign”
which mean above all others, the prime and quality of the
debt food chain. We are not talking about the tragic fallout
of foreclosures, high unemployment, failing industries or
financial institutions, this is even a jump over those hardships
on the financial richter scale. We are witnessing the insolvency
of Nation States not seen in Europe since the failure of
the Weimar Republic when German banknotes were used as fuel.
It was cheaper to use than wood.
Learning currency strategies to hedge yourself as citizens
of the country under duress or as a speculator voting up
or down on the stock of that nations currency, can both
protect the citizen and enrich the effective currency trader.
If you are coming to this financial event a bit late, since
The Euro anticipating these events has already fallen quite
sharply from 1.51 to 1.33 and although more are now talking
parity my target is 1.15 this is only act 1 of a 3 act production.
After the majority of this unwinding is completing in Europe
I believe the contagion will then spread across the English
channel to the U.K. The British Pound having elected to
stay out of the euro has been more insulated and has not
fallen as hard against USD as the Euro, but that could change
quite soon after the elections on May 6th.
Bearish currency systems will begin to target the GBP as
a more favored short over the EUR and this is act 2. The
finale and act 3 happens across the pond here in the U.S,
best guess late this year or spring of 2011 and this will
be far enough away for all to prepare and learn currency
strategies to preserve our wealth or even capitalize on
the rolling Sovereign debt crisis in our home countries
or abroad from our laptops and pc’s. In an era where
cash is King, our challenge as currency traders will be
cash denominated in what and when!