Trying to Save the Euro from Total Disaster

European Commission President Jean-Claude Juncker has now come out in a very desperate move telling that those members of the EU who are non-euro countries should introduce the euro ASAP. “The euro is destined to be the single currency of the EU as a whole,” Juncker declared. Juncker then proposed a “euro preparation instrument” to provide technical and financial assistance to make this transition.

The Euro is in serious trouble because of the total mismanagement of the ECB. Low to negative interest rates have totally failed to stimulate the economy after almost 10 years. Now that rates must rise to try to avoid a massive pension collapse in Europe, the ECB could suffer a major default and will need to be bailed-out itself by the government since it owns 40% of euro-zone debt.

Juncker ‘s message is desperately trying to spread the pain. Insisting that all states now adopt the Euro will not save it. The structural design is faulty and Germany stands in the way of a debt consolidation. Increasing the number of states in the Euro will not help and this cannot even be accomplished in time to save the Euro assuming it did work.

Meanwhile, Austria sees the pending debt crisis and is rushing to offer the first euro member issue of a 100 year bond that will yield about 2.10%. They are looking to raise €3.5 billion euros of the debt maturing in 2117. The buyers of this one are totally insane. Yet, virtual-zero interest rates in Europe have forced many institutional investors running funds that need to cover pension or insurance liabilities into riskier, or longer-dated debt to increase their yields. This will only further increase the pending crisis on the horizon as they suffer massive losses as rates rise.