What Happens If the Euro Collapses 2012

forex trading outlook today - What Happens If the Euro Collapses 2012 ; The break up of the European Union will start with each nation reverting to their old currency or issuing a new one. Strong nations will have a strong currency. Nations with high debt levels can then devalue their currency, suffering high inflation but paying off their debt in devalued money.

If the Germany manages to force the spendthrift nations to remain in the European Union, it will do so by taking over their purse strings. Some nations will choose to leave the European Union over loss of sovereignty. Thus fiscal discipline will shrink the European Union. States that remain will have a stronger balance sheet but at the expense of a new German empire. The nations that choose to leave will lose the trade preferences and have to issue their own currency. Exiting states must then manage the global economy on their own, and those without a good export base will suffer.

The European Union may survive by ejecting the nations that refuse to be fiscally responsible. The EU may save itself by kicking out states like Greece and Ireland. The European Union will then remain stronger, but the nations kicked out will suffer financially from economic turmoil.

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