The Euro-zone is in far more serious trouble than here. With the US stock market being the recent focus with bank nationalization and AIG taking the EU out of the news lately, but the latest news is quite dire.

The EU over the weekend told its poorer countries that they should not look to them for help with their troubled banks and budget shortfalls. The eastern European countries like Hungary and Latvia can take the EU toward the breaking point because of Swiss and German exposure to its default.

Poland, the Czech Republic, Slovakia, Romania and Bulgaria have come out with stinging comments over being lumped into a group that has been labeled “the subprime of Europe.”

As I said last year and predicted in my year ahead column, this could be it for the Euro as a currency. The divide between haves and have nots is exploding with Mediterranean countries along with newer eastern countries being unable to function in a strong Euro environment.

On the contrary, Germany needs to bring Deutschemark back in order to have the needed control to handle its trade deficits –– as other nations devalue currencies to spur trade growth –– as well as to fund its growing budget shortfalls.

Tomorrow’s expectations are that the European Central Bank will cut rates by 50 basis points to 1.5%. The Bank of England will slash its rate to .5% –– a rate it has never reached in its history.

Dollar daze

With Treasury Secretary Tim Geithner anchored in Washington pouring through his thesaurus for a better word for nationalization, Secretary of State Hillary Clinton is on the second leg of a worldwide beggar tour.

In Asia, with the backdrop of Chinese government officials saying that they needed assurances from Uncle Sam before they continue funding our massive debt, Secretary Clinton is said to have provided that needed collateral.

It used to be when the Secretary of State visited the Middle East, Israel was on the top of the agenda, but not this trip.

Secretary Clinton is there for the sovereign wealth funds, giving them the warm fuzzy feeling the need to continue feeding our debt coffers.

These semi-empty promises are falling on hard-of-hearing ears though, as these sugar daddies have fewer dollars from trade to put back into treasuries. China’s trade and OPEC’s oil revenues have cratered, so there are fewer greenbacks to bring back to the American shores.

For more on Wall and Washington and the cratering economy see:


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