Ireland's decision to guarantee all bank deposits will contribute to the demise of the single European currency, because it will erode the euro's credibility if it's allowed to go ahead, Hugh Hendry, chief investment officer and Partner at Eclectica Fund, told CNBC on Thursday. The plan pledges to guarantee the liabilities of six Irish-owned banks totaling some 400 billion euros ($565 billion), more than twice the country's annual gross domestic product. "The decision, if left to stand … my prophecy is it will bring down the currency. The euro is not a tenable currency if you have politicians making such decisions. The reality is there is no such thing as a free lunch," Hendry told "Squawk Box Europe." "If I was German, I would say give me back my Deutschmarks," he added. Why Ireland Will Destroy the Euro - Economy * Europe * News * Story - CNBC.com Why would this be important to U.S. Investors? The Financial Planning landscape over the past decade has seen a greater number of U.S. investors pour more money into European based assets and securities. It really also drives home the point that we by far are not the only country dealing with an over leveraged property debt crisis. This is not just a U.S. crisis, it is a global crisis.
Its a confidence building measure more than anything else .Granted they went overboard with the unlimited guarantees but Irelands economy by itself is not likely to bring down the Euro IMO. The guarantees can be lowered once the markets have stabilized.
As far as overleveraging is concerned the US did not invent that .Its happened in several countries before and its always ended in disaster . Apparently we didnt learn from those experiences
Looks like no one seems to learn from past mistakes these days Crunch. The main part of the interview where I really feel the guy was trying to drive home his point is Central Banks trying to interfere with the natural economic cycles. Other have tried and it always fails miserably over time.
haha. in a twisted, schadenfreudistic way i appreciate this. it will help the dollar and increase foreigner's fleeing back to the dollar.
