The results of a poll released today reveals that more than half of all Germans have absolutely no confidence in the euro and want to bring back their national currency, the Deutschmark.
A Forsa poll conducted for Stern magazine said that 54 percent of Germans favor a return of their former currency, an identical figure to a poll taken in May 2010, according to Reuters.
The debt crisis cancer continues to spred
In the 1990s, the Chancellor Helmut Kohl’s government had a difficult time convincing Germans that a switch from the mark to the euro was in the best interest of the country. Despite the weakness of the currency amidst a rapidly spreading debt crisis, Chancellor Angela Merkel has said she will defend the euro.
According to Pipi Malmgren, however, Germany will abandoned the euro and re-introduce the Deutschmark mark and this will spell disaster for the beleaguered euro. She claims the German government has already sent orders for the currency to the printers.
“The markets are very likely to have to contend with the re-introduction of Deutschmarks in the near future,” writes Malmgren, who is a consultant for Deutsche Bank and is the former Special Assistant to the President of the United States for Economic Policy on the National Economic Council and former member of the U.S. President’s Working Group on Financial Markets. “This is bound to mean a collapse in the value of the Euro for those countries that will remain in it (devaluation for the rest of Europe). This step may seem unthinkable but, I believe that the German government is telling us in multiple ways that there is no other solution from their point of view.”
Malmgren notes that the crisis has spread and the Europeans are warning the United States to devise a plan to nationalize Bank of America.
Following a downgrade by Moody’s Investors Service, the Bank of America’s stock took a dive in August. The bank is currently battling a lawsuit by a stockholder that alleges it failed to disclose it owes more than $10 billion to American International Group Inc. in connection with mortgage-backed securities.
Bank of America’s problems are significant and have ominous implications for the economy. The transnational banking and financial services behemoth is the largest bank holding company by assets in the United States and the second largest bank by market capitalization.
“The multiple lawsuits against Bofa and other banks alone will render the US banking system vulnerable to any dramatic announcement out of Europe. But, no doubt US banks have immense exposures to European institutions and some may even have sovereign credit risk directly on their balance sheets,” writes Malmgren.
Malmgren also underscores the fact that there is very little willingness on the part Germany to “write a check” to bailout teetering Eurozone members. She pointed out that there is no meaningful collateral – short of nationalizing industry – to underwrite such a bailout.
Not surprisingly, the corporate media in the United States has failed to mention Malmgren’s commentary.
In response to the growing crisis and a contracting economy, the IMF has called on the European Central Bank to slash key interest rates and reverse two earlier hikes. The ECB “should lower its policy rate if downside risks to growth and inflation persist,” the Washington-based IMF said in its biannual regional economic outlook for Europe, according to Bloomberg.
Figures published today by the European Union’s official statistics agency Eurostat reveal retail sales falling 0.3% in August from July, driven by a huge drop in Germany, the currency area’s largest economy, the Wall Street Journal reports.
Malmgren predicted both the United States and Europe will experience growing stagflation as living costs rise and high unemployment persists. Fed policy in the U.S. will vacillate between fighting high inflation (as it did in the 1970s) and more ruinous Keynesian efforts to stimulate the economy.