Ambrose Evans-Pritchard: 2012 Could Be The Year Germany Lets The Euro Die!

• The global collapse will start in the PIIGS, progress to the rest of EU, UK, Japan and finally America. All fiat currencies are heading down the path of debasement to toilet paper status! (emphasis mine)
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  Ambrose Evans-Pritchard: 2012 could be the year Germany lets the euro die! 
  by http://www.telegraph.co.uk/
  So we enter Year IV of the Long Slump, the cruellest yet though not the most acute.
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  There will be no Chinese credit explosion this time, no real help from post-bubble India or over-stretched Brazil. It will be a global downturn on all fronts, aborting what remains of recovery even before industrial output in the OECD bloc has regained its pre-Lehman peak.
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  The second wave will hit with youth unemployment already at 45pc in Greece and 49pc in Spain; and with the US labour participation rate already at depression levels of 64pc.
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  We will hear more about Italy’s Red Brigades, Greece’s Sect of Revolutionaries, and America’s militia groups, and how democracies respond. Proto-fascism in Hungary is our warning.
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  China’s surgical soft-landing will slip control, like Fed tightening in 1929 and 2007, or Japan’s squeeze in 1990. Once construction has run amok, bears will have their way.
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  Since the purpose of New Year predictions is to stick one’s neck out, let me hazard that China will devalue the yuan in 2012. It will export yet more spare capacity into a deflationary world, until the West retaliates and starts to turn its back on globalisation. Capital outflows will accelerate. The idea that China can rescue anybody will seem quaint.
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  The strong yen has already pushed Japan back into deflation, and fresh recession. Public debt has reached one quadrillion yen, as noted acidly by Tokyo’s R&I rating agency when it stripped Japan of its AAA rating last month. That is $12.8 trillion, or Italy plus Spain times four.
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  There is a graveyard full of Gaijin commentators who wrote off Japan too soon. Will the dam break this year at last, with tax covering less than half of spending, public debt at 237pc of GDP, ever fewer workers, and a state pension fund now selling government bonds? Perhaps. As R&I warns, Europe’s woes have brought sovereign debt into very sharp focus.
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  Germany will not be able to fudge EMU any longer. It must either immolate itself, accepting a debt union and internal inflation to save a currency it never wanted and doesn’t love; or opt instead to uphold fiscal sovereignty and the essence of its own democracy, and let the Project die. The shrewd, equivocating, ice-cold Chancellor will quietly oust arch-europhile Wolfgang Schauble and let the Project die, always pretending otherwise.
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  … for more click here!

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