The Dollar Index is headed for another test of resistance at 80 on the strength of the euro crisis. Respect of the zero line by 63-day Twiggs Momentum suggests a primary up-trend. Breakout above 80 on the index (or 5% on TMO) would confirm, offering a medium-term target of 85*.
* Target calculation: 80 + ( 80 – 75 ) = 85
Dear Colin,
recently we had a bear market rally in the euro currency pair (EUR/USD) but unfortunately most market participants did forget we are still in a bear market. If we look at the long term moving averages we have a clear picture. The point and figure chart points in the same direction if we look at bigger boxsizes. The euro zone problems can,t be solved due to the fact that a spanish minds ticks different to a german mind if we talk about economy. Historically multi-cultural currencies never made it in the long run because a national currency represents as well the feeling of the people of this state. You will never be able to control (in what kind of european council you can imagine) national debt policy because europe has more than 20 different economic mindsets. The euro was made for multi national affiliated groups not for the average citizen in europe. So this experiment in the long run has to fail independent of what Mr. Merkel says. Greece has to go back to his national currency and germany as well this is my opinion. The euro is in intensive live care and dies sooner or later. On the other hand positive seasonality tendency for the euro will change soon and we did not make it back to a bull market in the euro. These are the problems we have in europe and you won,t find this opinion in the media and guess for what reason.
Stefan (pointandfigure.net)
****Emergency Debt Transfer Mechanism****
In times of debt emergencies like the one we have now a possible way to manage a country out of a debt crisis is to open an Emergency Debt Transfer Window for one month
****Explained****
An emergency debt transfer is when a debtor and a creditor exchange their respective sides of their loan with the government (of the nation the debtor pays tax in), which are replaced by tax credits (for the creditor) and tax debts (for the debtor) of equal value to the loan being transferred……
In other words, the government simultaneously collects the debt and pays the loan through future taxes resulting directly from economic growth
****A tax debt****
A tax debt is created from the amount of debt you have transferred which you are to pay it back through a higher tax rate on your income tax – say an extra 10c in the dollar – the debt can be held at zero interest and slowly be eroded by inflation or at an interest rate which follows inflation
****A tax credit****
A tax credit is something given to you in place of the debt you are owed which you can use to pay taxes with in the country of issuance – While you may not get as much back as promised at the issuance of the loan it is far better than having your debtor going bankrupt on you……
This system relies totally on economic growth for the repayment of debts and thus gets everyone involved focused on economic growth as opposed to fighting over the payment of debts
****The Greek Government****
The Greek Government can pay off its debts by issuing these special tax credits to German and French banks which the banks can then use in any business operations they may undertake in Greece……
Also tax credits can be given to governments of other countries and then be swapped for trade benefits etc……
These tax credits for businesses will have a stimulatory effect on the economy and the austerity will be specifically targeted only at those who owed money during the crisis……
This whole system requires economic growth before the creditors can recover their money as companies will not be able to buy or use them without first making profits that owe tax – this will get everyone working together to get the economy growing again……
As the debts wouldn’t normally be paid back in one big lump sum not being able to use all the tax credits for a few years or even decades is not totally unreasonable……
You could say that ‘the Greek economy is so bad there isn’t going to be enough business profits to pay back the tax credits’, but this is still better than Greece going bankrupt and paying nothing back, and if Greece does make a full recovery then all will go nicely over the next ten years for everyone involved……
With any luck the system will not cost the government anything, but if it does that can be seen as the cost of getting out of a debt crisis……
This method of Emergency Debt Transfer will break the debt death spiral we are stuck in and get everyone back to the important business of making life better
****Regulating the banks****
If the banking system is re-regulated at the same time then this whole debt crisis could be ended before the years end, without one bankruptcy!