Debt crises, economic leaders within the euro area increased between the cracks, the euro is facing the risk of disintegration.

We can look at history, to explore all this happened, who is the driving force behind.

Before the financial crisis, European financial institutions hold a lot of dollar bonds, especially the “two rooms” bonds, subprime mortgage asset-backed bonds, to the European financial sector with catastrophic consequences.

In order to avoid financial crisis spread to Europe, but also their economies in order to avoid stall, the euro zone governments began rescue operations, through the enlarged deficit in one hand and rescue banks in one hand and boosting the economy.

A problem. The euro has become a common currency, an important premise that the relative balance of the economic development, national government deficit can not exceed 3% of GDP. However, there is no uniform euro area fiscal policy, and the rescue efforts to a great result, not only national government deficit ratio suddenly increased, far beyond the 3%, and the equilibrium of the economy has been greatly damaged.

This reality to the international currency speculators provide enough opportunities. This year around the Spring Festival, the world’s leading gathering of money fund managers, said that friendship, but after the news came: the focus of this meeting is to discuss how the unity of action, against euro. Although rumors, but there afterwards confirmed market performance, trading volume surge in the euro, Greece, Spain, the debt crisis is hugely magnified.

Financial regulatory authorities in the euro area to come forward in time to stop the situation from further expansion, and even some important monetary fund managers (including Soros) to implement the “double” – the exposure provides account transactions within the specified time, withstood the attack of the first one fell swoop wave.

However, the troubles still. Rescue in Greece, the role of the IMF, the entire eurozone governments have committed themselves to a “fiscal austerity.” This makes it completely abandoned the eurozone financial rescue economic means.

At the same time, Moody’s and Fitch Ratings both companies, but also kept the euro zone countries to make sovereign debt rating, the objective to enlarge the euro zone economic imbalances between countries. Thus, the situation got so bad.

Finally, the second wave of attacks began the euro: the Irish debt crisis as an excuse to further enlarge the euro zone’s economic imbalances. Sing such as the German economy, encouraging the German out of the euro. For a time, the euro precarious.

At the same time, the dollar began to rise significantly. Even worse, gold and other commodity prices, the trend out of a negative correlation with the U.S. dollar, showing a very high independence. All this not only for the euro-zone residents to abandon the euro provided a hedge against inflation channel, but also pushed up inflation in the euro area.

Europe in the event of inflation, it must be “stagflation” – economic stagnation, rising prices. If the “stagflation”, the rate hike will further suppress the economy, interest rate cuts will further push up inflation, which will make the euro the sole means of macroeconomic control – monetary policy can not do anything, and the hands of national fiscal deficit has been high rate of waste out. Euro face of “stagflation” is almost helpless.

As the strongest economies in the euro area, and if Germany do not want to be dragged down the euro zone economy is bound to “take off in Europe,” no doubt the disintegration of the euro.

The euro area has been sliding into the edge of crisis, how do? Only one trick: to rely on the sovereignty means to close the capital account. At least the behavior of the euro on speculation to say “no”, on the one hand deal with the tax levy means a substantial increase in speculative costs, and strengthen supervision of foreign exchange transactions, the freezing of all trading accounts with suspicious behavior. When necessary, the temporary closure of the foreign exchange market, inventory speculators. Suppress “offensive”, the so foreign exchange regulation in an extremely harsh conditions restored.

This is not to say that “the euro must give up completely convertible currency?” Yes, but some give up, for the foreign government debt held by the euro and the euro should be spared. The disintegration of the euro, the part of the free convertibility of abandoning the euro should be the lowest cost option.

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